RURAL CELLULAR CORPORATION
(a Minnesota corporation)
$125,000,000
9 5/8% Senior Subordinated Notes due 2008
125,000 shares of
11 3/8% Senior Exchangeable Preferred Stock
PURCHASE AGREEMENT
May 7, 1998
TD Securities (USA) Inc.
NationsBanc Xxxxxxxxxx Securities LLC
c/o TD Securities (USA) Inc.
BancBoston Securities Inc.
c/o TD Securities (USA) Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Rural Cellular Corporation, a Minnesota corporation (the "ISSUER")
proposes to issue and sell to TD Securities (USA) Inc. ("TD SECURITIES"),
NationsBanc Xxxxxxxxxx Securities LLC and BancBoston Securities Inc.
(collectively, the "INITIAL PURCHASERS") (i) $125,000,000 aggregate principal
amount of its 9 5/8% Senior Subordinated Notes due 2008 (the "SENIOR
SUBORDINATED NOTES") and (ii) 125,000 shares of 11 3/8% Senior Exchangeable
Preferred Stock, liquidation preference $1,000 per share (including
additional shares payable in lieu of cash dividends, the "EXCHANGEABLE
PREFERRED STOCK"). The Senior Subordinated Notes are to be issued pursuant
to an indenture to be dated on or about May 14, 1998 (the "NOTES INDENTURE")
between the Issuer and Norwest Bank Minnesota, National Association, as
trustee (the "NOTES TRUSTEE"). The Exchangeable Preferred Stock is to be
issued pursuant to a certificate of designation (the "CERTIFICATE OF
DESIGNATION") of the Issuer with respect to such stock. Subject to certain
conditions, the Exchangeable Preferred Stock is exchangeable in whole, but
not in part, at the option of the Issuer, for the Issuer's 11 3/8% Exchange
Debentures due May 15, 2010 (including additional debentures payable in lieu
of cash interest, the "EXCHANGE DEBENTURES") which will be issued pursuant to
an indenture (the "EXCHANGE INDENTURE") which will be entered into at the
time of issuance thereof between the Issuer and Norwest Bank Minnesota,
National Association or such other
corporate trustee as the Issuer may select, as trustee (the "DEBENTURES
TRUSTEE" and together with the Notes Trustee, the "TRUSTEES"). The Senior
Subordinated Notes, together with the Exchangeable Preferred Stock or the
Exchange Debentures, if issued in exchange for the Exchangeable Preferred
Stock, are referred to herein as the "Securities." The Securities, the Notes
Indenture, the Exchange Indenture and the Certificate of Designation are more
fully described in the Offering Memorandum (as hereinafter defined).
Capitalized terms used herein and not otherwise defined herein have the
respective meanings specified in the Offering Memorandum.
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), in reliance on exemptions therefrom. The Issuer has prepared
a preliminary offering memorandum, dated April 24, 1998 (such preliminary
offering memorandum being hereinafter referred to as the "PRELIMINARY OFFERING
MEMORANDUM"), and a final offering memorandum, dated the date hereof (such final
offering memorandum, in the form first furnished to the Initial Purchasers for
use in connection with the offering of the Securities, being hereinafter
referred to as the "OFFERING MEMORANDUM"), each setting forth information
regarding the Issuer and the Securities. The Issuer hereby confirms that it has
authorized the use of the Preliminary Offering Memorandum and the Offering
Memorandum for the offering and resale of the Securities to the persons referred
to in clauses (i) and (ii) of the next paragraph.
The Issuer understands that the Initial Purchasers propose to make an
offering of the Securities on the terms set forth in the Offering Memorandum and
this Agreement, as soon as the Initial Purchasers deem advisable after this
Agreement has been executed and delivered, (i) to persons in the United States
whom the Initial Purchasers reasonably believe to be qualified institutional
buyers ("QUALIFIED INSTITUTIONAL BUYERS") as defined in Rule 144A under the
Securities Act, as such rule may be amended from time to time ("RULE 144A"), in
transactions complying with Rule 144A and/or (ii) to non-U.S. persons in
offshore transactions, as defined in Regulation S ("REGULATION S") under the
Securities Act, in compliance with Regulation S. The Issuer also understands
that, pursuant to the Communications Act of 1934, as amended, the Exchangeable
Preferred Stock is subject to restrictions on alien ownership and the
requirement of prior Federal Communications Commission ("FCC") approval of
transfers of control, as further described in the Offering Memorandum.
The holders of Senior Subordinated Notes and the holders of the
Exchangeable Preferred Stock will be entitled to the benefits of registration
rights agreements (collectively, the "REGISTRATION RIGHTS AGREEMENTS").
Pursuant to the Registration Rights Agreements, the Issuer will agree to file
with the Securities and Exchange Commission (the "COMMISSION") under the
circumstances set forth therein, either (i) a registration statement under the
Securities Act registering the Exchange Notes and the Exchange Preferred Stock
(as such terms are defined in the Registration Rights Agreements; collectively,
the "Exchange Securities") to be offered in exchange for the Senior
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Subordinated Notes and Exchangeable Preferred Stock and use its best efforts
to cause such registration statement to be declared effective or (ii) under
certain circumstances set forth therein, a shelf registration statement
pursuant to Rule 415 under the Securities Act relating to the resale of the
Senior Subordinated Notes and Exchangeable Preferred Stock, and use its best
efforts to cause such shelf registration statement to be declared effective.
If necessary, separate registration statements may be filed for the Senior
Subordinated Notes and the Exchangeable Preferred Stock, respectively.
As soon as practicable following the Closing Time, the Issuer expects
to consummate its purchase of (i) substantially all of the assets of Atlantic
Cellular Company, L.P. ("ACC") and one of its subsidiaries (the "ATLANTIC
ACQUISITION") and (ii) all of the issued and outstanding capital stock of
Western Maine Cellular, Inc. (collectively, the "PENDING ACQUISITIONS");
PROVIDED, that consummation of each of the Pending Acquisitions is subject to
(A) various regulatory approvals and consents, including the consent of the
Federal Communications Commission (the "FCC") and, in the case of the Atlantic
Acquisition, expiration or early termination of the waiting period under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR ACT")
and (B) fulfillment of all of the other conditions specified in the applicable
transaction documents.
The Issuer has an existing credit facility pursuant to a certain Loan
Agreement, dated as of May 1, 1997, among the Issuer, The Toronto-Dominion Bank,
Bank Boston, N.A., St. Xxxx Bank for Cooperatives, CoBank, Fleet National Bank,
First National Bank of Maryland, Societe Generale, New York Branch and Xxxxxx
Bank Ltd., New York Branch (as amended to date, the "EXISTING CREDIT FACILITY").
In connection with the transactions contemplated hereby and the Pending
Acquisitions, the Issuer has (i) entered into amendments to its Existing Credit
Facility and (ii) received a commitment pursuant to which an affiliate of TD
Securities would provide financing under a new credit facility (the "NEW CREDIT
FACILITY"), all as described in the Offering Memorandum (the Existing Credit
Facility and the New Credit Facility are collectively referred to herein as the
"CREDIT FACILITY").
This Agreement, the Notes Indenture, the Certificate of Designation,
the Exchange Indenture, the Senior Subordinated Notes, the Exchangeable
Preferred Stock, the Exchange Debentures and the Registration Rights Agreements
are sometimes collectively referred to herein as the "TRANSACTION DOCUMENTS."
Section 1. REPRESENTATIONS AND WARRANTIES. (a) The Issuer represents
and warrants to and agrees with the Initial Purchasers as of the date hereof and
as of the Closing Time (as defined in Section 2(b)) as follows:
(i) SIMILAR OFFERINGS. The Issuer and its affiliates (as defined in
Rule 501(b) under the Securities Act) have not, directly or indirectly
through any agent (provided that no representation is made as to the
Initial Purchasers, their affiliates
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or any person acting on their behalf), solicited any offer to buy, sold
or offered to sell (or otherwise negotiated in respect of), and will
not, directly or indirectly, solicit any offer to buy, sell or offer to
sell (or otherwise negotiate in respect of), in the United States or to
any United States citizen or resident, any security (as defined in the
Securities Act) (A) which is or would be integrated with the sale of the
Securities in a manner that would require the Securities to be
registered under the Securities Act or (B) in a manner that would
require the registration of the Securities under the Securities Act.
(ii) OFFERING MEMORANDUM. (A) GENERAL. As of their respective dates
and as of the Closing Time, none of the Preliminary Offering Memorandum,
(1) the Offering Memorandum or any amendment or supplement thereto will
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 under which they were made, not misleading, (2) all
reasonable inquiries have been made to ascertain such facts and to verify
the accuracy of all such information and statements and (3) any opinions
and intentions expressed in the Preliminary Offering Memorandum, the
Offering Memorandum or any amendment or supplement thereto with respect to
the Issuer and its subsidiaries are honestly held and are based on
reasonable assumptions; except that this representation and warranty does
not apply to untrue statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Issuer by the
Initial Purchasers through TD Securities expressly for use in the
Preliminary Offering Memorandum, the Offering Memorandum or any amendment
or supplement thereto.
