PURCHAGREE.DOC
America Online, Inc.
4 % Convertible Subordinated Notes
due November 15, 2002
Purchase Agreement
November 12, 1997
Xxxxxxx, Xxxxx & Co.,
BT Alex. Xxxxx
Xxxxxx Brothers Inc.
Xxxxx & Company
As representatives of the several Purchasers
named in Schedule I hereto,
c/o Goldman, Xxxxx & Co.
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
America Online, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Purchasers named in Schedule I hereto (the "Purchasers") an aggregate of
$350,000,000 principal amount of its 4% Convertible Subordinated Notes due
November 15, 2002 (the "Firm Securities"), and, at the election of the
Purchasers, up to an aggregate of $50,000,000 additional principal amount
thereof (the "Optional Securities") (the Firm Securities and any Optional
Securities which the Purchasers elect to purchase pursuant to the Purchase
Agreement (as hereinafter defined being collectively referred to as the
"Securities") convertible into Common Stock, par value $0.01 per share
("Stock"), of the Company.
The Purchasers and other holders (including subsequent transferees) of
Securities will be entitled to the benefits of the registration rights
agreement, to be dated as of the Time of Delivery (as defined below) (the
"Registration Rights Agreement") between the Company and the Purchasers, in the
form attached hereto as Exhibit B. Pursuant to the Registration Rights
Agreement, the Company will agree to file with the United States Securities and
Exchange Commission (the "Commission") under the circumstances set forth therein
a shelf registration statement pursuant to Rule 415 under the United States
Securities Act of 1933, as amended (the "Securities Act") relating to the resale
of (i) such Securities and (ii) the shares of Stock initially issuable upon
conversion of the Securities by holders thereof, and to use its best efforts to
cause such shelf registration statement to be declared effective.
1. The Company represents and warrants to, and agrees with, each of the
Purchasers that:
(a) An offering circular, dated November 12, 1997 (the "Offering
Circular"), including the international supplement thereto, and the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1997
(the "Form 10-K") filed with the United States Securities and Exchange
Commission (the "Commission") pursuant to Section 13(a), 13(c) or 15(d) of
the United States Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the Company's definitive proxy statement (the "Proxy Statement")
in connection with its 1997 annual meeting of stockholders, which are
attached to and made a part of the Offering Circular, has been prepared in
connection with the offering of the Securities and shares of the Stock
issuable upon conversion thereof. Any reference to the Offering Circular
shall be deemed to refer to and include the Form 10-K and the Proxy
Statement and any reference to the Offering Circular, as amended or
supplemented, as of any specified date, shall be deemed to include (i) any
documents filed with the Commission pursuant to Section 13(a), 13(c) or
15(d) of the Exchange Act after the date of the Offering Circular and prior
to such specified date and (ii) any Additional Issuer Information (as
defined in Section 5(f)) furnished by the Company prior to the completion of
the distribution of the Securities; and all documents filed under the
Exchange Act and so deemed to be included in the Offering Circular or any
amendment or supplement thereto are hereinafter called the "Exchange Act
Reports". The Exchange Act Reports, at the time they were or are filed with
the Commission, conformed or will conform in all material respects to the
applicable requirements of the Exchange Act and the applicable rules and
regulations of the Commission thereunder. The Offering Circular and any
amendments or supplements thereto and the Exchange Act Reports did not and
will not, as of their respective dates, contain 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 under which they
were made, not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by a Purchaser by or on behalf of Xxxxxxx, Sachs & Co. expressly for use
therein;
(b) Neither the Company nor any of its subsidiaries has sustained since
the date of the latest audited financial statements included in the Offering
Circular any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Offering Circular, except for any
loss or interference that would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole; and, since the respective
dates as of which information is given in the Offering Circular, there has
not been any change in the capital stock or the Stock, including but not
limited to any securities that are convertible into or exchangeable for, or
that represent the right to receive, Stock or any such substantially similar
securities (other than (i) pursuant to employee stock option plans existing
on the date of this Agreement, or upon the conversion or exchange of
convertible or exchangeable securities outstanding as of the date of this
Agreement, (ii) upon conversion of, and as contemplated by the Registration
Rights Agreement with respect to the Securities or (iii) as permitted
pursuant to paragraph 5(d)(iii) hereof) or long-term debt of the Company or
any of its subsidiaries (which, for purposes of this representation, shall
not include any increase in, or draw down under, the Company's credit
facility with The Chase Manhattan Bank, the entering into of any lease
financings or the entering into of any mortgage on the Company's real
property) or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of opera
tions of the Company and its subsidiaries, taken as a whole, otherwise than
as set forth or contemplated in the Offering Circular;
(c) Except for a lien held by The Chase Manhattan Bank on all assets
owned by the Company other than real property, a mortgage held by GMAC
Commercial Mortgage Corporation on real property owned by the Company
located on Sunrise Valley Drive in Reston, Virginia, and any lien or
encumbrance relating to the Company's technical center in the leased parcel
on which it is located in Reston, Virginia, the Company and its subsidiaries
have good and marketable title in fee simple to all real property and good
and marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects except such as are
described in the Offering Circular or such as would not, individually or in
the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole; and any real property and buildings held
under lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases, with such exceptions as are not
material and do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries;
(d) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Offering Circular, and has been duly
qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification, except where the failure to be so qualified in any such
jurisdiction would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole; and each significant subsidiary (as defined
in Rule 405 of Regulation C under the Securities Act) (a "Significant
Subsidiary") of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation;
(e) The Company has an authorized capitalization as set forth in the
Offering Circular, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and non-assessable; the shares of Stock initially issuable upon conversion
of the Securities have been duly and validly authorized and reserved for
issuance and, when issued and delivered in accordance with the provisions of
the Securities and the Indenture referred to below and this Agreement, will
be duly and validly issued, fully paid and non-assessable and will conform
in all material respects to the description of the Stock contained in the
Offering Circular; and all of the issued shares of capital stock of each
Significant Subsidiary of the Company have been duly and validly authorized
and issued, are fully paid and non-assessable and (except for directors'
qualifying shares) are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims, except for a lien on
such shares held by Chase Manhattan Bank in connection with the Company's
credit facility;
(f) The Securities have been duly authorized by the Company and, when
executed and delivered by the Company in accordance with the provisions of
the Indenture and this Agreement and authenticated by the Trustee will
constitute valid and legally binding obligations of the Company (subject as
to enforceability to the qualifications in the next sentence) entitled to
the benefits provided by the indenture to be dated as of November 17, 1997
(the "Indenture"), between the Company and State Street Bank and Trust
Company, as Trustee (the "Trustee"), under which they are to be issued,
