120,000,000 AGGREGATE PRINCIPAL AMOUNT ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. Purchase Agreement
Exhibit 10.1
EXECUTION VERSION
$120,000,000 AGGREGATE PRINCIPAL AMOUNT
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
6.25% CONVERTIBLE NOTES DUE 2018
May 4, 2011
X.X. XXXXXX SECURITIES LLC
As the Representative of the several Initial Purchasers
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
As the Representative of the several Initial Purchasers
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Alaska Communications Systems Group, Inc., a Delaware corporation (the “Company”), proposes to
issue and sell to the several purchasers named in Schedule A (the “Initial Purchasers”)
$120,000,000 in aggregate principal amount of its 6.25% Convertible Notes due 2018 (the “Notes”),
guaranteed on a joint and several basis by the subsidiaries of the Company listed in Schedule
B and each domestic subsidiary of the Company hereafter created or acquired, other than its
license subsidiaries, (the “Guarantors,” and such guarantees, the “Guarantees”). X.X. Xxxxxx
Securities LLC has agreed to act as the representative of the several Initial Purchasers (in such
capacity, the “Representative”) in connection with the offering and sale of the Notes. To the
extent that there are no additional Initial Purchasers listed on Schedule A other than you,
the term “Initial Purchasers” as used herein shall mean you, as Initial Purchaser. The term
“Initial Purchasers” shall mean either the singular or plural as the context requires.
The Notes will be convertible on the terms, and subject to the conditions, set forth in the
indenture (the “Indenture”) to be entered into among the Company, the Guarantors and The Bank of
New York Mellon Trust Company, N.A., as trustee (the “Trustee”), on the Closing Date (as defined
herein). As used herein, “Conversion Shares” means the fully paid, nonassessable shares of common
stock, par value $0.01 per share, of the Company (the “Common Stock”) to be received by the holders
of the Notes upon conversion of the Notes pursuant to the terms of the Notes and the Indenture. The
Notes will be convertible initially at a conversion rate of 97.2668 shares per $1,000 principal
amount of the Notes, on the terms, and subject to the conditions, set forth in the Indenture.
The Notes will be offered and sold to the Initial Purchasers without being registered under
the Securities Act of 1933, as amended, and the rules and regulations of the Securities and
Exchange Commission (the “Commission”) thereunder (the “Securities Act”), in reliance upon an
exemption therefrom.
This Agreement, the Indenture, the Notes and the Guarantees are referred to herein
collectively as the “Operative Documents.”
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The Company understands that the Initial Purchasers propose to make an offering of the Notes
on the terms and in the manner set forth herein and in the Disclosure Package (as defined below),
including the Preliminary Offering Memorandum (as defined below), and the Final Offering Memorandum
(as defined below) and agrees that the Initial Purchasers may resell, subject to the conditions set
forth herein, all or a portion of the Notes to purchasers at any time after the date of this
Agreement.
The Company has prepared an offering memorandum, dated the date hereof, setting forth
information concerning the Company, the Notes and the Common Stock, in form and substance
reasonably satisfactory to the Initial Purchasers. As used in this Agreement, “Offering Memorandum”
means, collectively, the Preliminary Offering Memorandum dated as of May 3, 2011 (the “Preliminary
Offering Memorandum”) and the offering memorandum dated the date hereof (the “Final Offering
Memorandum”), each as then amended or supplemented by the Company. As used herein, each of the
terms “Disclosure Package,” “Offering Memorandum,” “Preliminary Offering Memorandum” and “Final
Offering Memorandum” shall include in each case the documents incorporated or deemed to be
incorporated by reference therein.
The Company hereby confirms its agreements with the Initial Purchasers as follows:
Section 1. Representations, Warranties and Covenants of the Company and the Guarantors.
Each of the Company and the Guarantors, jointly and severally, hereby represent and warrant
to, and covenant with, each Initial Purchaser as follows:
(a) No Registration. Assuming the accuracy of the representations and warranties of the
Initial Purchasers contained in Section 6 and their compliance with the agreements set forth
therein, it is not necessary, in connection with the issuance and sale of the Notes to the Initial
Purchasers, the initial offer, resale and delivery of the Notes by the Initial Purchasers and the
conversion of the Notes into Conversion Shares, in each case in the manner contemplated by this
Agreement, the Indenture, the Disclosure Package and the Offering Memorandum, to register the Notes
or the Conversion Shares under the Securities Act or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended (the “Trust Indenture Act”).
(b) No Integration. None of the Company or any of its subsidiaries has, directly or through
any agent, sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of,
any “security” (as defined in the Securities Act) that is or will be integrated with the sale of
the Notes or the Conversion Shares in a manner that would require registration of the Notes or the
Conversion Shares under the Securities Act.
(c) Rule 144A. No securities of the same class (within the meaning of Rule 144A(d)(3) under
the Securities Act) as the Notes are listed on any national securities exchange registered under
Section 6 of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), or
quoted on an automated inter-dealer quotation system.
(d) Exclusive Agreement. Neither the Company nor any of the Guarantors has paid or agreed to
pay to any person any compensation for soliciting another person to purchase any securities of the
Company or the Guarantors (except as contemplated in this Agreement).
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(e) Offering Memoranda. Each of the Company and the Guarantors hereby confirms that it has
authorized the use of the Disclosure Package, the Preliminary Offering Memorandum and the Final
Offering Memorandum in connection with the offer and sale of the Notes by the Initial Purchasers.
Each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by
reference in the Disclosure Package or the Final Offering Memorandum complied when it was filed, or
will comply when it is filed, as the case may be, in all material respects with the Exchange Act
and the rules and regulations of the Commission thereunder and when read together with the
Disclosure Package or the Final Offering Memorandum, as applicable, did not and will not contain
any untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Preliminary Offering Memorandum, at the date
thereof, did not contain any 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. At the date of this Agreement and the Closing Date, the Final
Offering Memorandum did not and will not (and any amendment or supplement thereto, at the date
thereof and at the Closing Date, will not) contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the Company makes
no representation or warranty as to information contained in or omitted from the Preliminary
Offering Memorandum or the Final Offering Memorandum in reliance upon and in conformity with
written information furnished to the Company and the Guarantors by any Initial Purchaser through
the Representative expressly for use therein, it being understood and agreed that the only such
information furnished by any Initial Purchaser consists of the information described as such in
Section 8 hereof.