(B) DOCUMENTS. There are no contracts or documents of a character
that would be required to be described in the Offering Memorandum, if it
were a prospectus filed as part of a registration statement on Form S-1
under the Securities Act, that are not described as would be so required.
All such contracts which are so described in the Offering Memorandum to
which the Issuer or any of its subsidiaries is a party have been duly
authorized, executed and delivered by the Issuer or its subsidiaries,
constitute valid and binding agreements of the Issuer or such subsidiary
and are enforceable against the Issuer or such subsidiary in accordance
with the terms thereof except as enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding inequity or at law).
(C) CERTAIN TRANSACTIONS. No relationship, direct or indirect,
exists between or among the Issuer or any of its subsidiaries, on the one
hand, and the directors, officers, securityholders, customers or suppliers
of the Issuer or any of its subsidiaries, on the other hand, that is of a
character that would be required to be
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described in the Offering Memorandum if it were a prospectus filed as
part of a registration statement on Form S-1 under the Securities Act,
that is not described as would be so required.
(D) DATA. The statistical and market-related data included in the
Offering Memorandum are based on or derived from sources which the Issuer
believes to be reliable and accurate in all material respects or represents
the Issuer's good faith estimates that are made on the basis of data
derived from such sources.
(iii) NO LISTED SECURITIES. There are no debt securities or
preferred stock of the Issuer 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. The Issuer has been advised by the National Association of
Securities Dealers, Inc. (the "NASD") Private Offerings, Resales and
Trading through Automated Linkages ("PORTAL") Market that the Securities
have been designated PORTAL eligible securities in accordance with the
rules and regulations of the NASD.
(iv) INDEPENDENT ACCOUNTANTS. Xxxxxx Xxxxxxxx LLP, which is reporting
upon the audited financial statements and related notes of the Issuer
included in the Offering Memorandum and the audited financial statement and
related notes of Unity Cellular Systems, Inc. ("UNITY") included in the
Offering Memorandum, is an independent public accountant with respect to
the Issuer and its subsidiaries and, to the Issuer's knowledge, with
respect to Unity and its subsidiary, in accordance with the provisions of
the Securities Act and the rules and regulations of the Commission
thereunder. To the Issuer's knowledge, KPMG Peat Marwick LLP, which is
reporting upon the audited financial statements and related notes of ACC
included in the Offering Memorandum, is an independent public accountant
with respect to ACC and its subsidiaries in accordance with the provisions
of the Securities Act and the rules and regulations of the Commission
thereunder.
(v) ACCOUNTING CONTROLS; RECEIPT AND PAYMENT OF FUNDS. The Issuer
and its subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific authorization,
(B) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets, (C) access to assets
is permitted only in accordance with management's general or specific
authorization and (D) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. The Issuer and its subsidiaries
have not made, and, to the knowledge of the Issuer, no employee or agent of
the Issuer or any of its subsidiaries has made, any payment of the Issuer's
funds or its subsidiaries' funds or received or retained
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any funds in violation of any applicable law, regulation or rule or that
would be required to be disclosed in the Offering Memorandum if it were
a prospectus filed as part of a registration statement on Form S-1 under
the Securities Act. Neither the Issuer nor any of its subsidiaries, nor
any director, officer, agent, employee or other person associated with
or acting on behalf of the Issuer or any of its subsidiaries, has used
any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity; made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977;
or made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.
(vi) FINANCIAL STATEMENTS. The financial statements included in the
Offering Memorandum, together with the related notes, present fairly (A)
the financial position of the Issuer and its consolidated subsidiaries as
of the dates indicated and (B) the results of operations and cash flows of
the Issuer and its consolidated subsidiaries, in each case for the periods
specified. Such financial statements have been prepared in conformity with
generally accepted accounting principles as applied in the United States,
applied on a consistent basis throughout the periods involved, subject, in
the case of unaudited financial statements, to normal year-end adjustments
which shall not be materially adverse to the business, results of
operations, financial conditions or properties of the Issuer and its
consolidated subsidiaries, taken as a whole. The selected financial data
included in the Offering Memorandum present fairly the information shown
therein and have been compiled on a basis consistent with that of the
audited consolidated financial statements included in the Offering
Memorandum. The pro forma financial statements and related notes thereto
and other pro forma financial information included in the Offering
Memorandum present fairly the information shown therein, have been prepared
in accordance with the applicable requirements of Regulation S-X
promulgated under the Securities Act, have been prepared in accordance with
the Commission's rules and guidelines with respect to pro forma financial
statements, and have been properly compiled on the pro forma bases
described therein and, in the opinion of the Issuer, the assumptions used
in the preparation thereof are made on a reasonable basis and the
adjustments used therein are appropriate to give effect to the transactions
or circumstances referred to therein.
(vii) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Offering Memorandum, except
as otherwise stated therein or contemplated thereby, there has not been
(A) any material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Issuer or
its subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business (a "MATERIAL ADVERSE EFFECT"), (B) any
transaction entered into by the Issuer or any of its subsidiaries other
6
than in the ordinary course of business or (C) any dividend or distribution
of any kind declared, paid or made by the Issuer or any of its subsidiaries
on any class of their respective membership interests, partnership
interests or capital stock, as the case may be.
(viii) ORGANIZATION AND GOOD STANDING OF THE ISSUER. The Issuer is
a corporation duly organized, validly existing and in good standing under
the laws of the State of Minnesota, and has all requisite corporate power
and authority under such laws to (A) own, lease and operate its properties
and conduct its business as described in the Offering Memorandum and (B)
enter into and perform its obligations under Transaction Documents. The
Issuer is duly qualified to transact business and is in good standing in
each other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except to the extent that the failure to so qualify or be in good standing
would not have a Material Adverse Effect.
(ix) SUBSIDIARIES. SCHEDULE 1(a)(ix) attached hereto sets forth
each of the Issuer's subsidiaries (the "SUBSIDIARIES") and its ownership
thereof on the date hereof. Each of such Subsidiaries has been duly
organized or formed, as the case may be, and is validly existing and in
good standing as a corporation, limited liability company or limited
partnership, as the case may be, under the laws of the jurisdiction of
its organization or formation, as the case may be, and each such entity
has all requisite corporate, limited liability company or partnership
power and authority, as the case may be, under such laws to own, lease
and operate its properties and conduct its business as now conducted
and, if applicable, as described in the Offering Memorandum. Each of
such Subsidiaries, is duly qualified to transact business and is in good
standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except to the extent that the failure to so
qualify or be in good standing would not have a Material Adverse Effect.
(x) CAPITALIZATION. (a) THE ISSUER. The actual capitalization
of the Issuer at December 31, 1997, is as set forth in the Offering
Memorandum under the caption "Capitalization" in the "Actual" column.
All of the outstanding capital stock of the Issuer has been duly
authorized and validly issued, is fully-paid and nonassessable and was
not issued in violation of any preemptive or similar rights (whether
provided contractually or pursuant to any of its articles of
incorporation, by-laws or other organizational documents), and was
issued free and clear of all interests, mortgages, deeds of trust,
pledges, liens, encumbrances or claims (collectively, "ENCUMBRANCES"),
including restrictions on transferability or voting of such capital
stock, except as set forth in the Offering Memorandum.
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(b) SUBSIDIARIES. All of the outstanding capital stock of the
Subsidiaries owned by the Issuer as disclosed on SCHEDULE 1(a)(ix) is owned
directly by the Issuer, free and clear of any Encumbrances, including
restrictions on transferability or voting of such capital stock, has been
duly authorized and validly issued, is fully-paid and nonassessable and was
not issued to or acquired by the Issuer in violation of any preemptive or
similar rights of any holder of any interest in such Subsidiaries (whether
provided contractually or pursuant to any of its articles of incorporation,
by-laws or other organizational documents) except as set forth in the
Offering Memorandum. All offers and sales by the Issuer of the Issuer's
securities which have taken place within the past three years were at all
relevant times exempt from the registration requirements of the Securities
Act or duly registered under the Securities Act, and were duly registered
or the subject of an available exemption from the requirements of
applicable state securities laws. Immediately after the filing of the
Certificate of Designation, the Issuer will have a duly authorized
capitalization of 15,000,000 shares of Class A Common Stock, par value $.01
per share, 5,000,000 shares of Class B Common Stock, par value $.01 per
share, 450,000 shares of Exchangeable Preferred Stock (which may be issued
in two separate classes of stock designated as Class A Exchangeable
Preferred Stock and Class B Exchangeable Preferred Stock) and 9,550,000
undesignated shares of capital stock, par value $.01 per share.
(xi) AUTHORIZATION OF THIS AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Issuer, and constitutes a valid
and binding agreement of the Issuer enforceable against the Issuer in
accordance with its terms, except as (A) enforcement thereof may be limited
by bankruptcy, insolvency including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or in law)
and (B) the enforceability of any right to indemnification provided herein
violates the public policy of any law, rule or regulation.
(xii) AUTHORIZATION OF THE INDENTURES. Each of the Notes Indenture
and the Exchange Indenture have been duly authorized by the Issuer, and
when duly executed and delivered by the Issuer and the other parties
thereto in accordance with the terms thereof, will constitute a valid
and binding agreement of the Issuer enforceable against the Issuer in
accordance with its terms, except as (A) enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law) and (B) the enforceability of any right
8
to indemnification or waiver of usury provided therein violates the public
policy of any law, rule or regulation.