which will be substantially in the form previously delivered to you. The
Indenture has been duly authorized and when executed and delivered by the
Company and the Trustee, the Indenture will constitute a valid and legally
binding instrument of the Company, enforceable against the Company in
accordance with its terms, subject as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles; and the
Securities and the Indenture will conform in all material respects to the
descriptions thereof in the Offering Circular and will be in substantially
the form previously delivered to you;
(g) Prior to the date hereof, neither the Company nor any of its
affiliates has taken any action which is designed to or which has
constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of the Company in
connection with the offering of the Securities;
(h) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture, the
Registration Rights Agreement and this Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, except for any conflict,
breach or default that would not have, individually or in the aggregate, a
material adverse effect on the Company and its subsidiaries, taken as a
whole, nor will such action result in any violation of (a) the provisions
of the Certificate of Incorporation or By-laws of the Company or (b) any
statute or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or any of its subsidiaries or
any of their properties; provided, however, that in the case of clause (b)
of this paragraph (h), this representation and warranty shall not extend to
such violations as would not have a material adverse effect on the ability
of the Company to perform its obligations under this Agreement, the
Registration Rights Agreement, the Indenture or the Securities or to
consummate the transactions contemplated thereby; and no consent, approval,
authorization, order, registration or qualification of or with any court or
governmental agency or body is required other than in connection with the
registration for resale of the Securities and Stock under the Securities Act
pursuant to the Registration Rights Agreement, the qualification of the
Indenture under the Trust Indenture Act in connection with such registration
and actions under Blue Sky laws. Neither the Company nor any of its
Significant Subsidiaries is in violation of its Certificate of Incorporation
or By-laws or in default in the performance or observance of any material
obligation, covenant or condition contained in any indenture, mortgage, deed
of trust, loan agreement, lease or other agreement or instrument to which it
is a party or by which it or any of its properties may be bound, except for
any violation that would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole;
(i) The statements set forth in the Offering Circular under the caption
"Description of Notes" and "Description of Capital Stock", insofar as they
purport to constitute a summary of the terms of the Securities and the
Stock, accurately summarize in all material respects the legal matters,
documents or proceedings referred to therein;
(j) Other than as set forth in the Offering Circular, there are no legal
or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the current or future financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole; and, to the best of the Company's knowledge,
no such proceedings are threatened by governmental authorities or threatened
by others;
(k) When the Securities are issued and delivered pursuant to this
Agreement, the Securities will not be of the same class (within the meaning
of Rule 144A under the United States Securities Act) as securities which are
listed on a national securities exchange registered under Section 6 of the
Exchange Act or quoted in a U.S. automated inter-dealer quotation system;
(l) The Company is subject to Section 13 or 15(d) of the Exchange Act;
(m) The Company is not, and after giving effect to the offering and sale
of the Securities, will not be an "investment company", or an entity
"controlled" by an "investment company", as such terms are defined in the
United States Investment Company Act of 1940, as amended (the "Investment
Company Act");
(n) Neither the Company, nor any person acting on its behalf (which
shall not include the Purchasers) has offered or sold the Securities by
means of any general solicitation or general advertising within the meaning
of Rule 502(c) under the Securities Act or, with respect to Securities sold
outside the United States to non-U.S. persons (as defined in Rule 902 under
the Securities Act), by means of any directed selling efforts within the
meaning of Rule 902 under the Securities Act and the Company, any affiliate
of the Company and any person acting on its or their behalf (which shall not
include the Purchasers) has complied with and will implement the "offering
restriction" within the meaning of such Rule 902;
(o) Within the preceding six months, neither the Company nor any other
person acting on behalf of the Company has offered or sold to any person any
Securities, or any securities of the same or a similar class as the
Securities, other than Securities offered or sold to the Purchasers here
under. The Company will take reasonable precautions designed to insure that
any offer or sale, direct or indirect, in the United States or to any U.S.
person (as defined in Rule 902 under the Securities Act) of any Securities
or any substantially similar security issued by the Company, within six
months subsequent to the date on which the distribution of the Securities
has been completed (as notified to the Company by Xxxxxxx, Xxxxx & Co.), is
made under restrictions and other circumstances reasonably designed not to
affect the status of the offer and sale of the Securities in the United
States and to U.S. persons contemplated by this Agreement as transactions
exempt from the registration provisions of the Securities Act;
(p) Ernst & Young LLP, who have certified certain financial statements
of the Company and its subsidiaries, are independent auditors as required by
the Securities Act and the rules and regulations of the Commission
thereunder;
(q) The Company has all corporate power to enter into this Agreement and
the Registration Rights Agreement. This Agreement has been and, as of the
Time of Delivery, the Registration Rights Agreement will have been, duly
authorized, executed and delivered by the Company;
(r) Except as set forth on Schedule II, there are no registration rights
or other similar rights to have any securities of the Company (other than
the Securities) registered under any Securities Act registration statement;
(s) None of the holders of outstanding shares of capital stock of the
Company and no other person has or will have any preemptive or other rights
to purchase, subscribe for or otherwise acquire (i) the shares of Stock to
be issued upon conversion of the Securities or any rights to such shares or
(ii) as a result of or in connection with the transactions contemplated by
the Indenture, this Agreement or the Registration Rights Agreement, any
other capital stock of the Company or rights thereto; and
(t) Each of the directors and executive officers of the Company listed
in Schedule III hereto has entered into a written agreement with the Company
in the form of Exhibit A hereto (each such agreement, a "Lock-up
Agreement"), and executed originals of each Lock-up Agreement have been
delivered to you.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to each of the Purchasers, and each of the Purchasers
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of 97.5% of the principal amount thereof, plus accrued interest, if any,
from November 17, 1997 to the Time of Delivery hereunder, the principal amount
of Firm Securities set forth opposite the name of such Purchaser in Schedule I
hereto and (b) in the event and to the extent that the Purchasers shall exercise
the election to purchase Optional Securities as provided below, the Company
agrees to issue and sell to each of the Purchasers, and each of the Purchasers
agrees, severally and not jointly, to purchase from the Company, at the purchase
price set forth in clause (a) of this Section 2, that portion of the aggregate
principal amount of Optional Securities as to which such election shall have
been exercised (to be adjusted by you so as to eliminate fractions of $1,000)
determined by multiplying such aggregate principal amount of Optional Securities
by a fraction, the numerator of which is the maximum aggregate principal amount
of Optional Securities which such Purchaser is entitled to purchase as set forth
opposite the name of such Purchaser in Schedule I hereto and the denominator of
which is the maximum number of Optional Securities that all of the Purchasers
are entitled to purchase hereunder.