(f) Disclosure Package. The term “Disclosure Package” shall mean (i) the Preliminary Offering
Memorandum, as amended or supplemented at the Applicable Time, (ii) the Final Term Sheet (as
defined herein) and (iii) any other writings that the parties expressly agree in writing to treat
as part of the Disclosure Package (“Issuer Written Information”). As of 7:00 a.m., New York time,
on May 5, 2011 (the “Applicable Time”), the Disclosure Package did not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading. The
preceding sentence does not apply to statements in or omissions from the Disclosure Package based
upon and in conformity with written information furnished to the Company and the Guarantors by any
Initial Purchaser through the Representative expressly for use therein, it being understood and
agreed that the only such information furnished by any Initial Purchaser consists of the
information described as such in Section 8 hereof.
(g) Statements in Offering Memorandum. The statements in the Disclosure Package and the Final
Offering Memorandum under the heading “Certain United States federal income tax consequences,”
insofar as such statements summarize legal matters or legal conclusions with respect thereto are
accurate and fair summaries of such legal matters.
(h) Offering Materials Furnished to Initial Purchasers. To the extent not publicly available,
the Company has delivered to the Representative copies of the materials contained in the Disclosure
Package and the Final Offering Memorandum, each as amended or supplemented,
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in such quantities and at such places as the Representative has reasonably requested for each
of the Initial Purchasers.
(i) Authorization of the Purchase Agreement. This Agreement has been duly authorized,
executed and delivered by the Company and each of the Guarantors.
(j) Authorization of the Indenture. The Indenture has been duly authorized by the Company and
each of the Guarantors; on the Closing Date, the Indenture will have been duly executed and
delivered by the Company and each of the Guarantors, respectively, and, assuming due authorization,
execution and delivery thereof by the Trustee, will constitute a valid and legally binding
agreement of the Company and each of the Guarantors enforceable against the Company and each of the
Guarantors in accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting
the rights and remedies of creditors or by general equitable principles; and the Indenture conforms
in all material respects to the description thereof contained in the Disclosure Package and the
Final Offering Memorandum.
(k) Authorization of the Notes. The Notes have been duly authorized by the Company; when the
Notes are executed, authenticated and issued in accordance with the terms of the Indenture and
delivered to and paid for by the Initial Purchasers pursuant to this Agreement on the Closing Date
(assuming due authentication of the Notes by the Trustee), such Notes will constitute valid and
legally binding obligations of the Company, entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms, except as enforcement thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to
or affecting the rights and remedies of creditors or by general equitable principles; and the Notes
will conform in all material respects to the description thereof contained in the Disclosure
Package and the Final Offering Memorandum.
(l) Authorization of the Guarantees. The Guarantees have been duly authorized by the
Guarantors; when the Guarantees are executed, authenticated and issued in accordance with the terms
of the Indenture and delivered to and paid for by the Initial Purchasers pursuant to this Agreement
on the respective Closing Date (assuming due authentication of the Guarantees by the Trustee), such
Guarantees will constitute valid and legally binding obligations of the Guarantors, entitled to the
benefits of the Indenture and enforceable against the Guarantors in accordance with their terms,
except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, or other
similar laws relating to or affecting the rights and remedies of creditors or by general equitable
principles; and the Guarantees will conform in all material respects to the description thereof
contained in the Disclosure Package and the Final Offering Memorandum.
(m) Authorization of the Conversion Shares. The Conversion Shares have been duly authorized
and reserved and, when issued upon conversion of the Notes in accordance with the terms of the
Notes and the Indenture, will be validly issued, fully paid and nonassessable, and the issuance of
such shares will not be subject to any preemptive or similar rights.
(n) No Material Adverse Change. Except as otherwise disclosed in the Disclosure Package and
the Final Offering Memorandum (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), subsequent to the respective dates as of which
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information is given in the Disclosure Package: (i) there has been no material adverse change,
or any development that could reasonably be expected to result in a material adverse change, in the
condition, financial or otherwise, or in the earnings, business, properties, operations or
prospects, whether or not arising from transactions in the ordinary course of business, of the
Company and its subsidiaries, considered as one entity (any such change is called a “Material
Adverse Change”); (ii) the Company and its subsidiaries, considered as one entity, have not
incurred any material liability or obligation, indirect, direct or contingent (in each case,
whether or not covered by insurance), nor entered into any material transaction or agreement; and
(iii) there has been no dividend or distribution of any kind declared, paid or made by the Company
or, except for dividends paid to the Company or other subsidiaries, any of its subsidiaries on any
class of capital stock or repurchase or redemption by the Company or any of its subsidiaries of any
class of capital stock.
(o) Independent Accountants. KPMG LLP, who have expressed their opinion with respect to the
financial statements (which term as used in this Agreement includes the related notes thereto) and
supporting schedules included as a part of or incorporated by reference in the Disclosure Package
and the Final Offering Memorandum, are independent registered public accountants with respect to
the Company as required by the Securities Act and the Exchange Act and the applicable published
rules and regulations thereunder.
(p) Preparation of the Financial Statements. The financial statements and the supporting
schedules included or incorporated by reference in the Disclosure Package and the Final Offering
Memorandum present fairly the consolidated financial position of the Company and its consolidated
subsidiaries as of and at the dates indicated and the results of their operations and cash flows
for the periods specified. Such financial statements and supporting schedules comply as to form
with the applicable accounting requirements of Regulation S-X and have been prepared in conformity
with generally accepted accounting principles as applied in the United States (“GAAP”) applied on a
consistent basis throughout the periods involved, except as may be expressly stated in the related
notes thereto. The financial data set forth in the Disclosure Package and the Final Offering
Memorandum under the captions “Summary—Selected consolidated financial data” and “Capitalization”
fairly present the information set forth therein on a basis consistent with that of the audited
financial statements contained in the Disclosure Package and the Final Offering Memorandum. The
Company’s ratios of earnings to fixed charges set forth in the Disclosure Package and the Final
Offering Memorandum have been calculated in compliance with Item 503(d) of Regulation S-K under the
Securities Act.