(xiii) AUTHORIZATION OF THE SENIOR SUBORDINATED NOTES. The
issuance, execution and delivery of the Senior Subordinated Notes and
the Exchange Notes have been duly authorized by the Issuer and, at the
Closing Time, the Senior Subordinated notes will have been duly executed
by the Issuer. When executed, authenticated, issued and delivered in
the manner provided for in the Notes Indenture and delivered against
payment of the purchase price therefor as provided in this Agreement,
the Senior Subordinated Notes (A) will constitute valid and binding
obligations of the Issuer, enforceable against the Issuer in accordance
with their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law) and (B) will be in the form contemplated by, and
entitled to the benefits of, the Notes Indenture. The Exchange Notes,
when executed, authenticated, issued and delivered in exchange for the
Senior Subordinated Notes, will constitute valid and binding obligations
of the Issuer, entitled to the benefits of the Notes Indenture,
enforceable against the Issuer in accordance with the terms thereof,
subject to the exceptions noted in clause (A) above.
(xiv) AUTHORIZATION OF EXCHANGEABLE PREFERRED STOCK. The issuance
and delivery of the Exchangeable Preferred Stock and the Exchange Preferred
Stock have been duly authorized by the Issuer. The filing of the
Certificate of Designation relating to the Exchangeable Preferred Stock and
the Exchange Preferred Stock has been duly authorized and will have been
duly filed prior to the Closing Time. When issued and delivered against
payment therefor in accordance with the terms hereof or the Certificate of
Designation, the Exchangeable Preferred Stock will be (and if any Exchange
Preferred Stock is issued in exchange for the Exchangeable Preferred Stock,
such Exchange Preferred Stock will be) validly issued, fully paid and
nonassessable and free of any preemptive or similar rights. As of the
Closing Time, the Articles of Incorporation of the Issuer by virtue of the
Certificate of Designation will set forth the rights, preferences and
priorities of the Exchangeable Preferred Stock and the Exchange Preferred
Stock. The certificates for the Exchangeable Preferred Stock that are
being sold by the Issuer (and any Exchange Preferred Stock issued in
exchange therefor) are in due and proper form and holders of such
Exchangeable Preferred Stock (or such Exchange Preferred Stock) will not be
subject to personal liability by reason of being such holders.
(xv) AUTHORIZATION OF THE EXCHANGE DEBENTURES. The Exchange
Debentures have been duly authorized by the Issuer for issuance, subject to
further
9
action by the Issuer's Board of Directors with respect to the due
execution and delivery thereof. The Exchange Debentures, when executed
by the Issuer and authenticated by the Debentures Trustee in accordance
with the provisions of the Exchange Indenture and delivered upon the
exchange of the Exchangeable Preferred Stock, (A) will have been duly
executed, issued and delivered by the Issuer, and (B) will constitute
valid and binding obligations of the Issuer enforceable against the
Issuer in accordance with their terms except as enforcement thereof may
be limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law) and (C) will be in the form contemplated by, and
entitled to the benefits of, the Exchange Indenture.
(xvi) AUTHORIZATION OF THE REGISTRATION RIGHTS AGREEMENTS. Each
of the Registration Rights Agreements has been duly authorized by the
Issuer, and, when executed and delivered by the Issuer and the other
parties thereto in accordance with the terms thereof, will constitute a
valid and binding agreement of the Issuer, enforceable against the Issuer
in accordance with its terms except (A) as enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and (B) the
enforceability of any right to indemnification provided therein violates
the public policy of any law, rule or regulation.
(xvii) THE PENDING ACQUISITIONS. No consent, approval,
authorization or order of any court or governmental agency or body
(except for such consents, approvals or authorizations as are required
by the FCC and relevant state regulatory authorities or, in the case of
the Atlantic Acquisition, under the HSR Act), is required for the
performance by the Issuer of the transactions contemplated by the
Pending Acquisitions, and the Issuer has no reasonable basis to believe
that the transactions contemplated by the Pending Acquisitions will not
be consummated in accordance with their terms.
(xviii) DESCRIPTION OF THE TRANSACTION DOCUMENTS AND OTHER MATTERS
The statements set forth in the Offering Memorandum, insofar as such
statements purport to summarize certain provisions of the Transaction
Documents, the Pending Acquisitions and the Credit Facility constitute
accurate summaries thereof in all material respects.
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(xix) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Issuer nor
any of its subsidiaries is in violation of its respective organizational
documents or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
agreement or instrument to which any of them is a party or by which any of
them may be bound, or to which any of the property or assets of any of them
is subject (collectively, "AGREEMENTS AND INSTRUMENTS"), except for such
violations or defaults that would not result in a Material Adverse Effect;
and (A) the execution, delivery and performance of this Agreement, the
Securities, the Notes Indenture, the Exchange Indenture (if the Exchange
Debentures are issued in exchange for the Exchangeable Preferred Stock),
the Registration Rights Agreements, by the Issuer, and the consummation by
the Issuer of the transactions contemplated herein and therein (including
the issuance and sale by the Issuer of the Securities in accordance with
the offering and sale restrictions contained in this Agreement and the
Offering Memorandum and the use of the proceeds from the sale of the
Securities as described in the Offering Memorandum under the caption "USE
OF PROCEEDS"), (B) compliance by the Issuer with its obligations hereunder
and under the Securities, (C) compliance by the Issuer of its obligations
under the Notes Indenture, the Exchange Indenture (if the Exchange
Debentures are issued in exchange for the Exchangeable Preferred Stock) and
such other agreements to which it is or will be a party in connection with
the transactions contemplated by this Agreement, (D) consummation of the
Pending Acquisitions and (E) the execution, delivery and performance of the
Existing Credit Facility or the New Credit Facility, as applicable, will
not (1) whether with or without the giving of notice or the passage of time
or both, constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any Encumbrance
upon any property or assets of any such entity or any of its subsidiaries
pursuant to, the Agreements and Instruments (except for such conflicts,
breaches or defaults or Encumbrances that would not result in a Material
Adverse Effect or (2) result in any violation of (x) the provisions of the
respective organizational documents of the Issuer or any of its
subsidiaries or (y) any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Issuer or any of its subsidiaries or any of their assets, properties or
operations (except for such violations that would not result in a Material
Adverse Effect). As used herein, a "REPAYMENT EVENT" means any event or
condition which gives the holder of any note, debenture or other evidence
of indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by any such entity or any of its subsidiaries.
(xx) ABSENCE OF LABOR DISPUTES. No labor dispute with the employees
of the Issuer or any of its subsidiaries exists or, to the knowledge of the
Issuer, is threatened that, if such dispute were to occur, in either case
may reasonably be
11
expected to result in a Material Adverse Effect, and the Issuer has no
actual knowledge of any existing or imminent labor disturbance by the
employees of the Issuer's or its subsidiaries' principal suppliers,
contractors or customers that could be expected to result in a Material
Adverse Effect.
(xxi) ABSENCE OF PROCEEDINGS. Except as set forth in the Offering
Memorandum, there is no action, suit, proceeding, inquiry or investigation
before or brought by any court or governmental agency or body, domestic or
foreign, now pending, or, to the knowledge of the Issuer, threatened, to
which the Issuer or any of its subsidiaries is a party and which might
reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the
validity or enforceability of any material provision of any Transaction
Document or the rights and remedies of the Initial Purchasers, the Notes
Trustee, the Debenture Trustee or the holders of the Securities thereunder.
The aggregate of all pending legal or governmental proceedings that are not
described in the Offering Memorandum to which the Issuer or any of its
subsidiaries is a party including ordinary routine litigation incidental
to the business of the Issuer or any of its subsidiaries, could not
reasonably be expected to have a Material Adverse Effect.
(xxii) POSSESSION OF INTELLECTUAL PROPERTY. The Issuer and its
subsidiaries own or possess, or can acquire on reasonable terms (or have
the rights to sue at law or in equity for any infringement of), adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "INTELLECTUAL PROPERTY") necessary to carry on the business
now carried on by them, except where the failure to own, possess or hold
such rights to acquire or sue would not have a Material Adverse Effect; and
neither the Issuer nor any of its subsidiaries has received any notice or
is otherwise aware of any infringement of or conflict with asserted rights
of others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Issuer or its subsidiaries
therein, and which infringement or conflict (if the subject of any
unfavorable decision, ruling or finding) or invalidity or inadequacy,
singly or in the aggregate, would result in a Material Adverse Effect.
(xxiii) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
(including, without limitation, the FCC) or quasi-governmental agency
(other than (A) under the Securities Act and the rules and regulations
thereunder with respect to the Registration Rights Agreements and the
transactions contemplated thereunder and the securities or "blue sky" laws
of any jurisdiction and (B) those that have been obtained and are in full
force and effect) is necessary or required on behalf of the Issuer for the
issuance, sale and delivery of the
12
Securities, or for the execution, delivery or performance by the Issuer
of any Transaction Document, or for the consummation by the Issuer of
the transactions contemplated in such documents.