The Company hereby grants to the Purchasers the right to purchase at
their election up to $50,000,000 aggregate principal amount of Optional
Securities, at the purchase price set forth in clause (a) of this Section 2, for
the sole purpose of covering overallotments in the sale of the Firm Securities.
Any such election to purchase Optional Securities may be exercised only by
written notice on one occasion from you to the Company, given within a period of
30 calendar days after the date of this Agreement, setting forth the aggregate
principal amount of Optional Securities to be purchased and the date on which
such Optional Securities are to be delivered, as determined by you but in no
event earlier than the First Time of Delivery (as defined in Section 4 hereof)
or, unless you and the Company otherwise agree in writing, earlier than two or
later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Securities, the
several Purchasers propose to offer the Firm Securities for sale upon the terms
and conditions set forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with the Company that:
(a) It will offer and sell the Securities only to: (i) persons who it
reasonably believes are "qualified institutional buyers" ("QIBs") within the
meaning of Rule 144A under the Securities Act in transactions meeting the
requirements of Rule 144A or (ii) upon the terms and conditions set forth in
Annex I to this Agreement;
(b) It is an Institutional Accredited Investor; and
(c) It will not offer or sell the Securities by any form of general
solicitation or general advertising, including but not limited to the methods
described in Rule 502(c) under the Securities Act.
4. (a) The Securities to be purchased by each Purchaser hereunder will be
represented by one or more definitive global Securities in book-entry form which
will be deposited by or on behalf of the Company with The Depository Trust
Company ("DTC") or its designated custodian. The Company will deliver the
Securities to Xxxxxxx, Xxxxx & Co., for the account of each Purchaser, against
payment by or on behalf of such Purchaser of the purchase price therefor by wire
transfer to an account designated by the Company, in Federal (same day) funds,
by causing DTC to credit the Securities to the account of Xxxxxxx, Sachs & Co.
at DTC. The Company will cause the certificates representing the Securities to
be made available to Xxxxxxx, Xxxxx & Co. for checking at least twenty-four
hours prior to the Time of Delivery (as defined below) at the office of DTC or
its designated custodian (the "Designated Office"). The time and date of such
delivery and payment for the Firm Securities shall be 9:30 a.m., New York City
time, on November 17, 1997 or such other time and date as Xxxxxxx, Sachs & Co.
and the Company may agree upon in writing and with respect to the Optional
Securities, 9:30 a.m., New York City time, on the date specified by Xxxxxxx,
Xxxxx & Co. in writing, or such other time and date as Xxxxxxx, Sachs & Co. and
the Company may agree upon in writing. Such time and date for delivery of the
Firm Securities is herein called the "First Time of Delivery" and such time and
date for delivery of the Optional Securities, if not the First Time of Delivery,
is herein called the "Second Time of Delivery," and each such time and date for
delivery is herein called the "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross-receipt
for the Securities and any additional documents requested by the Purchasers
pursuant to Section 7(h) hereof, will be delivered at such time and date at the
offices of Ropes & Xxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000-0000 (the "Closing
Location"), and the Securities will be delivered at the Designated Office, all
at such Time of Delivery. A meeting will be held at the Closing Location at
10:00 a.m., New York City time, on the New York Business Day next preceding such
Time of Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 4, "New York Business Day"
shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
5. The Company agrees with each of the Purchasers:
(a) To prepare the Offering Circular in a form reasonably acceptable to you;
to make no amendment or any supplement to the Offering Circular which shall be
disapproved by you in your reasonable judgment promptly after reasonable notice
thereof; and to furnish you with copies thereof;
(b) Promptly from time to time to take such action as is required under the
Registration Rights Agreement to qualify the Securities and the shares of Stock
issuable upon conversion of the Securities for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Securities, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction or take any action that would subject it
to taxation in any jurisdiction where it is not so subject;
(c) To furnish the Purchasers with four copies of the Offering Circular and
each amendment or supplement thereto signed by an authorized officer of the
Company with the independent accountants' report(s) in the Offering Circular,
and any amendment or supplement containing amendments to the financial
statements covered by such report(s), signed by the accountants, and additional
copies thereof in such quantities as you may from time to time reasonably
request, and if, at any time prior to the earlier of the expiration of nine
months after the date of the Offering Circular or your completion of the initial
distribution of the Securities, any event shall have occurred as a result of
which the Offering Circular as then amended or supplemented would include an
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 when such Offering Circular is delivered, not misleading,
or, if for any other reason it shall be necessary or desirable during such same
period to amend or supplement the Offering Circular, to notify you and upon your
request to prepare and furnish without charge to each Purchaser and to any
dealer in securities as many copies as you may from time to time reasonably
request of an amended Offering Circular or a supplement to the Offering Circular
which will correct such statement or omission or effect such compliance;