(q) Incorporation and Good Standing of the Company and its Subsidiaries. Each of the Company
and its subsidiaries has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation and has corporate power and
authority to own or lease, as the case may be, and operate its properties and to conduct its
business as described in the Disclosure Package and the Final Offering Memorandum and, in the case
of the Company, to enter into and perform its obligations under this Agreement. The Company and
each of its subsidiaries is duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except for such jurisdictions
where the failure to so qualify or to be in good standing would not, individually or in the
aggregate, result in a material adverse effect on the
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condition, financial or otherwise, or on the earnings, business, properties, operations or
prospects, whether or not arising from transactions in the ordinary course of business, of the
Company and its subsidiaries, considered as one entity (a “Material Adverse Effect”). All of the
issued and outstanding shares of capital stock of each subsidiary have been duly authorized and
validly issued, are fully paid and nonassessable and are owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance or
claim. The Company does not own or control, directly or indirectly, any corporation, association or
other entity other than the subsidiaries listed in Exhibit 21 to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2010.
(r) Capitalization and Other Capital Stock Matters. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Disclosure Package and the Final Offering
Memorandum under the caption “Capitalization” (other than for subsequent issuances, if any,
pursuant to employee benefit plans described in the Disclosure Package and the Final Offering
Memorandum or upon exercise of outstanding options or warrants described in the Disclosure Package
and the Final Offering Memorandum, as the case may be). The Common Stock (including the Conversion
Shares) conforms in all material respects to the description thereof contained in the Disclosure
Package and the Final Offering Memorandum. All of the issued and outstanding shares of Common Stock
have been duly authorized and validly issued, are fully paid and nonassessable and have been issued
in compliance with federal and state securities laws. None of the outstanding shares of Common
Stock were issued in violation of any preemptive rights, rights of first refusal or other similar
rights to subscribe for or purchase securities of the Company. There are no authorized or
outstanding options, warrants, preemptive rights, rights of first refusal or other rights to
purchase, or equity or debt securities convertible into or exchangeable or exercisable for, any
capital stock of the Company or any of its subsidiaries other than those accurately described in
the Disclosure Package and the Final Offering Memorandum. The description of the Company’s stock
option, stock bonus and other stock plans or arrangements, and the options or other rights granted
thereunder, set forth or incorporated by reference in the Disclosure Package and the Final Offering
Memorandum accurately and fairly presents and summarizes such plans, arrangements, options and
rights.
(s) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals
Required. Neither the Company nor any of its subsidiaries is (i) in violation or in default (or,
with the giving of notice or lapse of time, would be in default) (“Default”) under its charter or
by-laws, (ii) in Default under any indenture, mortgage, loan or credit agreement, deed of trust,
note, contract, franchise, lease or other agreement, obligation, condition, covenant or instrument
to which the Company or such subsidiary is a party or by which it may be bound (including, without
limitation, the Credit Agreement, dated as of October 21, 2010 (the “Credit Agreement”), among the
Company, Alaska Communications Systems Holdings, Inc., the lenders named therein and JPMorgan Chase
Bank, N.A., as Administrative Agent), or to which any of the property or assets of the Company or
any of its subsidiaries is subject (each, an “Existing Instrument”) or (iii) in violation of any
statute, law, rule, regulation, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having jurisdiction over
the Company or such subsidiary or any of its properties, as applicable, except with respect to
clause (ii) only, for such Defaults as would not, individually or in the aggregate, have a Material
Adverse Effect.
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The execution, delivery and performance by the Company and each of the Guarantors of the
Operative Documents and consummation of the transactions contemplated thereby (including, without
limitation, the application of the net proceeds from the sale of the Notes sold), by the Disclosure
Package and by the Final Offering Memorandum (i) have been duly authorized by all necessary
corporate action and will not result in any Default under the charter or by-laws of the Company or
any such Guarantor, (ii) will not conflict with or constitute a breach of, or Default or a Debt
Repayment Triggering Event (as defined below) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any such Guarantor
pursuant to, or require the consent of any other party to, any Existing Instrument and (iii) will
not result in any violation of any statute, law, rule, regulation, judgment, order or decree
applicable to the Company or any such Guarantor of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having jurisdiction over the Company or
any such Guarantor or any of its or their properties.
No consent, approval, authorization or other order of, or registration or filing with, any
court or other governmental or regulatory authority or agency is required for the Company’s or the
Guarantors’ execution, delivery and performance of the Operative Documents and consummation of the
transactions contemplated thereby, by the Disclosure Package and by the Final Offering Memorandum,
except (i) such as have been obtained or made by the Company and are in full force and effect under
the Securities Act, applicable state securities or blue sky laws and from the Financial Industry
Regulatory Authority (“FINRA”) and (ii) such as have been obtained or made by the Company under the
rules of the Nasdaq Stock Market LLC.
As used herein, a “Debt Repayment Triggering Event” means any event or condition which gives,
or with the giving of notice or lapse of time would give, 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 the Company or
any of its subsidiaries.
(t) No Stamp or Transfer Taxes. There are no stamp or other issuance or transfer taxes or
duties or other similar fees or charges under federal law or the laws of any state, or any
political subdivision thereof, or any other U.S. or non-U.S. governmental authority required to be
paid in connection with the execution and delivery of this Agreement, the issuance or sale by the
Company of the Notes, upon the issuance of Common Stock upon the conversion of the Notes or upon
the issuance by the Guarantors of the Guarantees.
(u) No Material Actions or Proceedings. Except as otherwise disclosed in the Disclosure
Package and the Final Offering Memorandum, there are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company’s knowledge, threatened against or affecting the
Company or any of its subsidiaries, (i) which has as the subject thereof any officer or director
of, or property owned or leased by, the Company or any of its subsidiaries or (ii) relating to
environmental or employment discrimination matters, where in either such case, (A) there is a
reasonable possibility that such action, suit or proceeding might be determined adversely to the
Company or such subsidiary, or any officer or director of, or property owned or leased by, the
Company or any of its subsidiaries and (B) any such action, suit or proceeding, if so determined
adversely, would reasonably be expected to have a Material
8
Adverse Effect or adversely affect the consummation of the transactions contemplated by this
Agreement.