(xxiv) POSSESSION OF LICENSES AND PERMITS. The Issuer and its
subsidiaries possess, and, upon consummation of the transactions
contemplated under this Agreement, will possess, such permits, licenses,
approvals, consents and other authorizations (collectively, "GOVERNMENTAL
LICENSES") of the appropriate federal, state, local or foreign regulatory
and quasi-regulatory agencies or bodies (including, without limitation, the
FCC) necessary to conduct any business now conducted by them and as
contemplated to be conducted by them upon consummation of the transactions
contemplated under this Agreement or as disclosed in the Offering
Memorandum, except where the failure to possess such Governmental Licenses
would not, singly or in the aggregate, have a Material Adverse Effect; and
such Governmental Licenses contain no materially burdensome conditions or
restrictions not customarily imposed by the FCC on telecommunications
operators operating under the same types of licenses as the Issuer and its
subsidiaries. The Issuer and its subsidiaries are, and upon consummation
of the transactions contemplated under this Agreement will be, in
substantial compliance with the terms and conditions of all such
Governmental Licenses, except where the failure to comply would not, singly
or in the aggregate, have a Material Adverse Effect. All of the
Governmental Licenses are, and upon consummation of the transactions
contemplated under this Agreement will be, valid and in full force and
effect, except when the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect would
not have a Material Adverse Effect, and neither the Issuer nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses or which in
any manner otherwise affects or questions the validity or effectiveness
thereof, and which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material Adverse
Effect. No event has occurred which permits (nor has an event occurred
which with notice or lapse of time or both would permit) the revocation or
termination of such Governmental Licenses or the imposition of any material
adverse restriction or condition thereon or which might result in any other
material impairment of the rights of the Issuer or any of its subsidiaries
therein. The Issuer and its subsidiaries are in compliance with the
Communications Act of 1934, as amended, including the Telecommunications
Act of 1996, and all statutes, orders, rules, regulations and policies of
the FCC relating to or affecting the telecommunications operations of the
Issuer and its subsidiaries, except for such noncompliance as would not
have a Material Adverse Effect.
(xxv) TITLE TO PROPERTY. The Issuer and its subsidiaries have
title in fee simple to, or a valid leasehold interest in all their real
property and good title to, or a valid leasehold interest in, all of their
other properties and assets, free and clear of
13
all Encumbrances, except such as (A) are described in the Offering
Memorandum or (B) do not, singly or in the aggregate, have a Material
Adverse Effect. All of the leases and subleases material to the
business of the Issuer and its subsidiaries, considered as one
enterprise, and under which the Issuer or any subsidiary holds
properties described in the Offering Memorandum, are in full force and
effect, and neither the Issuer nor any subsidiary has received any
notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Issuer or any subsidiary under any
of the leases or subleases mentioned above, or affecting or questioning
the rights of such corporation to the continued possession or the leased
or subleased premises under any such lease or sublease.
(xxvi) TAX RETURNS. The Issuer and its subsidiaries have filed any
federal, state, local and foreign income and other material tax returns
that are required to be filed by such entities or have duly requested
extensions thereof and have paid all taxes required to be paid by any of
them and any related assessments, fines or penalties, except for any such
taxes, assessments, fines or penalties that are being contested in good
faith and by appropriate proceedings; and adequate charges, accruals or
reserves have been provided for in the financial statements referred to in
Section 1(a)(vi) above in respect of any federal, state, local and foreign
income and other material taxes for all periods as to which the tax
liability of the Issuer or its subsidiaries has not been finally determined
or remains open to examination by applicable taxing authorities.
(xxvii) ENVIRONMENTAL LAWS. Except as described in the Offering
Memorandum and except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) neither the Issuer nor its subsidiaries is in
violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance or code, or rule of common law or any judicial or
administrative interpretation thereof, including any applicable judicial or
administrative order, consent, decree or judgment, regulating, or imposing
liability concerning, pollution, the protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "HAZARDOUS MATERIALS") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "ENVIRONMENTAL LAWS"), (B) the Issuer
and its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are in compliance with
such requirements, (C) there are no administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations or proceedings relating in any
way to Environmental Laws pending or threatened against the Issuer or any
of its subsidiaries and (D) the Issuer has no knowledge of
14
any events or circumstances that might reasonably be expected to form
the basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against
or affecting the Issuer or any of its subsidiaries relating to Hazardous
Materials or any Environmental Laws.
(xxviii) REGISTRATION RIGHTS. Except as described in the Offering
Memorandum, there are no persons with registration rights or other similar
rights to have any securities registered by the Issuer or any of its
subsidiaries under the Securities Act.
(xxix) SOLVENCY. At the date of this Agreement, the Issuer is, and
immediately after the Closing Time, the Issuer will be, Solvent. As used
herein, the term "SOLVENT" means, with respect to the Issuer, on a
particular date, that on such date (A) the fair value of the assets of the
Issuer, on a consolidated basis with its subsidiaries, is greater than the
total amount of liabilities (including contingent liabilities) of the
Issuer, on a consolidated basis with its subsidiaries, (B) the present fair
salable value of the assets of the Issuer, on a consolidated basis with its
subsidiaries, is greater than the amount that will be required to pay the
probable liabilities of the Issuer, on a consolidated basis with its
subsidiaries, on its debts as they become absolute and matured, (C) the
Issuer, on a consolidated basis with its subsidiaries, is able to pay its
debts and other liabilities, including contingent obligations, as they
mature and (D) the Issuer, on a consolidated basis with its subsidiaries,
is not engaged in business or a transaction, and is not about to engage in
business or a transaction, for which it has an unreasonably small capital.
(xxx) INVESTMENT COMPANY ACT. As of the date of this Agreement,
the Issuer is not, and upon the issuance and sale of the Securities as
herein contemplated and the application of the net proceeds as described in
the Offering Memorandum, the Issuer will not be, an "investment company" or
an entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended.
(xxxi) RULE 144A ELIGIBILITY. The Securities are eligible for
resale pursuant to Rule 144A and will not be, at the Closing Time, of the
same class as securities of the Issuer that are listed on a national
securities exchange registered under Section 6 of the Exchange Act, or
quoted in a U.S. automated interdealer quotation system.
(xxxii) NO GENERAL SOLICITATION. Neither the Issuer nor any person
acting on its behalf through any agent (provided that no representation is
made as to the Initial Purchasers, their affiliates or any person acting on
their behalf) (A) has engaged or will engage in any form of general
solicitation or general advertising (within the meaning of Rule 502(c)
under the Securities Act) in connection with the offering of the Securities
in the United States or (B) solicited offers for, or offered or sold, such
Securities by means of any form of general solicitation or general
advertising (within
15
the meaning of Rule 502(c) under the Securities Act) or
in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act.
(xxxiii) NO REGISTRATION REQUIRED. Assuming (A) that the
representations and warranties of the Initial Purchasers set forth in
Section 2 and Section 6 hereof are true and (B) the compliance by the
Initial Purchasers with the covenants and agreements set forth in Section 2
and Section 6 hereof, it is not necessary in connection with the offer,
sale and delivery of the Securities to the Initial Purchasers under, or in
connection with the initial resale of such Securities by the Initial
Purchasers in accordance with, this Agreement to register the Securities
under the Securities Act or to qualify any indenture in respect of the
Securities under the Trust Indenture Act of 1939, as amended.
(xxxiv) NO DIRECTED SELLING EFFORTS. With respect to those
Securities sold in reliance on Regulation S, (A) none of the Issuer, any
of its affiliates or any person acting on its or their behalf (other
than the Initial Purchasers, their affiliates and any person acting on
their behalf, as to whom the Issuer makes no representation) has engaged
or will engage in any directed selling efforts (within the meaning of
Regulation S) in the United States and (B) the Issuer, its affiliates
and any person acting on its or their behalf (other than the Initial
Purchasers, their affiliates and any person acting on their behalf, as
to whom the Issuer makes no representation) has complied and will comply
with the offering restrictions requirement of Regulation S.
(xxxv) MARKET ACTIVITIES. The Issuer has not, directly or
indirectly, (A) taken any action designed to cause or to result in, or that
has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Issuer to
facilitate the sale or resale of the Securities or (B) (x) sold (except
pursuant to this Agreement), bid for, purchased, or paid anyone any
compensation for soliciting purchases of, the Securities or (y) paid or
agreed to pay to any person and compensation for soliciting another to
purchase any other securities of the Issuer.
(xxxvi) ERISA. The Issuer is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Issuer would have any liability; the Issuer has not
incurred and does not expect to incur liability under (A) Title IV of ERISA
with respect to termination of, or withdrawal from, any "pension plan" or
(B) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the
"CODE"); and each "pension plan" for which the Issuer would have liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all
16
material respects and nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification.
(xxxvii) INSURANCE. The Issuer and each of its subsidiaries
carry, or are covered by, insurance in such amounts and covering such
risks as is adequate for the conduct of their respective businesses and
the value of their respective properties and is customary for companies
engaged in similar businesses in similar industries.
(b) OFFICERS' CERTIFICATES. Any certificate signed by any officer of the
Issuer or any of its subsidiaries and delivered to the Initial Purchasers or to
counsel for the Initial Purchasers shall be deemed a representation and warranty
by the Issuer to the Initial Purchasers as to the matters covered thereby.