(d) During the period beginning from the date hereof and continuing until
the date 90 days after the date hereof, not to offer, sell, contract to sell or
otherwise dispose of, except as provided hereunder any securities of the Company
that are substantially similar to the Securities or the Stock, including but not
limited to any securities that are convertible into or exchangeable for, or that
represent the right to receive, Stock or any such substantially similar
securities (other than (i) pursuant to employee stock option plans existing on
the date of this Agreement, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of the date of this Agreement (ii) upon
conversion of, and as contemplated by the Registration Rights Agreement with
respect to, the Securities or (iii) any offer, sale, contract to sell or other
disposition by the Company of any shares of Common Stock or any other securities
of the Company in connection with acquisitions, joint ventures, strategic
relationships, lease or other financings, license agreements or similar
transactions (provided that the market value of all such securities issuable
pursuant to this subsection (c) shall not exceed $300 million) without the prior
written consent of Xxxxxxx, Sachs & Co.;
(e) Not to be or become, at any time prior to the expiration of two years
after the Time of Delivery, an open-end investment company, unit investment
trust, closed-end investment company or face-amount certificate company that is
or is required to be registered under Section 8 of the Investment Company Act;
(f) At any time when the Company is not subject to Section 13 or 15(d)
of the Exchange Act, for the benefit of holders from time to time of Securities,
to furnish at its expense, upon request, to holders of Securities and the Stock
issuable upon conversion thereof and prospective purchasers of securities
information (the "Additional Issuer Information") satisfying the requirements of
subsection (d)(4)(i) of Rule 144A under the Securities Act;
(g) To use its reasonable best efforts to cause the Securities to be
eligible for the PORTAL trading system of the National Association of Securities
Dealers, Inc;
(h) To furnish to the holders of the Securities as soon as practicable after
the end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries certified by independent public accountants) and, as
soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the date of the
Offering Circular), consolidated summary financial information of the Company
and its subsidiaries for such quarter in reasonable detail;
(i) During the period of two years after the Time of Delivery (or such
shorter period following the latest date of original issuance of the Securities
after which resales of the Securities may be effected by non-affiliates of the
Company in reliance on paragraph (k) of Rule 144 under the Securities Act, or
any successor provision thereto), the Company will not resell, and will use
reasonable efforts to prevent any of its "affiliates" (as defined in Rule 144
under the Securities Act) from reselling, any of the Securities which constitute
"restricted securities" under Rule 144 that have been reacquired by any of them;
(j) To use the net proceeds received by it from the sale of the Securities
pursuant to this Agreement in the manner specified in the Offering Circular
under the caption "Use of Proceeds" ;
(k) To reserve and keep available at all times, free of preemptive rights,
shares of Stock for the purpose of enabling the Company to satisfy any
obligations to issue shares of Stock upon conversion of the Securities;
(l) Until such time as any Security or any Stock issuable upon conversion
thereof is registered under the Securities Act pursuant to the Registration
Rights Agreement and transferred pursuant to such registration, to include a
legend on the Securities and the Stock issuable upon the conversion thereof to
the effect set forth under "Notice to Investors" in the Offering Circular; and
(m) List the shares of Stock issuable upon conversion of the Securities on
the New York Stock Exchange.
6. The Company covenants and agrees with the several Purchasers that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
issue of the Securities and the shares of Stock issuable upon conversion of the
Securities and all other expenses of the Company in connection with the
preparation, printing and filing of the Offering Circular and any amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Purchasers and dealers; (ii) the cost of printing or producing any Agreement
among Purchasers, this Agreement, the Indenture, the Registration Rights
Agreement, any Blue Sky Memorandum, closing documents (including any
compilations thereof) and any other documents in connection with the offering,
purchase, sale and delivery of the Securities; (iii) all expenses in connection
with the qualification of the Securities and the shares of Stock issuable upon
conversion of the Securities for offering and sale under state securities laws
as provided in Section 5(b) hereof, including the reasonable fees and
disbursements of counsel for the Purchasers in connection with such
qualification and in connection with the Blue Sky surveys; (iv) any fees charged
by securities rating services for rating the Securities; (v) the cost of
preparing the Securities; (vi) the fees and expenses of the Trustee and any
agent of the Trustee and the fees and disbursements of counsel for the Trustee
in connection with the Indenture and the Securities; (vii) any cost incurred in
connection with the designation of the Securities for trading in PORTAL and the
listing of the shares of Stock issuable upon conversion of the Securities; and
(viii) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section. It is understood, however, that, except as provided in this Section,
and Sections 8 and 11 hereof, the Purchasers will pay all of their own costs and
expenses, including the fees of their counsel, transfer taxes on resale of any
of the Securities by them, and any advertising expenses connected with any
offers they may make.