(v) Labor Matters. (i) No labor problem or dispute with the employees of the Company or any
of its subsidiaries exists or is threatened or imminent, and (ii) none of the Company or any of the
Guarantors is aware of any existing, threatened or imminent labor disturbance by the employees of
any of its or its subsidiaries’ principal suppliers, contractors or customers, in each case, that
could have a Material Adverse Effect.
(w) Intellectual Property Rights. The Company and its subsidiaries own, possess, license or
have other valid and subsisting rights to use, on reasonable terms, all patents, patent
applications, trademarks, service marks, trade names, and registrations and applications thereof,
copyrights (whether registered or unregistered), licenses, inventions, trade secrets, technology,
know-how (including other unpatented or unpatentable proprietary or confidential information,
systems or procedures) and other intellectual property (collectively, the “Intellectual Property”)
necessary for the conduct of the Company’s business as now conducted or as proposed in the
Disclosure Package and the Final Offering Memorandum to be conducted. Except as set forth in the
Disclosure Package and the Final Offering Memorandum, (a) no party has been granted an exclusive
license to use any portion of such Intellectual Property owned by the Company; (b) there is no
material infringement by third parties of any such Intellectual Property owned by or exclusively
licensed to the Company; (c) there is no pending or threatened action, suit, proceeding or claim by
others challenging the Company’s rights in or to any material Intellectual Property, and none of
the Company or any of the Guarantors is aware of any facts that would form a reasonable basis for
any such claim; (d) there is no pending or threatened action, suit, proceeding or claim by others
challenging the validity or scope of any such Intellectual Property, and none of the Company or any
of the Guarantors is aware of any facts that would form a reasonable basis for any such claim; and
(e) there is no pending or threatened action, suit, proceeding or claim by others that the
Company’s business as now conducted infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of others, and none of the Company or any of
the Guarantors is aware of any other fact that would form a reasonable basis for any such claim.
(x) All Necessary Permits, etc. The Company and each subsidiary, taken as a whole, possess
such valid and current licenses, certificates, authorizations or permits issued by the appropriate
state, federal or foreign regulatory agencies or bodies necessary to conduct their respective
businesses, and neither the Company nor any subsidiary has received any notice of proceedings
relating to the revocation or modification of, or non-compliance with, any such license,
certificate, authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could have a Material Adverse Effect.
(y) Title to Properties. The Company and each of its subsidiaries has good and marketable
title to all the properties and assets reflected as owned in the financial statements referred to
in Section 1(n) above or elsewhere in the Disclosure Package and the Final Offering Memorandum, in
each case free and clear of any security interests, mortgages, liens, encumbrances, equities,
claims and other defects, except such as do not materially and adversely affect the value of such
property and do not materially interfere with the use made or proposed to be made of such property
by the Company or such subsidiary. The real property, improvements,
9
equipment and personal property held under lease by the Company or any subsidiary are held
under valid and enforceable leases, with such exceptions as are not material and do not materially
interfere with the use made or proposed to be made of such real property, improvements, equipment
or personal property by the Company or such subsidiary.
(z) Tax Law Compliance. The Company and its consolidated subsidiaries have filed all
necessary federal, state, local and foreign income and franchise tax returns in a timely manner and
have paid all taxes required to be paid by any of them and, if due and payable, any related or
similar assessment, fine or penalty levied against any of them, except for any taxes, assessments,
fines or penalties (i) as may be being contested in good faith and by appropriate proceedings or
(ii) the non-payment of which would not result in a Material Adverse Effect. The Company has made
appropriate provisions in the financial statements referred to in Section 1(p) above in respect of
all federal, state, local and foreign income and franchise taxes for all current or prior periods
as to which the tax liability of the Company or any of its consolidated subsidiaries has not been
finally determined.
(aa) Neither Company nor any Guarantor is an “Investment Company”. The Company and each of
the Guarantors has been advised of the rules and requirements under the Investment Company Act of
1940, as amended, and the rules and regulations promulgated thereunder (the “Investment Company
Act”). None of the Company or any of the Guarantors is, and after receipt of payment for the Notes
and the application of the proceeds thereof as contemplated under the caption “Use of proceeds” in
the Disclosure Package and the Final Offering Memorandum will be, an “investment company” within
the meaning of the Investment Company Act and will conduct its business in a manner so that it will
not become subject to the Investment Company Act.
(bb) Compliance with Reporting Requirements. The Company is subject to and in full compliance
with the reporting requirements of Section 13 or Section 15(d) of the Exchange Act.
(cc) Insurance. Each of the Company and its subsidiaries are insured by recognized,
financially sound and reputable institutions with policies in such amounts and with such
deductibles and covering such risks as are generally deemed adequate and customary for their
businesses including, but not limited to, policies covering real and personal property owned or
leased by the Company and its subsidiaries against theft, damage, destruction, acts of terrorism or
vandalism and earthquakes. All policies of insurance and fidelity or surety bonds insuring the
Company or any of its subsidiaries or their respective businesses, assets, employees, officers and
directors are in full force and effect; the Company and its subsidiaries are in compliance with the
terms of such policies and instruments in all material respects; and there are no claims by the
Company or any of its subsidiaries under any such policy or instrument as to which any insurance
company is denying liability or defending under a reservation of rights clause; and neither the
Company nor any such subsidiary has been refused any insurance coverage sought or applied for. The
Company has no reason to believe that it or any subsidiary will not be able (i) to renew its
existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage
from similar institutions as may be necessary or appropriate to conduct its business as now
conducted and at a cost that would not have a Material Adverse Effect.
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(dd) No Restriction on Dividends or other Distributions. No subsidiary of the Company is
currently prohibited, directly or indirectly, from paying any dividends or other distributions to
the Company or any of the Guarantors, from making any other distribution on such subsidiary’s
capital stock, from repaying to the Company or any Guarantor any loans or advances to such
subsidiary from the Company or such Guarantor or from transferring any of such subsidiary’s
property or assets to the Company or any other subsidiary of the Company, except as described in or
contemplated by the Disclosure Package and the Final Offering Memorandum.