2. PURCHASE, SALE AND RESALE OF THE SECURITIES; CLOSING
REPRESENTATIONS AND WARRANTIES OF THE INITIAL PURCHASERS. (a) SECURITIES. On
the basis of the representations and warranties contained in this Agreement, and
subject to the terms and conditions set forth in this Agreement, the Issuer
agrees to sell to the Initial Purchasers, severally and not jointly, and each
Initial Purchaser, severally and not jointly, agrees to purchase from the
Issuer, at the price set forth in SCHEDULE B, the aggregate principal amount of
Securities set forth in SCHEDULE A opposite the name of such Initial Purchaser,
plus any additional amount of Securities which such Initial Purchaser may become
obligated to purchase pursuant to the provisions of Section 11 hereof.
(b) PAYMENT. Payment of the purchase price for, and delivery of, the
Securities shall be made at such place as shall be agreed upon by the Issuer and
the Initial Purchasers, at 9:00 A.M., New York time, on the fifth (5th) business
day after the date hereof (unless postponed in accordance with the provisions of
Section 11), or such other time not later than ten (10) business days after such
date as shall be agreed upon by the Issuer and the Initial Purchasers (such date
and time of payment and delivery being herein called the "CLOSING TIME").
Payment shall be made to the Issuer by wire transfer of IMMEDIATELY
AVAILABLE FUNDS to a bank account designated by the Issuer, against delivery to
TD Securities for the respective accounts of the Initial Purchasers of
certificates for the Securities to be purchased by them. It is understood that
each Initial Purchaser has authorized TD Securities, for its account, to accept
delivery of, and receipt for, and make payment of the purchase price for, the
Securities which it has agreed to purchase. TD Securities, individually and not
as representative of the Initial Purchasers, may (but shall not be obligated to)
make payment of the purchase price for the Securities to be purchased by any
Initial Purchaser whose funds have not been received by the Closing Time, but
such payment shall not relieve such Initial Purchaser from its obligations
hereunder.
17
(c) QUALIFIED INSTITUTIONAL BUYER. Each Initial Purchaser severally and
not jointly represents and warrants to, and agrees with, the Issuer that it is a
Qualified Institutional Buyer within the meaning of Rule 144A under the
Securities Act.
(d) DENOMINATIONS; REGISTRATION. Certificates for the Securities shall be
in such denominations ($1,000 or integral multiples thereof) and registered in
such names as the Initial Purchasers may request in writing at least one full
business day before the Closing Time. The certificates representing the
Securities [(which may be in temporary form)] shall be registered in the name of
Cede & Co. pursuant to an agreement or agreements with The Depository Trust
Company ("DTC"), and shall be made available for examination and packaging by
the Initial Purchasers in The City of New York not later than 10:00 A.M. on the
last business day prior to the Closing Time.
Section 3. CERTAIN COVENANTS OF THE ISSUER. The Issuer covenants
with the Initial Purchasers as follows:
(a) OFFERING MEMORANDUM. The Issuer will promptly deliver to the Initial
Purchasers (without charge, for the period ending after the later of (i) the
completion of the distribution of the Securities as determined by TD Securities
and (ii) 45 days following the Closing Time, and at the expense of the Initial
Purchasers thereafter) such number of copies of the Offering Memorandum, as it
may then be amended or supplemented, or the Preliminary Offering Memorandum, as
it may then be amended or supplemented, as the Initial Purchasers may from time
to time reasonably request.
(b) NOTICE AND EFFECT OF MATERIAL EVENTS. The Issuer will as soon as is
practicable notify each Initial Purchaser, and confirm such notice in writing,
of (x) any filing made by the Issuer of information relating to the offering of
the Securities with any securities exchange or any other regulatory body in the
United States or any other jurisdiction and (y) prior to the completion of the
distribution of the Securities by the Initial Purchasers as determined by TD
Securities, any material changes in or affecting the condition, financial or
otherwise, the earnings, business affairs or business prospects of the Issuer
and its subsidiaries which (i) make any statement of any material fact made in
the Offering Memorandum materially false or misleading or (ii) are not disclosed
in the Offering Memorandum. If, during the period referred to in paragraph (a)
above, any event shall occur or condition exist as a result of which it is
necessary, in the opinion of counsel for the Initial Purchasers or counsel for
the Issuer, 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 under which they were made, not misleading or
if, in the opinion of counsel for the Initial Purchasers or counsel for the
Issuer, it is necessary to amend or supplement the Offering Memorandum to comply
with applicable law, the Issuer, at its own expense, will promptly prepare such
amendment or supplement as may be necessary so that the statements in the
Offering Memorandum as so amended or supplemented will not, in the
18
light of the circumstances then existing, be misleading or so that such
Offering Memorandum as so amended or supplemented will comply with applicable
law, as the case may be, and furnish the Initial Purchasers such number of
copies as they may reasonably request (and the Initial Purchasers will, upon
receiving notice from the Issuer to do so, suspend use of the Offering
Memorandum, until such time as they shall have received such copies of the
amended or supplemented Offering Memorandum).
(c) AMENDMENT TO OFFERING MEMORANDUM AND SUPPLEMENTS. The Issuer will
advise each Initial Purchaser promptly of any proposal to amend or supplement
the Offering Memorandum and will not effect such amendment or supplement without
the consent of the Initial Purchasers (except to the extent that any such
amendment or supplement objected to is necessary, in the judgment of counsel to
the Issuer, to make the statements made in the Offering Memorandum, in the light
of the circumstances under which they were made, not misleading). Neither the
consent of the Initial Purchasers, nor the Initial Purchasers' delivery of any
such amendment or supplement, shall constitute a waiver of any of the conditions
set forth in Section 5 hereof.
(d) QUALIFICATION OF SECURITIES FOR OFFER AND SALE. The Issuer will use
its best efforts, in cooperation with the Initial Purchasers, to qualify the
Securities for offering and sale under the applicable securities laws of such
states and other jurisdictions of the United States as the Initial Purchasers
may designate and maintain such qualifications in effect as long as required for
the sale of the Securities; PROVIDED, HOWEVER, that the Issuer shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.
(e) RATING OF SECURITIES. The Issuer shall take all reasonable action
necessary to enable Standard & Poor's Ratings Services, a division of McGraw
Hill, Inc. ("S&P"), and Xxxxx'x Investors Service Inc. ("MOODY'S"), to provide
their respective credit ratings of the Securities.
(f) DTC. The Issuer will use its reasonable efforts in cooperation with
the Initial Purchasers to obtain the necessary approvals for the Securities to
be eligible for clearance and settlement through DTC.
(g) PORTAL. The Issuer will use its reasonable efforts in cooperation
with the Initial Purchasers to obtain the necessary approvals for the Securities
to be designated PORTAL securities in accordance with the rules and regulations
adopted by the NASD relating to trading in the PORTAL market.
19
(h) USE OF PROCEEDS. The Issuer will apply the net proceeds that it
receives from the offer and sale of the Securities issued by the Issuer in the
manner set forth in the Offering Memorandum under the heading "Use of Proceeds."
(i) RESTRICTION ON SALE OF SECURITIES. For a period of 90 days after the
date of the Offering Memorandum, the Issuer will not, without the prior written
consent of TD Securities, directly or indirectly, issue, sell, offer or agree to
sell, grant any option for the sale of, or otherwise dispose of, any other
securities that are substantially similar to the Securities or securities that
are exchangeable for or convertible into the Securities, other than the Exchange
Securities referred to in the Registration Rights Agreements.
Section 4. PAYMENT OF EXPENSES. (a) EXPENSES. Whether or not any
sale of the Securities is consummated, the Issuer will pay and bear all costs
and expenses incident to the performance of its and any of its respective
subsidiaries' obligations under any Transaction Document, including (i) the
preparation and printing of the Preliminary Offering Memorandum, the Offering
Memorandum and any amendments or supplements thereto, and the cost of furnishing
copies thereof to the Initial Purchasers, (ii) the delivery of the Securities to
the Initial Purchasers, (iii) the fees and disbursements of the Issuer's counsel
and accountants, (iv) the qualification of the Securities under the applicable
U.S. securities laws in accordance with Section 3(d) hereof and any filing for
review of the offering with NASD, including filing fees and fees and
disbursements of counsel for the Initial Purchasers in connection therewith and
in connection with the preparation of any "blue sky" or legal investment
memoranda, (v) any fees charged by rating agencies for rating the Securities,
(vi) the fees and expenses of the Notes Trustee and the Debenture Trustee,
including the fees and disbursements of counsel for the Notes Trustee and the
Debenture Trustee in connection with the Notes Indenture, the Exchange
Debenture, and the Securities, (vii) the cost of preparing certificates
representing the Securities, (viii) the cost of obtaining approval for the
trading of the Securities through PORTAL and (ix) all other costs and expenses
incident to the performance of the Issuer's obligations hereunder that are not
otherwise specifically provided for in this Section; PROVIDED, that except as
specifically provided herein, the Issuer will not be obligated to pay the costs
and expenses of counsel for the Initial Purchasers.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Initial Purchasers in accordance with the provisions of Section 5 or 10(a)(i),
the Issuer shall reimburse the Initial Purchasers for all of their documented
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Initial Purchasers, reasonably incurred by the Initial
Purchasers in connection with this Agreement or the offering contemplated
hereunder.