7. The obligations of the Purchasers hereunder, as to the Securities to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) Ropes & Xxxx, counsel for the Purchasers, shall have furnished to you
such opinion or opinions, dated the Time of Delivery, with respect to such
matters as you may reasonably request, and such counsel shall have received such
papers and information as they may reasonably request to enable them to pass
upon such matters;
(b) Xxxxxx Xxxxxxxxxx, general counsel for the Company, shall have furnished
to you his written opinion, dated the Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of Delaware, with corporate
power and authority to own its properties and conduct its business as
described in the Offering Circular;
(ii) The Company has an authorized capitalization as set forth in the
Offering Circular, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and non-assessable;
(iii) To such counsel's knowledge, the Company has been duly qualified
as a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification, except to the extent that the failure to be so qualified or
in good standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole;
(iv) Each Significant Subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation, except to the extent that the
failure to be so qualified or in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole; and
all of the issued shares of capital stock of each Significant Subsidiary
have been duly and validly authorized and issued, are fully paid and
non-assessable, and (except for directors' qualifying shares) are owned
directly or indirectly by the Company, (such counsel being entitled to rely
in respect of the opinion in this clause upon opinions of local counsel and
in respect of matters of fact upon certificates of officers of the Company
or its subsidiaries, provided that such counsel shall state that he believes
that both you and he are justified in relying upon such opinions and
certificates);
(v) To such counsel's knowledge and other than as set forth in the
Offering Circular, there are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which any
property of the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate reasonably be expected to have a material
adverse effect on the current or future consolidated financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole; and, to such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(vi) This Agreement has been duly authorized, executed and delivered by
the Company;
(vii) The issue and sale of the Securities and the performance by the
Company of its obligations under the Securities, the Indenture, the
Registration Rights Agreement and this Agreement with respect to the
Securities and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
is bound or to which any of the property or assets of the Company or any of
its subsidiaries is subject, except for any violation that would not,
individually or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole, nor will such actions result
in any violation of (a) the provisions of the Certificate of Incorporation
or By-laws of the Company or (b) any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their properties
except, as to clause (b), any violation that would not have a material
adverse effect on the ability of the Company to perform its obligations
under this Agreement, the Registration Rights Agreement, the Securities or
the Indenture or to consummate the transactions contemplated hereby or
thereby;
(viii) To such counsel's knowledge, no consent, approval, authorization,
order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Securities or the consummation by the Company of the transactions
contemplated by this Agreement, the Indenture or the Registration Rights
Agreement, except such as may be required under the Securities Act in
connection with the registration of the Securities pursuant to the
Registration Rights Agreement, the qualification of the Indenture under the
Trust Indenture Act at the time of the filing of a registration statement
pursuant to the Registration Rights Agreement, and such consents, approvals,
authorizations, registrations or qualifications (i) as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Purchasers and (ii) the failure of
which to obtain would not have a material adverse effect on the ability of
the Company to perform its obligations under this Agreement, the
Registration Rights Agreement, the Securities or the Indenture or to
consummate the transactions contemplated hereby or thereby;
(ix) The Exchange Act Reports (other than the financial statements and
schedules and other financial information or financial data included
therein, as to which such counsel need express no opinion), at the time they
were filed with the Commission, complied as to form in all material respects
with the requirements of the Exchange Act, and the rules and regulations of
the Commission thereunder;
(x) Except as set forth on Schedule II, to such counsel's knowledge, no
holder of any security of the Company has any right (except as has been
satisfied or waived) to require registration of shares of Common Stock or
any other security of the Company because of the consummation of the
transactions contemplated by this Agreement, the Registration Rights
Agreement and the Indenture.
Such counsel shall also include a statement to the effect that, although
such counsel does not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Offering Circular, such counsel
has no reason to believe that the Offering Circular, as of the date hereof,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading (except that such counsel need
express no view as to the financial statements and other financial information
or financial data included or incorporated by reference therein). With respect
to such statements, such counsel may state that his belief is based upon his
participation in the preparation of the Offering Circular and any amendments or
supplements thereto and documents incorporated therein by reference,
certificates of officers of the Company and of state authorities and discussion
of the contents thereof with officers of the Company, but is without independent
check or verification except as specified.
(c) Mintz, Levin , Cohn, Ferris, Glovsky and Popeo, P.C., counsel for the
Company, shall have furnished to you their written opinion, dated the Time of
Delivery, in form and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of Delaware, with corporate
power and authority to own its properties and conduct its business as
described in the Offering Circular;
(ii) The shares of Stock initially issuable upon conversion of the
Securities have been duly and validly authorized and reserved for issuance
and, when issued and delivered in accordance with the provisions of the
Securities, the Indenture and this Agreement, will be duly and validly
issued and fully paid and non-assessable, and will conform in all material
respects to the description of the Stock contained in the Offering Circular;
(iii) To such counsel's knowledge and other than as set forth in the
Offering Circular, there are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which any
property of the Company or any of its subsidiaries is the subject that are
required to be disclosed in the Company's Exchange Act reports that are not
so disclosed and, to such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others;
(iv) This Agreement has been duly authorized, executed and delivered by
the Company;
(v) The Securities are in the form contemplated by the Indenture, have
been duly authorized and executed by the Company and authenticated by the
Trustee in the manner provided for in the Indenture and when delivered
against the purchase price therefor specified herein, will constitute valid
and legally binding obligations of the Company (subject as to enforceability
to the qualifications in the next paragraph) entitled to the benefits
provided by the Indenture; and the Securities and the Indenture conform in
all material respects to the description thereof in the Offering Circular;
(vi) Each of the Registration Rights Agreement and the Indenture has
been duly authorized, executed and delivered by the Company and constitutes
a valid and legally binding instrument of the Company, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles;
(vii) The issue and sale of the Securities and the performance by the
Company of its obligations under the Securities, the Indenture, the
Registration Rights Agreement and this Agreement with respect to the
Securities and the consummation of the transactions herein and therein
contemplated will not result in any violation of (a) the provisions of the
Certificate of Incorporation or By-laws of the Company or (b) to such
counsel's knowledge, any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their properties except, as to clause
(b), any violation that would not have a material adverse effect on the
ability of the Company to perform its obligations under this Agreement, the
Registration Rights Agreement, the Securities or the Indenture or to
consummate the transactions contemplated hereby or thereby;
(viii) To such counsel's knowledge, no consent, approval, authorization,
order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Securities or the consummation by the Company of the transactions
contemplated by this Agreement, the Indenture or the Registration Rights
Agreement, except such as may be required under the Securities Act in
connection with the registration of the Securities pursuant to the
Registration Rights Agreement, the qualification of the Indenture under the
Trust Indenture Act at the time of the filing of a registration statement
pursuant to the Registration Rights Agreement, and such consents, approvals,
authorizations, registrations or qualifications (i) as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Purchasers and (ii) the failure of
which to obtain would not have a material adverse effect on the ability of
the Company to perform its obligations under this Agreement, the
Registration Rights Agreement, the Securities or the Indenture or to
consummate the transactions contemplated hereby or thereby;
(ix) The statements set forth in the Offering Circular under the caption
"Description of Notes" and "Description of Capital Stock", insofar as they
purport to constitute a summary of the terms of the Securities and the Stock
and under the caption "Certain U.S. Federal Income Tax Consequences",
insofar as they purport to describe the provisions of the laws and documents
referred to therein, fairly summarize such provisions in all material
respects;
(x) Assuming (i) the accuracy of the representations and warranties of
the Company in Sections 1(n) and 1(o) and (ii) the accuracy of the
representations and warranties of the Purchasers in Section 3(b) and the
compliance by the Purchasers with the covenants in Sections 3(a), 3(c) and
Annex I, no registration of the Securities under the Securities Act, and no
qualification of an indenture under the United States Trust Indenture Act of
1939 with respect thereto, is required for the offer, sale and initial
resale of the Securities by the Purchasers in the manner contemplated by
this Agreement; and
(xi) The Company is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act;
Such counsel shall also include a statement to the effect that, although
such counsel does not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Offering Circular, such counsel
has no reason to believe that the Offering Circular, as of the date hereof,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading (except that such counsel need
express no view as to the financial statements and other financial information
or data included or incorporated by reference therein). With respect to such
statements, such counsel may state that its belief is based upon its
participation in the preparation of the Offering Circular and any amendments or
supplements thereto and documents incorporated therein by reference,
certificates of officers of the Company and of state authorities and discussion
of the contents thereof with officers of the Company, but is without independent
check or verification except as specified.