(ee) No Price Stabilization or Manipulation. The Company has not taken and will not take,
directly or indirectly, any action designed to or that might be reasonably expected to cause or
result in stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Notes. The Company acknowledges that the Initial Purchasers may engage in
passive market making transactions in the Common Stock on the Nasdaq Stock Market LLC in accordance
with Regulation M under the Exchange Act.
(ff) Related Party Transactions. There are no material business relationships or related
party transactions involving the Company or any subsidiary or any other person that have not been
described in the Disclosure Package or the Final Offering Memorandum.
(gg) No General Solicitation. None of the Company or any of its affiliates (as defined in
Rule 501(b) of Regulation D under the Securities Act (“Regulation D”)), has, directly or through an
agent, engaged in any form of general solicitation or general advertising (as those terms are used
in Regulation D) in connection with the offering of the Notes or the Conversion Shares under the
Securities Act or in any manner involving a public offering within the meaning of Section 4(2) of
the Securities Act; the Company has not entered into any contractual arrangement with respect to
the distribution of the Notes or the Conversion Shares except for this Agreement, and the Company
will not enter into any such arrangement.
(hh) No Unlawful Contributions or Other Payments. Neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is aware of or has taken any action, directly
or indirectly, that would result in a violation by such persons of the FCPA, including, without
limitation, making use of the mails or any means or instrumentality of interstate commerce
corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of
any money, or other property, gift, promise to give, or authorization of the giving of anything of
value to any “foreign official” (as such term is defined in the FCPA) or any foreign political
party or official thereof or any candidate for foreign political office, in contravention of the
FCPA and the Company, its subsidiaries and, to the knowledge of the Company and each Guarantor, its
affiliates have conducted their businesses in compliance with the FCPA and have instituted and
maintain policies and procedures designed to ensure, and which are reasonably expected to continue
to ensure, continued compliance therewith. “FCPA” means the Foreign Corrupt Practices Act of 1977,
as amended, and the rules and regulations thereunder.
(ii) No Conflict with Money Laundering Laws. The operations of the Company and its
subsidiaries are and have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting
11
Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the
rules and regulations thereunder and any related or similar rules, regulations or guidelines
issued, administered or enforced by any governmental agency (collectively, the “Money Laundering
Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority
or body or any arbitrator involving the Company or any of its subsidiaries with respect to the
Money Laundering Laws is pending or, to the best knowledge of the Company or any of the Guarantors,
threatened.
(jj) No Conflict with OFAC Laws. Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company or any Guarantor, any director, officer, agent, employee or affiliate of
the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by
the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will
not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture partner or other person or entity, for the
purpose of financing the activities of any person currently subject to any U.S. sanctions
administered by OFAC.
(kk) Compliance with Environmental Laws. Except as otherwise disclosed in the Disclosure
Package and the Final Offering Memorandum, (i) neither the Company nor any of its subsidiaries is
in violation of any federal, state, local or foreign law, regulation, order, permit or other
requirement relating to pollution or 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 emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum and petroleum products (collectively, “Materials of Environmental
Concern”), or otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern (collectively,
“Environmental Laws”), which violation includes, but is not limited to, noncompliance with any
permits or other governmental authorizations required for the operation of the business of the
Company or its subsidiaries under applicable Environmental Laws, or noncompliance with the terms
and conditions thereof, nor has the Company or any of its subsidiaries received any written
communication, whether from a governmental authority, citizens group, employee or otherwise, that
alleges that the Company or any of its subsidiaries is in violation of any Environmental Law,
except as would not, individually or in the aggregate, have a Material Adverse Effect; (ii) there
is no claim, action or cause of action filed with a court or governmental authority, no
investigation with respect to which the Company has received written notice, and no written notice
by any person or entity alleging potential liability for investigatory costs, cleanup costs,
governmental responses costs, natural resources damages, property damages, personal injuries,
attorneys’ fees or penalties arising out of, based on or resulting from the presence, or release
into the environment, of any Material of Environmental Concern at any location owned, leased or
operated by the Company or any of its subsidiaries, now or in the past (collectively,
“Environmental Claims”), pending or, to the best of the Company’s and each Guarantor’s knowledge,
threatened against the Company or any of its subsidiaries or any person or entity whose liability
for any Environmental Claim the Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law, except as would not, individually or in the aggregate, have a
Material Adverse Effect; (iii) to the best of the Company’s and each Guarantor’s knowledge, there
are no past, present or
12
anticipated future actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence or disposal of any
Material of Environmental Concern, that reasonably could result in a violation of any Environmental
Law, require expenditures to be incurred pursuant to Environmental Law, or form the basis of a
potential Environmental Claim against the Company or any of its subsidiaries or against any person
or entity whose liability for any Environmental Claim the Company or any of its subsidiaries has
retained or assumed either contractually or by operation of law, except as would not, individually
or in the aggregate, have a Material Adverse Effect; and (iv) neither the Company nor any of its
subsidiaries is subject to any pending or threatened proceeding under Environmental Law to which a
governmental authority is a party and which is reasonably likely to result in monetary sanctions of
$100,000 or more.
(ll) Periodic Review of Costs of Environmental Compliance. In the ordinary course of its
business, the Company conducts a periodic review of the effect of Environmental Laws on the
business, operations and properties of the Company and its subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for cleanup, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties). On the basis of such review and the
amount of its established reserves, the Company has reasonably concluded that such associated costs
and liabilities would not, individually or in the aggregate, have a Material Adverse Effect.
(mm) ERISA Compliance. None of the following events has occurred or exists: (i) a failure to
fulfill the obligations, if any, under the minimum funding standards of Section 302 of the United
States Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the regulations
and published interpretations thereunder with respect to a Plan, determined without regard to any
waiver of such obligations or extension of any amortization period; (ii) an audit or investigation
by the Internal Revenue Service, the U.S. Department of Labor, the Pension Benefit Guaranty
Corporation or any other federal or state governmental agency or any foreign regulatory agency with
respect to the employment or compensation of employees by the Company or any of its subsidiaries;
(iii) any breach of any contractual obligation, or any violation of law or applicable qualification
standards, with respect to the employment or compensation of employees by the Company or any of its
subsidiaries, except in each case with respect to the events or conditions set forth in (ii) and
(iii) hereof, as could not, individually or in the aggregate, result in a Material Adverse Effect.