Section 5. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The
obligations of the Initial Purchasers to purchase and pay for the Securities
that they have agreed to purchase hereunder are subject to the accuracy of the
representations and warranties of the Issuer contained herein and in
certificates of any officer of the Issuer and any subsidiary delivered
20
pursuant to the provisions hereof, to the performance by the Issuer of its
obligations hereunder, and to the following further conditions:
(a) OPINION OF COUNSEL FOR THE ISSUER. At the Closing Time, the
Initial Purchasers shall have received a favorable opinion, dated as of the
Closing Time, of the following counsel for the Issuer, in form and substance
satisfactory to counsel for the Initial Purchasers: (i) Xxxx & Xxxxxxx, A
Professional Association, counsel for the Issuer, to the effect set forth in
EXHIBIT A-1 hereto and to such further effect as counsel for the Initial
Purchasers may reasonably request (in giving such opinion, such counsel may
rely, as to all matters governed by the laws of jurisdictions other than the
law of the State of Minnesota and the federal law of the United States upon
the opinions of counsel satisfactory to the Initial Purchasers), (ii) Xxxxx,
Xxxx, Xxxxxxxxx & Xxxxx, Chartered, special regulatory counsel for the
Issuer, to the effect of the regulatory matters set forth in Exhibit A-2
hereto and to such further effect as counsel for the Initial Purchasers may
reasonably request, (iii) Xxxx & Xxxxxxx, A Professional Association,
Minnesota regulatory counsel for the Issuer, to the effect of the regulatory
matters set forth in EXHIBIT A-3 hereto and to such further effect as counsel
for the Initial Purchasers may reasonably request and (iv) Xxxxxx, Xxxxxxx,
Xxxxxxx, Xxxxxx & Micoleau LLC, special Maine regulatory counsel for the
Issuer, to the effect of the regulatory matters substantially in the form set
forth in EXHIBIT A-4 hereto and to such further effect as counsel for the
Initial Purchasers may reasonably request. Each such counsel may also state
that, insofar as such opinion involves factual matters, they have relied, to
the extent they deem proper, upon certificates of officers of the Issuer and
its subsidiaries (and other affiliates) and certificates of public officials.
(b) OPINION OF COUNSEL FOR THE INITIAL PURCHASERS. At the Closing
Time, the Initial Purchasers shall have received the favorable opinion, dated
as of the Closing Time, of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, counsel for
the Initial Purchasers. In giving such opinion such counsel may rely, as to
all matters governed by the laws of jurisdictions other than the law of the
State of New York, the federal law of the United States and the General
Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to the Initial Purchasers. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Issuer and its
subsidiaries (and other affiliates) and certificates of public officials.
(c) OFFICERS' CERTIFICATES. At the Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Offering Memorandum, any Material Adverse Effect,
whether or not arising in the ordinary course of business, and the Initial
Purchasers shall have received a certificate of the President or a Vice
President of the Issuer and of the chief financial or chief accounting
officer of the Issuer, dated as of the Closing Time, to the effect that (i)
there has been no such Material Adverse Effect, (ii) the representations and
warranties in Section 1 hereof are true and correct in all material respects
with the same force and effect as though expressly made at and as of the
Closing Time (except for those representations and warranties that are
expressly made as of
21
a certain date) and (iii) the Issuer has complied in all material respects
with all agreements and satisfied in all material respects all conditions on
its part to be performed or satisfied at or prior to the Closing Time.
(d) ACCOUNTANTS' COMFORT LETTERS. At the time of the execution of this
Agreement, TD Securities shall have received from each of Xxxxxx Xxxxxxxx
LLP, independent public accountants for the Issuer and Unity, and KPMG Peat
Marwick LCC, independent auditors for ACC, a letter to the Initial Purchasers
dated the date hereof, in form and substance satisfactory to the Initial
Purchasers, together with signed or reproduced copies of such letter for each
of the other Initial Purchasers, containing statements and information of the
type ordinarily included in accountants' "comfort letters" with respect to
the financial statements and certain financial information contained in the
Offering Memorandum.
(e) BRING-DOWN COMFORT LETTERS. At the Closing Time, TD Securities
shall have received from each of Xxxxxx Xxxxxxxx LLP, independent public
accountants for the Issuer and Unity, and KPMG Peat Marwick LLC, independent
auditors for ACC, a letter, dated as of the Closing Time, to the effect that
they reaffirm the statements made in the letters furnished pursuant to
subsection (d) of this Section, except that the specified dates referred to
shall be a date not more than three (3) business days prior to the Closing
Time, together with signed or reproduced copies of such letter for the other
Initial Purchasers.
(f) MAINTENANCE OF RATING. At the Closing Time, the Senior
Subordinated Notes shall be rated at least B-3 by Xxxxx'x and B- by S&P, and
the Issuer shall have delivered to the Initial Purchasers a letter dated the
Closing Time from each such rating agency, or other evidence satisfactory to
the Initial Purchasers, confirming that the Securities have such ratings; and
since the date of this Agreement, there shall not have occurred a downgrading
in the rating assigned to the Securities or any of the Issuer's other debt
securities by any "nationally recognized statistical rating organization," as
that term is defined by the Commission in Rule 436(g)(2) under the Securities
Act, and no such securities rating agency shall have publicly announced that
it has under surveillance or review, with possible negative implications, its
rating of the Securities or any of the Issuer's other debt securities.
(g) PORTAL. At the Closing Time, the Senior Subordinated Notes and the
Exchangeable Preferred Stock shall have been designated for trading on PORTAL.
(h) ADDITIONAL DOCUMENTS. At the Closing Time, counsel for the Initial
Purchasers shall have been furnished with all such documents, certificates
and opinions as they may require for the purpose of enabling them to pass
upon the matters referred to in Section 5(b) and in order to evidence (i) the
accuracy and completeness of any of the representations, warranties or
statements of the Issuer in this Agreement, (ii) the performance of the
covenants of the Issuer in this Agreement or (iii) the fulfillment of the
conditions herein contained and all proceedings taken by the Issuer at or
prior to the Closing Time in connection with the authorization, issuance and
sale of the Securities as contemplated in this
22
Agreement. Such documents, certificates and opinions shall be satisfactory
in form and substance to the Initial Purchasers and to counsel for the
Initial Purchasers.
(i) EXECUTION AND DELIVERY OF AGREEMENTS. At or prior to the Closing
Time, the Notes Indenture and the Registration Rights Agreements, in form and
substance reasonably satisfactory to the Initial Purchasers, shall have been
duly executed and delivered by the Issuer and be in full force and effect.
(j) SOLVENCY CERTIFICATE. At the Closing Time, the Initial Purchasers
shall have received a solvency certificate of the Issuer's chief financial
officer, in form and substance reasonably satisfactory to the Initial
Purchasers and dated as of the Closing Time.
(k) TERMINATION OF AGREEMENT. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement may be terminated by the Initial Purchasers by notice to the
Issuer at any time at or prior to the Closing Time, and such termination
shall be without liability of any party to any other party except as provided
in Section 4 and except that Sections 1, 7 and 8 shall survive any such
termination and remain in full force and effect.
(l) ATLANTIC FINANCIAL DATA CERTIFICATE AND BRING DOWN. At the time of
execution of this Agreement, the Initial Purchasers shall have received from
the Chief Executive Officer and the Chief Financial Officer of the Issuer a
certificate as of the date hereof in respect of certain financial data
included in the Offering Memorandum in the form previously agreed. At the
Closing Time, the Initial Purchasers shall have received from such officers a
certificate to the effect that they reaffirm as of the Closing Time the
statements made in the certificate referred to in the preceding sentence,
with any reference in such bring down certificate to "the date hereof" or any
similar reference being brought forward to the date of such bring down
certificate.
Section 6. SUBSEQUENT OFFERS AND RESALES OF THE SECURITIES. (a)
REPRESENTATIONS. WARRANTIES AND COVENANTS OF THE INITIAL PURCHASERS. Each
of the Initial Purchasers represents, warrants and covenants to observe the
following procedures in connection with the offer and sale of the Securities:
(i) OFFERS AND SALES ONLY TO QUALIFIED INSTITUTIONAL BUYERS. Each
Initial Purchaser understands that no action has been taken in any
jurisdiction by the Issuer that would permit a public offering of the
Securities in any jurisdiction where action would be required for such
purpose. Each Initial Purchaser represents and agrees that it has not
offered, sold or delivered and it will not offer, sell or deliver any of
the Securities in any jurisdiction 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 any such jurisdiction (other than in the
United States). Each such offer or sale shall only
23
be made (A) to persons whom the offeror or seller reasonably believes to
be Qualified Institutional Buyers (as defined in Rule 144A under the
Securities Act) or (B) to non-U.S. persons outside the United States
(which shall include dealers or other professional fiduciaries in the
United States acting on a discretionary basis for beneficial owners
(other than an estate or trust) that are non-U.S. persons) to whom the
offeror or seller reasonably believes offers and sales of the Securities
may be made in reliance upon Regulation S under the Securities Act and
applicable securities legislation of the relevant jurisdiction.