(d) On the date of the Offering Circular prior to the execution of this
Agreement and also at each Time of Delivery, Ernst & Young LLP shall have
furnished to you a letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, to the effect set forth in
Annex II hereto;
(e) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Offering Circular any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Offering Circular, and (ii) since the
respective dates as of which information is given in the Offering Circular there
shall not have been any change in the capital stock or the Stock, including but
not limited to any securities that are convertible into or exchangeable for, or
that represent the right to receive, Stock or any such substantially similar
securities (other than (i) pursuant to employee stock option plans existing on
the date of this Agreement, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of the date of this Agreement (ii) upon
conversion of, and as contemplated by the Registration Rights Agreement with
respect to the Securities or (iii) as permitted pursuant to paragraph 5(d)(iii)
hereof) or long-term debt of the Company or any of its subsidiaries (which, for
purposes hereof, shall not include any increase in, or draw down under, the
Company's credit facility with The Chase Manhattan Bank, the entering into of
any lease financings or the entering into of any mortgage on the Company's real
property) or any change, or any development involving a prospective change, in
or affecting the general affairs, management, financial position, stockholders'
equity or results of operations of the Company and its subsidiaries, otherwise
than as set forth or contemplated in the Offering Circular, the effect of which,
in any such case described in Clause (i) or (ii) is in the judgment of the
Representatives, so material and adverse as to make it impracticable or
inadvisable to proceed with the offering or the delivery of the Securities being
delivered at such Time of Delivery on the terms and in the manner contemplated
in this Agreement and in the Offering Circular;
(f) On or after the date hereof (i) no downgrading shall have occurred in
the rating accorded the Company's debt securities by any "nationally recognized
statistical rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company's
debt securities;
(g) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a suspension or material
limitation in trading in the Company's securities on the New York Stock
Exchange; (iii) a general moratorium on commercial banking activities declared
by either Federal or New York State authorities; or (iv) the outbreak or
escalation of hostilities involving the United States or the declaration by the
United States of a national emergency or war, if the effect of any such event
specified in this Clause (iv) in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the offering or the delivery of the
Securities on the terms and in the manner contemplated in the Offering Circular;
(h) The Securities have been designated for trading on PORTAL;
(i) Each Lock-up Agreement shall have been duly executed and delivered to
the Company and you and there shall have occurred no breach of any Lock-up
Agreement; and
(j) The Company shall have furnished or caused to be furnished to you at
such Time of Delivery certificates of officers of the Company satisfactory to
you as to the accuracy of the representations and warranties of the Company
herein at and as of such Time of Delivery, as to the performance by the Company
of all of its obligations hereunder to be performed at or prior to such Time of
Delivery, as to the matters set forth in subsection (d) of this Section and as
to such other matters as you may reasonably request.
8. (a) The Company will indemnify and hold harmless each Purchaser
against any losses, claims, damages or liabilities, joint or several, to which
such Purchaser may become subject, under the Securities Act or otherwise, inso
far as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Offering Circular, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact necessary to make the
statements therein not misleading, and will reimburse each Purchaser for any
reasonable legal or other expenses reasonably incurred by such Purchaser in con
nection with investigating or defending any such action or claim 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 or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in the Offering Circular or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Purchaser by or on behalf of
Xxxxxxx, Xxxxx & Co. expressly for use therein.
(b) Each Purchaser will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in the Offering Circular or the Offering Circular, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in Offering Circular or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of Xxxxxxx, Sachs & Co. expressly for use therein; and
will reimburse the Company for any reasonable legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any such
action or claim as such expenses are incurred.
(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 the indemnifying party in writing of the com
mencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection (a) or (b). In case any such action shall
be brought against any indemnified party and it shall promptly notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such indem
nified party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party under such subsection for
any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the written consent of the indemnified party (which consent shall
not be unreasonably withheld), effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or threatened
action or claim in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified party is an actual or potential
party to such action or claim) unless such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to act, by
or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Purchasers on the other from the
offering of the Securities. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company on the one
hand and the Purchasers on the other in connection with the statements or omis
sions which resulted in such losses, claims, damages or liabilities (or actions
in respect thereof), as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the Purchasers
on the other shall be deemed to be in the same proportion as the total net pro
ceeds from the offering (before deducting expenses) received by the Company bear
to the total underwriting discounts and commissions received by the Purchasers,
in each case as set forth in the Offering Circular. 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 information supplied by the Company on the one hand
or the Purchasers on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Purchasers agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were determined by pro
rata allocation (even if the Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this
subsection (d), no Purchaser shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities under
written by it and distributed to investors were offered to investors exceeds the
amount of any damages which such Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Purchasers' obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend
upon the same terms and conditions, to each person, if any, who controls any
Purchaser within the meaning of the Securities Act; and the obligations of the
Purchasers under this Section 8 shall be in addition to any liability which the
respective Purchasers may otherwise have and shall extend upon the same terms
and conditions, to each officer and director of the Company and to each person,
if any, who controls the Company within the meaning of the Securities Act.