None of the following events has occurred or is reasonably likely to occur: (i) a material increase
in the aggregate amount of contributions required to be made to all Plans in the current fiscal
year of the Company and its subsidiaries compared to the amount of such contributions made in the
Company and its subsidiaries’ most recently completed fiscal year; (ii) a material increase in the
Company and its subsidiaries’ “accumulated post-retirement benefit obligations” (within the meaning
of Statement of Financial Accounting Standards 106) compared to the amount of such obligations in
the Company and its subsidiaries’ most recently completed fiscal year; (iii) any event or condition
giving rise to a liability under Title IV of ERISA; or (iv) the filing of a claim by one or more
employees or former employees of the Company or any of its subsidiaries related to its or their
employment, except in each case with respect to the events or conditions set forth in (iii) and
(iv) hereof, as could not, individually or in the aggregate, result in a Material Adverse Effect.
For purposes of this paragraph, the term “Plan” means a plan (within the meaning of Section 3(3) of
ERISA)
13
subject to Title IV of ERISA with respect to which the Company or any of its subsidiaries may
have any liability.
(nn) Brokers. There is no broker, finder or other party that is entitled to receive from the
Company any brokerage or finder’s fee or other fee or commission as a result of any transactions
contemplated by this Agreement.
(oo) No Outstanding Loans or Other Indebtedness. There are no outstanding loans, advances
(except normal advances for business expenses in the ordinary course of business) or guarantees or
indebtedness by the Company to or for the benefit of any of the officers or directors of the
Company or any of the members of any of their families, except as disclosed in the Disclosure
Package and the Final Offering Memorandum.
(pp) Xxxxxxxx-Xxxxx Compliance. There is and has been no failure on the part of the Company
and any of the Company’s directors or officers, in their capacities as such, to comply with any
provision of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations promulgated in connection
therewith (the “Xxxxxxxx-Xxxxx Act”), including Section 402 related to loans and Sections 302 and
906 related to certifications.
(qq) Internal Controls and Procedures. The Company maintains (i) effective internal control
over financial reporting as defined in Rule 13a-15 under the Exchange Act, and (ii) a system of
internal accounting controls sufficient to provide reasonable assurance that (A) transactions are
executed in accordance with management’s general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (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.
(rr) No Material Weakness in Internal Controls. Except as disclosed in the Disclosure Package
and the Final Offering Memorandum, since the end of the Company’s most recent audited fiscal year,
there has been (i) no material weakness in the Company’s internal control over financial reporting
(whether or not remediated) and (ii) no change in the Company’s internal control over financial
reporting that has materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.
(ss) Disclosure Controls. The Company and its subsidiaries maintain an effective system of
“disclosure controls and procedures” (as defined in Rule 13a-15 of the Exchange Act) that is
designed to ensure that information required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the Commission’s rules and forms, including controls and procedures
designed to ensure that such information is accumulated and communicated to the Company’s
management as appropriate to allow timely decisions regarding required disclosure. The Company and
its subsidiaries have carried out evaluations of the effectiveness of their disclosure controls and
procedures as required by Rule 13a-15 of the Exchange Act.
14
(tt) Stock Options. With respect to the stock options (the “Stock Options”) granted pursuant
to the stock-based compensation plans of the Company and its subsidiaries (the “Company Stock
Plans”) (i) each Stock Option designated by the Company or the relevant subsidiary of the Company
at the time of grant as an “incentive stock option” under Section 422 of the Internal Revenue Code
of 1986, as amended (the “Code”), so qualifies, (ii) each grant of a Stock Option was duly
authorized no later than the date on which the grant of such Stock Option was by its terms to be
effective (the “Grant Date”) by all necessary corporate action, including, as applicable, approval
by the board of directors of the Company or the relevant subsidiary of the Company (or a duly
constituted and authorized committee thereof) and any required stockholder approval by the
necessary number of votes or written consents, and the award agreement governing such grant (if
any) was duly executed and delivered by each party thereto, (iii) each such grant was made in
accordance with the terms of the Company Stock Plans, the Exchange Act and all other applicable
laws and regulatory rules or requirements, including the rules of Nasdaq Stock Market LLC and any
other exchange on which the securities of the Company or the relevant subsidiary of the Company are
traded, (iv) the per share exercise price of each Stock Option was equal to or greater than the
fair market value of a share of Common Stock on the applicable Grant Date and (v) each such grant
was properly accounted for in accordance with GAAP in the consolidated financial statements
(including the related notes) of the Company and disclosed in the Company’s filings with the
Commission in accordance with the Exchange Act and all other applicable laws, except in the case of
clauses (ii), (iii) or (iv) for such grants that would not, individually or in the aggregate, have
a Material Adverse Effect.
(uu) Neither the Company nor any of its subsidiaries has knowingly granted, and there is no
and has been no policy or practice of the Company or any of its subsidiaries of granting, Stock
Options prior to, or otherwise coordinating the grant of Stock Options with, the release or other
public announcement of material information regarding the Company or its subsidiaries or their
results of operations or prospects.
(vv) Subsidiaries. The subsidiaries listed on Annex A attached hereto are the only
significant subsidiaries of the Company as defined by Rule 1-02 of Regulation S-X (the
“Subsidiaries”).
(ww) Lending Relationship. Except as disclosed in the Disclosure Package and the Final
Offering Memorandum, the Company (i) does not have any material lending or other relationship with
any bank or lending affiliate of any Initial Purchaser and (ii) does not intend to use any of the
proceeds from the sale of the Notes hereunder to repay any outstanding debt owed to any affiliate
of any Initial Purchaser.