(ii) NO GENERAL SOLICITATION. Neither it nor any person acting on its
behalf has engaged or will engage in any form of general solicitation or
general advertising (within the meaning of Rule 502(c) under the Securities
Act) in connection with the offering or sale of the Securities in the
United States.
(iii) SUBSEQUENT PURCHASER NOTIFICATION. Each Initial Purchaser
will take reasonable steps to inform, and cause each of its affiliates to
take reasonable steps to inform, persons acquiring Securities from such
Initial Purchaser or affiliate, as the case may be, in the United States
(the "SUBSEQUENT PURCHASERS") that the Securities (A) have not been and
will not be registered under the Securities Act, (B) are being sold to them
without registration under the Securities Act in reliance on Rule 144A or
in accordance with another exemption from registration under the Securities
Act, as the case may be and (C) may not be offered, sold or otherwise
transferred except (1) to the Issuer, (2) outside the United States in
accordance with Rule 904 of Regulation S or (3) inside the United States in
accordance with (x) Rule 144A to a person whom the seller reasonably
believes is a Qualified Institutional Buyer that is purchasing such
Securities for its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the offer, sale or
transfer is being made in reliance on Rule 144A or (y) pursuant to another
available exemption from registration under the Securities Act.
(iv) RESTRICTIONS ON TRANSFER. The transfer restrictions set forth
under "Notice to Investors" in the Offering Memorandum, including the
legend required thereby, shall apply to the Securities except as otherwise
agreed by the Issuer and the Initial Purchasers.
(v) RESALE PURSUANT TO RULE 903 OF REGULATION S OR RULE 144A. Each
Initial Purchaser understands that the Securities have not been and will
not be registered under the Securities 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 Securities Act or
pursuant to an exemption from the registration requirements of the
Securities Act. Each Initial Purchaser severally represents, warrants and
agrees that it has offered and sold Securities and will offer and sell
Securities (A) as part of their distribution at any time and (B) otherwise
until
24
forty (40) days after the later of the date upon which the offering
of the Securities commences and the Closing Time, only (x) outside the
United States in accordance with Rule 903 of Regulation S or (y) to a
Qualified Institutional Buyer in transactions that meet the requirements of
Rule 144A under the Securities Act. Accordingly, neither the Initial
Purchasers, their affiliates nor any persons acting on their behalf have
engaged or will engage in any directed selling efforts with respect to
Securities, and the Initial Purchasers, their affiliates and any person
acting on their behalf have complied and will comply with the offering
restriction requirements of Regulation S. Each Initial Purchaser agrees
that, at or prior to confirmation of a sale of Securities (other than a
sale of Securities 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 or through it during the
restricted period a confirmation or notice to substantially the following
effect:
The Securities covered hereby have not been registered under the
United States Securities Act of 1933 (the "Securities Act") and
may not be offered or 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 and (ii) otherwise until forty (40) days
after the later of the date upon which the offering of the
Securities commenced and the date of closing, except in either
case in accordance with Regulation S or another exemption from
the registration requirements of the Securities Act. Terms used
above have the meaning given to them by Regulation S.
Terms used in the above paragraph but not otherwise defined have the
meaning given to them by Regulation S.
(vi) CONTRACTUAL ARRANGEMENTS WITH RESPECT TO DISTRIBUTION. Each
Initial Purchaser severally represents and agrees that it has not entered
and will not enter into any contractual arrangements with respect to the
distribution of the Securities, except with its affiliates or with the
prior written consent of the Issuer.
(b) COVENANTS OF THE ISSUER. The Issuer covenants with each Initial
Purchaser as follows:
(i) DUE DILIGENCE. In connection with the original distribution of
the Securities in accordance with the terms of this Agreement, the Issuer
agrees that, prior to any offer or resale of the Securities by the Initial
Purchasers, the Initial Purchasers and counsel for the Initial Purchasers
shall have the right to make reasonable inquiries into the businesses of
the Issuer and its subsidiaries.
25
(ii) INTEGRATION. The Issuer agrees that it will not and will
cause its affiliates not to solicit any offer to buy or make any offer
or sale of, or otherwise negotiate in respect of, securities of the
Issuer of any class thereof if, as a result of the doctrine of
"integration" referred to in Rule 502 under the Securities Act, such
offer or sale would render invalid the exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereof or
by Rule 144A or by Regulation S thereunder or otherwise with respect to
(A) the sale of the Securities by the Issuers to the Initial Purchasers,
(B) the resale of the Securities by the Initial Purchasers to Subsequent
Purchasers or (C) the resale of the Securities by such Subsequent
Purchasers to others).
(iii) RULE 144A INFORMATION. The Issuer agrees that, in order to
render the Securities eligible for resale pursuant to Rule 144A under the
Securities Act, while any of the Securities remain outstanding, it will
make available, upon request, to any holder of Securities or prospective
purchasers of Securities the information specified in Rule 144A(d)(4),
unless the Issuer furnishes information to the Commission pursuant to
Section 13 or 15(d) of the Exchange Act.
(iv) RESTRICTION ON RESALES. After the Closing Time and until
the Issuer shall have filed, and the Commission shall have declared
effective, a Registration Statement (as defined in the Registration
Rights Agreements) covering the Securities, the Issuer shall not, and
shall not permit any of its affiliates to, sell any Securities that are
"restricted securities" (as such term is defined in Rule 144(a)(3) under
the Securities Act).
Section 7. INDEMNIFICATION. (a) INDEMNIFICATION OF INITIAL
PURCHASERS. The Issuer agrees to indemnify and hold harmless each Initial
Purchaser and each person, if any, who controls any Initial Purchaser within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of an untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission;
26
PROVIDED, that (subject to Section 7(d) below) any such settlement is
effected with the written consent of the Issuer; and
(iii) against any and all expense whatsoever, as incurred
(including reasonable fees and disbursements of counsel chosen by TD
Securities), reasonably incurred in investigating, preparing or defending
against any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue statement
or omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Issuer by any
Initial Purchaser through TD Securities expressly for use in the Preliminary
Offering Memorandum or the Offering Memorandum (or any amendment or supplement
thereto); PROVIDED FURTHER, that with respect to any untrue statement contained
in or omission from any Preliminary Offering Memorandum, this indemnity
agreement shall not inure to the benefit of any Initial Purchaser on account of
any loss, claim, damage, liability or action arising from the sale of any
Securities to any person in the initial resale by that Initial Purchaser if that
Initial Purchaser failed to send or give a copy of the Offering Memorandum, as
the same may be amended or supplemented, to that person at or prior to the
written confirmation of such initial resale, and the untrue statement or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact in such Preliminary Offering Memorandum was corrected in the
Offering Memorandum and the Offering Memorandum was made available to that
Initial Purchaser prior to the sale of the Securities.
(b) INDEMNIFICATION OF ISSUER. Each Initial Purchaser severally agrees to
indemnify and hold harmless the Issuer, its directors, and each person, if any,
who controls the Issuer within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, against any and all loss, liability, claim,
damage and expense described in the indemnity contained in subsection (a) of
this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Preliminary
Offering Memorandum or the Offering Memorandum (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Issuer by such Initial Purchaser through TD Securities expressly for use
in the Preliminary Offering Memorandum or the Offering Memorandum (or any
amendment or supplement thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure
27
to so notify an indemnifying party shall not relieve such indemnifying party
from any liability hereunder to the extent it is not materially prejudiced as
a result thereof and in any event shall not relieve it from any liability
which it may have otherwise than on account of this indemnity agreement. In
the case of parties indemnified pursuant to Section 7(a) above, counsel to
the indemnified parties shall be selected by TD Securities, and, in the case
of parties indemnified pursuant to Section 7(b) above, counsel to the
indemnified parties shall be selected by the Issuer. An indemnifying party
may participate at its own expense in the defense of any such action;
PROVIDED, HOWEVER, that counsel to the indemnifying party shall not (except
with the consent of the indemnified party) also be counsel to the indemnified
party. In no event shall the indemnifying parties be liable for the fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be
sought under this Section 7 or Section 8 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding 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) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel and the indemnifying party is
obligated to reimburse the indemnified party under the foregoing provisions of
this Section 7, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 7(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 60 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
Section 8. CONTRIBUTION. If the indemnification provided for in
Section 7 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuer on the one hand and the Initial Purchasers on the other hand from the
offering of the Securities pursuant to this
28
Agreement or (ii) if the allocation provided by clause (i) 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 Issuer on the one hand and of the Initial Purchasers on the
other hand in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Issuer on the one hand and the
Initial Purchasers on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Issuer and the total discount received by the Initial Purchasers, in each
case as set forth on the cover of the Offering Memorandum, bear to the aggregate
"Price to Investors" of the Securities as set forth on such cover.
The relative fault of the Issuer on the one hand and the Initial
Purchasers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Issuer or by the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Issuer and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 8 were determined by PRO
RATA allocation (even if the Initial Purchasers were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 8. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 8 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities purchased by it and sold pursuant to the
terms of this Agreement exceeds the amount of any damages which such Initial
Purchaser has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
29
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.