9. (a) If any Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Securities on the terms contained herein. If within thirty-six
hours after such default by any Purchaser you do not arrange for the purchase of
such Securities, then the Company shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties satis
factory to you to purchase such Securities on such terms. In the event that,
within the respective prescribed periods, you notify the Company that you have
so arranged for the purchase of such Securities, or the Company notifies you
that it has so arranged for the purchase of such Securities, you or the Company
shall have the right to postpone such Time of Delivery for a period of not more
than seven days, in order to effect whatever changes may thereby be made
necessary in the Offering Circular, or in any other documents or arrangements,
and the Company agrees to prepare promptly any amendments to the Offering
Circular which in your opinion may thereby be made necessary. The term
"Purchaser" as used in this Agreement shall include any person substituted under
this Section with like effect as if such person had originally been a party to
this Agreement with respect to such Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a) above, the aggregate principal amount of such
Securities which remains unpurchased does not exceed one-eleventh of the
aggregate principal amount of all the Securities to be purchased at such Time of
Delivery, then the Company shall have the right to require each non-defaulting
Purchaser to purchase the principal amount of Securities which such Purchaser
agreed to purchase hereunder at such Time of Delivery and, in addition, to
require each non-defaulting Purchaser to purchase its pro rata share (based on
the principal amount of Securities which such Purchaser agreed to purchase
hereunder) of the Securities of such defaulting Purchaser or Purchasers for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Purchaser from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a) above, the aggregate principal amount of Securities
which remains unpurchased exceeds one-eleventh of the aggregate principal amount
of all the Securities to be purchased at such Time of Delivery, or if the
Company shall not exercise the right described in subsection (b) above to
require non-defaulting Purchasers to purchase Securities of a defaulting
Purchaser or Purchasers, then this Agreement (or, with respect to the Second
Time of Delivery, the obligations of the Purchasers to purchase and of the
Company to sell the Optional Securities) shall thereupon terminate, without
liability on the part of any non-defaulting Purchaser or the Company, except for
the expenses to be borne by the Company and the Purchasers as provided in
Section 6 hereof and the indemnity and contribution agreements in Section 8
hereof; but nothing herein shall relieve a defaulting Purchaser from liability
for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Purchasers, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Purchaser or any controlling person of any Purchaser, or the Company, or
any officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9 hereof, or
if the sale of the Securities shall not have been consummated because the
condition in Section 7(f) shall not have been satisfied or because the condition
in Section 7(a) shall not have been satisfied at a time when all other
conditions in Section 7 shall have been satisfied, the Company shall not then be
under any liability to any Purchaser except as provided in Sections 6 and 8
hereof; but, if for any other reason, any Securities are not delivered by or on
behalf of the Company as provided herein, the Company will reimburse the
Purchasers through you for all out-of-pocket expenses approved in writing by
you, including fees and disbursements of counsel, reasonably incurred by the
Purchasers in making preparations for the purchase, sale and delivery of the
Securities, but the Company shall then be under no further liability to any
Purchaser except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or given
by you jointly or by Xxxxxxx, Xxxxx & Co. on behalf of you as the
representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Xxxxxxx,
Sachs & Co., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the Offering
Circular, Attention: Secretary; provided, however, that any notice to a
Purchaser pursuant to Section 8(c) hereof shall be delivered or sent by mail,
telex or facsimile transmission to such Purchaser at its address set forth in
its Purchasers' Questionnaire, or telex constituting such Questionnaire, which
address will be supplied to the Company by you upon request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Purchasers, the Company and, to the extent provided in Sections 8 and 10
hereof, the officers and directors of the Company and each person who controls
the Company or any Purchaser, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Purchaser shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
If the foregoing is in accordance with your understanding, please sign and
return to us seven (7) counterparts hereof, and upon such acceptance hereof by
you, on behalf of each of the Purchasers, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Purchasers and the
Company.
Very truly yours,
AMERICA ONLINE, INC.
By: /S/LENNERT J. LEADER
Name: Lennert J. Leader
Title: Senior Vice President,
Chief Financial Officer, Treasurer,
Chief Accounting Officer and
Assistant Secretary
Accepted as of the date hereof:
Xxxxxxx, Xxxxx & Co.
BT Alex. Xxxxx
Xxxxxx Brothers Inc.
Xxxxx & Company
By: /S/XXXXXXX, XXXXX & CO.
(Xxxxxxx, Sachs Co.)
SCHEDULE I
Aggregate
Total Principal Amount
Aggregate of Optional
Amount of Securities
Firm to be
Securities Purchased if
to be Maximum Option
Purchased Exercised
Xxxxxxx, Xxxxx & Co. $280,001,000 $40,001,000
BT Alex. Xxxxx. 23,333,000 3,333,000
Xxxxxx Brothers Inc 23,333,000 3,333,000
Xxxxx & Company 23,333,000 3,333,000
Total $350,000,000 $50,000,000
SCHEDULE II
EXISTING REGISTRATION RIGHTS
REGISTRATION RIGHTS
NAME OF ACQUISITION/ REGISTRABLE SHARES*
TRANSACTION
2Market, Inc. 14,000
Bertelsmann AG 3,609,000
Extreme Fans, Inc. 33,000
The Grandstand Sports 1,000
Services, Inc.
Xxxxxxx-Xxxxx Company 1,486,000
Xxxx Xxxxx 363,000
LightSpeed Media, Inc. 17,000
Mitsui 396,000**
Sprint 3,600,000
TOTAL 9,519,000
_________
*Rounded to nearest 1,000 shares.
**Estimated number of Common Stock shares issuable upon conversion of 1,000
shares of Series B Convertible Preferred Stock (as of September 30).