(xx) Solvency. On and immediately after the Closing Date, each of the Company and each
Guarantor (after giving effect to the issuance of the Notes and the other transactions related
thereto as described in each of the Disclosure Package and the Offering Memorandum) will be
Solvent. As used in this paragraph, the term “Solvent” means, with respect to a particular date,
that on such date (i) the present fair market value (or present fair saleable value) of the assets
of the Company or the Guarantor, as applicable, is not less than the total amount required to pay
the liabilities of the Company or the Guarantor, as applicable, on its total existing debts and
liabilities (including contingent liabilities) as they become absolute and matured; (ii) the
Company or the Guarantor, as applicable, is able to realize upon its assets and pay its debts and
other liabilities,
15
contingent obligations and commitments as they mature and become due in the normal course of
business; (iii) assuming consummation of the issuance of the Notes as contemplated by this
Agreement and the Disclosure Package, the Company or the Guarantor, as applicable, is not incurring
debts or liabilities beyond its ability to pay as such debts and liabilities mature; (iv) the
Company or the Guarantor, as applicable, is not engaged in any business or transaction, and does
not propose to engage in any business or transaction, for which its property would constitute
unreasonably small capital after giving due consideration to the prevailing practice in the
industry in which the Company or the Guarantor, as applicable, is engaged; and (v) the Company or
the Guarantor, as applicable, is not a defendant in any civil action that would result in a
judgment that the Company or the Guarantor, as applicable, is or would become unable to satisfy.
(yy) Statistical and Market Data. Nothing has come to the attention of the Company that has
caused the Company to believe that the statistical and market-related data included or incorporated
by reference in each of the Disclosure Package and the Offering Memorandum is not based on or
derived from sources that are reliable and accurate in all material respects.
Any certificate signed by an officer of the Company or any Guarantor and delivered to the
Representative or to counsel for the Initial Purchasers shall be deemed to be a representation and
warranty by the Company or such Guarantor to each Initial Purchaser as to the matters set forth
therein.
Section 2. Purchase, Sale and Delivery of the Notes
(a) The Notes. The Company agrees to issue and sell to the several Initial Purchasers the
Notes upon the terms herein set forth. On the basis of the representations, warranties and
agreements herein contained, and upon the terms but subject to the conditions herein set forth, the
Initial Purchasers agree, severally and not jointly, to purchase from the Company the respective
aggregate principal amount of Notes set forth opposite their names on Schedule A. The
purchase price per Note to be paid by the several Initial Purchasers to the Company shall be 97% of
the aggregate principal amount thereof.
(b) The Closing Date. Delivery of the Notes to be purchased by the Initial Purchasers and
payment therefor shall be made at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, XX 00000 (or such other place as may be agreed to by the Company, the Guarantors
and the Representative) at 9:00 a.m., New York time, on May 10, 2011, or such other time and date
not later than 1:30 p.m., New York time, on May 17, 2011 as the Representative shall designate by
notice to the Company (the time and date of such closing are called the “Closing Date”).
(c) Payment for the Notes. Payment for the Notes shall be made at the Closing Date by wire
transfer of immediately available funds to the order of the Company.
It is understood that the Representative has been authorized, for its own account and the
accounts of the several Initial Purchasers, to accept delivery of and receipt for, and make payment
of the purchase price for, the Notes the Initial Purchasers have agreed to purchase. The
Representative may (but shall not be obligated to) make payment for any Notes to be purchased by
any Initial Purchaser whose funds shall not have been received by the Representative by the
16
Closing Date for the account of such Initial Purchaser, but any such payment shall not relieve
such Initial Purchaser from any of its obligations under this Agreement.
(d) Delivery of the Notes. The Company shall deliver, or cause to be delivered, to the
Representative for the accounts of the several Initial Purchasers the Notes at the Closing Date,
against the irrevocable release of a wire transfer of immediately available funds for the amount of
the purchase price therefor. Delivery of the Notes shall be made through the facilities of The
Depository Trust Company unless the Representative shall otherwise instruct. Time shall be of the
essence, and delivery at the time and place specified in this Agreement is a further condition to
the obligations of the Initial Purchasers.
Section 3. Covenants of the Company and the Guarantors
Each of the Company and the Guarantors, jointly and severally, covenant and agree with each
Initial Purchaser as follows:
(a) Representative’s Review of Proposed Amendments and Supplements. During such period
beginning on the date hereof and ending on the date of the completion of the resale of the Notes by
the Initial Purchasers (as notified by the Representative to the Company), prior to amending or
supplementing the Disclosure Package or the Final Offering Memorandum (other than any filings of
any quarterly report on Form 10-Q or any amendment or supplement to such form or to the Company’s
Annual Report on Form 10-K for the year ended December 31, 2010), the Company and the Guarantors
shall furnish to the Representative for review a copy of each such proposed amendment or
supplement, and the Company shall not print, use or distribute such proposed amendment or
supplement to which the Representative reasonably objects.
(b) Amendments and Supplements to the Offering Memorandum and Other Securities Act Matters.
If, at any time prior to the completion of the resale of the Notes by the Initial Purchasers (as
notified by the Representative to the Company), any event or development shall occur or condition
exist as a result of which it is necessary to amend or supplement the Disclosure Package or the
Final Offering Memorandum in order that the Disclosure Package or the Final Offering Memorandum
will not include an untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the circumstances under which
they were made or then prevailing, as the case may be, not misleading, or if in the opinion of the
Representative or counsel for the Initial Purchasers it is otherwise necessary to amend or
supplement the Disclosure Package or the Final Offering Memorandum to comply with law, the Company
and each of the Guarantors shall promptly notify the Initial Purchasers and prepare, subject to
Section 3(a) hereof, such amendment or supplement as may be necessary to correct such untrue
statement or omission.
(c) Copies of Disclosure Package and the Offering Memorandum. To the extent not publicly
available, the Company and the Guarantors agree to furnish to the Representative, without charge,
until the earlier of nine months after the date hereof or the completion of the resale of the Notes
by the Initial Purchasers (as notified by the Initial Purchasers to the Company) as many copies of
the materials contained in the Disclosure Package and the Final Offering Memorandum and any
amendments and supplements thereto as the Initial Purchasers may request.