For purposes of this Section 8, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as
such Initial Purchaser, and each director of the Issuer, and each person, if
any, who controls the Issuer within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Issuer. The Initial Purchasers' respective obligations to
contribute pursuant to this Section 8 are several in proportion to the principal
amount of Securities set forth opposite their respective names in SCHEDULE A
hereto and not joint.
Section 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties, indemnities, agreements and other
statements of the Issuer or its officers set forth in or made pursuant to this
Agreement will remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Initial Purchaser or controlling
person, or by or on behalf of the Issuer, and will survive delivery of the
Securities to the Initial Purchasers.
Section 10. TERMINATION OF AGREEMENT. (a) TERMINATION; GENERAL.
The Initial Purchasers may terminate this Agreement, by notice to the Issuer, at
any time at or prior to the Closing Time (i) if there has been, since the time
of the execution of this Agreement or the respective dates as of which
information is given in the Offering Memorandum, any event or condition which
would result in a Material Adverse Effect, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, or any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case, the effect of which is such as to make the judgment of
TD Securities, impracticable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in any securities of the
Issuer has been suspended or materially limited by the Commission, or if trading
generally on the American Stock Exchange or the New York Stock Exchange or in
the Nasdaq National Market has been suspended or materially limited, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices have
been required, by any of such exchanges or by such system or by order of the
Commission, NASD or any other governmental authority, in each case, the effect
of which is such as to make it, in the judgment of TD Securities, impracticable
to market the Securities or to enforce contracts for the sale of the Securities,
or (iv) if a banking moratorium has been declared by either Federal, New York or
Minnesota authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party, except as to the
30
extent provided in Section 4; PROVIDED that the provisions of Sections 1, 7,
8 and 9 shall remain in full force and effect.
Section 11. DEFAULT BY ONE OR MORE OF THE INITIAL PURCHASERS. If one
or more of the Initial Purchasers shall fail, at the Closing Time, to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "DEFAULTED SECURITIES"), TD Securities shall have the right, but not the
obligation, within 24 hours thereafter, to make arrangements for one or more
non-defaulting Initial Purchasers, to purchase, each severally and not jointly,
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, TD Securities
shall not have completed such arrangements within such 24-hour period, then this
Agreement shall terminate without liability on the part of any non-defaulting
Initial Purchaser.
No action pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default that does not result in a termination
of this Agreement, either TD Securities or the Issuer shall have the right to
postpone the Closing Time for a period not exceeding seven (7) days in order to
effect any required changes in the Offering Memorandum or in any other documents
or arrangements.
Section 12. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchasers shall be directed to TD Securities at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000-0000, Attention: Xxxxxx Xxxxx, and notices to the Issuer shall
be directed to the Issuer at 0000 Xxxxxx Xxxxxx XX, Xxxxxxxxxx, Xxxxxxxxx 00000,
Attention: President, with copies to Xxxx & Xxxxxxx, A Professional Association,
Attention: Xxx X. Xxxxxxx, 0000 Xxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000.
Section 13. PARTIES. This Agreement shall inure to the benefit of
and be binding upon the Initial Purchasers and the Issuer and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchasers and the Issuer and their respective successors and the
controlling persons and officers and directors referred to in Section 7 and 8
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Initial Purchasers and the
Issuer and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any Initial Purchaser shall be deemed to be a successor by reason merely of
such purchase.
31
Section 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO ITS CONFLICTS OF LAW PROVISIONS). SPECIFIED TIMES OF THE DAY
REFER TO NEW YORK CITY TIME.
Section 15. EFFECT OF HEADINGS. The Section and other headings
herein are for convenience only and shall not affect the construction hereof.
Section 16. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and in separate counterparts and, when this Agreement has been
executed by each party in multiple or separate counterparts, all such
counterparts taken together shall constitute one and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
32
If the foregoing is in accordance with the Initial Purchasers'
understanding of our agreement, please sign and return a counterpart hereof to
TD Securities, whereupon this instrument will become a binding agreement among
the Issuer and the Initial Purchasers in accordance with its terms.
Very truly yours,
RURAL CELLULAR CORPORATION
By:
---------------------------
Name:
Title:
Confirmed and accepted as of
the date first above written:
TD SECURITIES (USA) INC.
By:
-------------------------
Name:
Title:
NATIONSBANC XXXXXXXXXX
SECURITIES LLC
By:
----------------------
Name:
Title:
BANCBOSTON SECURITIES INC.
By:
----------------------
Name:
Title:
33
SCHEDULE A
Principal Amount
of Senior Number of Shares of
Subordinated Notes Exchangeable Preferred
Initial Purchasers to be Purchased Stock to be Purchased
TD Securities ( USA) Inc. $ 87,500,000 87,500
NationBanc Xxxxxxxxxx $ 25,000,000 25,000
Securities LLC
BancBoston Securities Inc. $ 12,500,000 12,500
Total $125,000,000 125,000
SCHEDULE B
1. The initial price of the Securities shall be 100% of the principal
amount or liquidation preference (as applicable) thereof, plus accrued
interest or dividends (as applicable) , if any, from the date of
issuance.
2. The purchase price to be paid by the Initial Purchasers for the Senior
Subordinated Notes shall be 97.125% of the principal amount thereof
and for the Exchangeable Preferred Stock shall be 96.50% of the
liquidation preference thereof.
3. Interest on the Senior Subordinated Notes shall accrue at an annual
rate of 95/8% and will be payable on May 15 and November 15 of each
year, commencing on November 15, 1998. Dividends will accrue on the
Exchangeable Preferred Stock at an annual rate of 113/8% per annum and
will be payable on February 15, May 15, August 15 and November 15 of
each year, commencing on August 15, 1998.
4. The redemption prices to be supplied in the Offering Memorandum under
the caption "Description of the Senior Subordinated Notes - Optional
Redemption" (and correspondingly in the Notes Indenture) shall be on
or after May 15 of the years appearing below:
YEAR REDEMPTION
PRICE
2003 104.813%
2004 103.208%
2005 101.604%
2006 and thereafter 100.000%
5. The redemption prices to be supplied in the Offering Memorandum under
the caption "Description of Exchangeable Preferred Stock and Exchange
Debentures - Exchangeable Preferred Stock - Optional Redemption" (and
correspondingly in the Certificate of Designation) shall be on or
after May 15 of the years appearing below:
YEAR REDEMPTION
PRICE
2003 105.688%
2004 104.266%
2005 102.844%
2006 101.422%
2007 and thereafter 100.000%
6. The redemption prices to be supplied in the Offering Memorandum
under the caption "Description of Exchangeable Preferred Stock
and Exchange Debentures - Exchange Debentures - Optional
Redemption" (and correspondingly in the Exchange Indenture) shall
be on or after May 15 of the years appearing below:
YEAR REDEMPTION
PRICE
2003 105.688%
2004 104.266%
2005 102.844%
2006 101.422%
2007 and thereafter 100.000%
7. The redemption price to be supplied in the Offering Memorandum under
the caption "Description of Senior Subordinated Notes - Optional
Redemption" with respect to the redemption of Senior Subordinated
Notes from the net cash proceeds of a Qualifying Event (and
correspondingly in all other places in the Offering Memorandum where
such redemption price is referenced and in the Notes Indenture) shall
be 109.625%.
8. The redemption price to be supplied in the Offering Memorandum under
the caption "Description of Exchangeable Preferred Stock and Exchange
Debentures - Exchangeable Preferred Stock - Optional Redemption" with
respect to the redemption of Exchangeable Preferred Stock from the net
cash proceeds of a Qualifying Event (and correspondingly in all other
places in the Offering Memorandum where such redemption price is
referenced and in the Certificate of Designation) shall be 111.375%.
9. The redemption price to be supplied in the Offering Memorandum under
the caption "Description of Exchangeable Preferred Stock and Exchange
Debentures - Exchange Debentures - Optional Redemption" with respect
to the redemption of Exchange Debentures from the net cash proceeds of
a Qualifying Event (and correspondingly in all other places in the
Offering Memorandum where such redemption price is referenced and in
the Exchange Indenture) shall be 111.375%.
SCHEDULE 1(a)(ix)
SUBSIDIARIES
Wholly owned subsidiaries:
RCC Licenses, Inc., a Minnesota corporation
RCC Paging, Inc., a Minnesota corporation
RCC Atlantic Long Distance, Inc., a Minnesota corporation
RCC Atlantic, Inc., a Minnesota corporation
MRCC, Inc., a Maine corporation
Partially owned subsidiaries:
Cellular 2000, Inc., a Minnesota corporation
(41.67% ownership)
Switch 2000, LLC, a Minnesota limited liability company
(40.77% ownership)
Wireless Alliance, LLC, a Minnesota limited liability company
(51.00% ownership)
EXHIBIT A-1
FORM OF OPINION OF XXXX & XXXXXXX
EXHIBIT A-2
FORM OF OPINION OF XXXXX, NACE, XXXXXXXXXX
& SACHS, CHARTERED
EXHIBIT A-3
FORM OF REGULATORY OPINION
OF XXXX & XXXXXXX
EXHIBIT A-4
FORM OF REGULATORY OPINION
OF XXXXXX, XXXXXXX, XXXXXXX, XXXXXX
& MICOLEAU LLC