SCHEDULE III
LOCK-UP AGREEMENT SIGNATURES
Xxxxxx Xxxxxxx
Xxxxx Xxxx
Xxxxxxx Xxxxxxx
Xxxxxxx Xxxx
Xxxxx Xxxxxxxx
Xxxxxx Xxxxxxxxxxx
Miles Xxxxxxxx
Xxxxxxxxx Xxxx
Xxxxxxx Xxxxxx
Xxxxx Xxxxxx
Xxxxxxx Leader
Xxxxxxxx Leonsis
Xxxxxxx Xxxxxx
Xxxxxx Xxxxxxxxxx
Xxxxxx Xxxxxxx
Xxxx Xxxxxxx
Xxxxxx Xxxxxxxxxx
ANNEX I
(1) The Securities have not been and will not be registered under the Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Regulation S under
the Act or pursuant to an exemption from the registration requirements of the
Act. Each Purchaser represents that it has offered and sold the Securities, and
will offer and sell the Securities (i) as part of their distribution at any time
and (ii) otherwise until 40 days after the later of the commencement of the
offering and the Time of Delivery, only in accordance with Rule 903 of
Regulation S or, Rule 144A under the Act. Accordingly, each Purchaser agrees
that neither it, its affiliates nor any persons acting on its or their behalf
has engaged or will engage in any directed selling efforts with respect to the
Securities, and it and they have complied and will comply with the offering
restrictions requirement of Regulation S. Each Purchaser agrees that, at or
prior to confirmation of sale of Securities (other than a sale pursuant to Rule
144A), it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Securities from it
during the restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (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 their 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 (or
Rule 144A if available) under the Securities Act. Terms used above have
the meaning given to them by Regulation S."
Terms used in this paragraph have the meanings given to them by Regulation S.
(2) Notwithstanding the foregoing, Securities in registered form may be
offered, sold and delivered by the Purchasers in the United States and to
U.S. persons pursuant to Section 3 of this Agreement without delivery of the
written statement required by paragraph (1) above.
(3) Each Purchaser further represents and agrees that (i) it has not
offered or sold and prior to the date six months after the date of issue of the
Securities will not offer or sell any Securities to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (b) it
has complied, and will comply, with all applicable provisions of the Financial
Services Act of 1986 of Great Britain with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United Kingdom,
and (c) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issuance of
the Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Xxx 0000 (Investment Advertisements) (Exemptions) Order 1996
of Great Britain or is a person to whom the document may otherwise lawfully be
issued or passed on.
(4) Each Purchaser agrees that it will not offer, sell or deliver any of
the Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action is required to permit
its purchase and resale of the Securities in such jurisdictions. Each Purchaser
understands that no action has been taken to permit a public offering in any
jurisdiction outside the United States where action would be required for such
purpose. Each Purchaser agrees not to cause any advertisement of the Securities
to be published in any newspaper or periodical or posted in any public place and
not to issue any circular relating to the Securities, except in any such case
with Xxxxxxx, Sachs & Co.'s express written consent and then only at its own
risk and expense.
ANNEX II
Pursuant to Section 7(d) of the Purchase Agreement, the accountants shall
furnish letters to the Purchasers to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Securities
Exchange Act of 1934 (the "Exchange Act") and the applicable published rules
and regulations thereunder;
(ii) In our opinion, the consolidated financial statements and financial
statement schedules audited by us and included in the Offering Circular
comply as to form in all material respects with the applicable requirements
of the Exchange Act and the related published rules and regulations;
(iii) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company for
the five most recent fiscal years included in the Offering Circular agrees
with the corresponding amounts (after restatements where applicable) in the
audited consolidated financial statements for such five fiscal years;
(iv) On the basis of limited procedures not constituting an audit in
accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information referred
to below, a reading of the latest available interim financial statements of
the Company and its subsidiaries, inspection of the minute books of the
Company and its subsidiaries since the date of the latest audited financial
statements included in the Offering Circular, inquiries of officials of the
Company and its subsidiaries responsible for financial and accounting
matters and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe that:
(A) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Offering Circular are not in conformity with generally
accepted accounting principles applied on the basis substantially
consistent with the basis for the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Offering Circular;
(B) any other unaudited income statement data and balance sheet
items included in the Offering Circular do not agree with the
corresponding items in the unaudited consolidated financial statements
from which such data and items were derived, and any such unaudited
data and items were not determined on a basis substantially consistent
with the basis for the corresponding amounts in the audited
consolidated financial statements included in the Offering Circular;
(C) the unaudited financial statements which were not included
in the Offering Circular but from which were derived any unaudited
condensed financial statements referred to in Clause (A) and any
unaudited income statement data and balance sheet items included in
the Offering Circular and referred to in Clause (B) were not
determined on a basis substantially consistent with the basis for the
audited consolidated financial statements included in the Offering
Circular;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Offering Circular do not comply as to form
in all material respects with the applicable accounting requirements
or the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest financial statements
included in the Offering Circular or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any decreases
in consolidated net current assets or stockholders' equity or other
items specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included in the Offering
Circular except in each case for changes, increases or decreases which
the Offering Circular discloses have occurred or may occur or which
are described in such letter; and
(F) from the period from the date of the latest financial
statements included in the Offering Circular to the specified date
referred to in Clause (E) there were any decreases in consolidated net
revenues or operating profit or the total or per share amounts of
consolidated net income or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Representatives, except in each case for
decreases or increases which the Offering Circular discloses have
occurred or may occur or which are described in such letter; and
(v) In addition to the examination referred to in their
report(s) included in the Offering Circular and the limited procedures,
inspection of minute books, inquiries and other procedures referred to in
paragraphs (iii) and (iv) above, they have carried out certain specified
procedures, not constituting an audit in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages and
financial information specified by the Representatives, which are derived
from the general accounting records of the Company and its subsidiaries,
which appear in the Offering Circular, and have compared certain of such
amounts, percentages and financial information with the accounting records
of the Company and its subsidiaries and have found them to be in agreement.