17
(d) Blue Sky Compliance. The Company and the Guarantors shall cooperate with the
Representative and counsel for the Initial Purchasers, as the Initial Purchasers may reasonably
request from time to time, to qualify or register the Notes for sale under (or obtain exemptions
from the application of) the state securities or blue sky laws or Canadian provincial securities
laws or other foreign laws of those jurisdictions designated by the Representative, shall comply
with such laws and shall continue such qualifications, registrations and exemptions in effect so
long as required for the distribution of the Notes. None of the Company or any of the Guarantors
shall be required to qualify as a foreign corporation or to take any action that would subject it
to general service of process in any such jurisdiction where it is not presently qualified or where
it would be subject to taxation as a foreign corporation, other than those arising out of the
offering or sale of the Notes in any jurisdiction where it is not now so subject. The Company and
the Guarantors will advise the Representative promptly of the suspension of the qualification or
registration of (or any such exemption relating to) the Notes for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event
of the issuance of any order suspending such qualification, registration or exemption, the Company
and the Guarantors shall use its best efforts to obtain the withdrawal thereof at the earliest
possible moment.
(e) Rule 144A Information. For so long as any of the Notes are “restricted securities” within
the meaning of Rule 144(a)(3) under the Securities Act, the Company shall provide to any holder of
the Notes or to any prospective purchaser of the Notes designated by any holder, upon request of
such holder or prospective purchaser, information required to be provided by Rule 144A(d)(4) of the
Securities Act if, at the time of such request, the Company is not subject to the reporting
requirements under Section 13 or 15(d) of the Exchange Act.
(f) Compliance with Securities Law. The Company will comply with all applicable securities
and other laws, rules and regulations, including, without limitation, the Xxxxxxxx-Xxxxx Act, and
use its best efforts to cause the Company’s directors and officers, in their capacities as such, to
comply with such laws, rules and regulations, including, without limitation, the provisions of the
Xxxxxxxx-Xxxxx Act.
(g) Legends. Each of the Notes will bear, to the extent applicable, the legend contained in
“Transfer restrictions” in the Disclosure Package and the Final Offering Memorandum for the time
period and upon the other terms stated therein.
(h) Written Information Concerning the Offering. Without the prior written consent of the
Representative, neither the Company nor any of the Guarantors will give to any prospective
purchaser of the Notes or any other person not in its employ any written information concerning the
offering of the Notes other than the Disclosure Package, the Final Offering Memorandum or any other
offering materials prepared by or with the prior consent of the Representative.
(i) No General Solicitation. Except following the effectiveness of an applicable registration
statement, the Company will not, and will cause its subsidiaries not to, solicit any offer to buy
or offer to sell the Notes by means of any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act.
18
(j) No Integration. The Company will not, and will cause its subsidiaries not to, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any “security” (as defined
in the Securities Act) in a transaction that could be integrated with the sale of the Notes in a
manner that would require the registration under the Securities Act of the Notes.
(k) Information to Publishers. Any information provided by the Company or any of the
Guarantors to publishers of publicly available databases about the terms of the Notes and the
Indenture shall include a statement that the Notes have not been registered under the Act and are
subject to restrictions under Rule 144A of the Act.
(l) DTC. The Company and each of the Guarantors will cooperate with the Representative and
use its best efforts to permit the Notes to be eligible for clearance and settlement through The
Depository Trust Company.
(m) Rule 144 Tolling. The Company will not, and will not permit any of its “affiliates” (as
defined in Rule 144 under the Securities Act) to, resell any of the Notes that constitute
“restricted securities” under Rule 144 that have been reacquired by any of them.
(n) Use of Proceeds. The Company shall apply the net proceeds from the sale of the Notes sold
by it in the manner described under the caption “Use of Proceeds” in the Disclosure Package and the
Final Offering Memorandum and such application of net proceeds will be in accordance with
applicable law, including the requirements of the Exchange Act.
(o) Transfer Agent. The Company shall engage and maintain, at its expense, a registrar and
transfer agent for the Common Stock.
(p) Available Conversion Shares. The Company shall reserve and keep available at all times,
free of pre-emptive rights, the full number of Conversion Shares.
(q) Conversion Rate. Between the date hereof and the Closing Date, none of the Company or any
of the Guarantors will do or authorize any act or thing that would result in an adjustment of the
conversion rate.
(r) Company to Provide Interim Financial Statements and Other Information. Prior to the
Closing Date, the Company will furnish the Initial Purchasers, as soon as they have been prepared
by and are available to the Company, a copy of any unaudited interim financial statements of the
Company for any period subsequent to the period covered by the most recent financial statements
appearing in the Disclosure Package and the Final Offering Memorandum.
(s) Agreement Not to Offer or Sell Additional Securities. During the period commencing on the
date hereof and ending on the 60th day following the date of the Final Offering Memorandum, none of
the Company or any of the Guarantors will, without the prior written consent of the Representative
(which consent may be withheld at the sole discretion of the Representative), directly or
indirectly, sell, offer, contract or grant any option to sell, pledge, transfer or establish an
open “put equivalent position” or liquidate or decrease a “call equivalent position” within the
meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of or transfer (or enter into
any transaction that is designed to, or might reasonably be expected to, result in the disposition
of), or announce the offering of, or file any registration statement under
19
the Securities Act in respect of, any shares of Common Stock, options or warrants to acquire
shares of the Common Stock or securities exchangeable or exercisable for or convertible into shares
of Common Stock (other than as contemplated by this Agreement with respect to the Notes);
provided, however, that the Company may issue shares of its Common Stock or options
to purchase its Common Stock, or Common Stock (i) upon conversion of the Company’s 5.75%
Convertible Notes due 2013, (ii) upon exercise of warrants that were issued concurrently with the
Company’s 5.75% Convertible Notes due 2013 or (iii) upon exercise of options, pursuant to any stock
option, stock bonus or other stock plan or arrangement described in the Disclosure Package and the
Final Offering Memorandum, but only if the holders of such shares, options, or shares issued upon
exercise of such options, agree in writing not to sell, offer, dispose of or otherwise transfer any
such shares or options (except forfeitures of Common Stock or options to purchase Common Stock by
the directors and executive officers subject to the lock-up agreement attached as Exhibit F
hereto to satisfy tax withholding obligations and, in the case of options exercises, payment of
exercise price, in connection with the vesting of equity awards acquired by directors and executive
officers pursuant to equity incentive plans existing and as in effect on the date of this Agreement
will be permitted, provided that the number of shares sold for consideration on the open
market or to any third party by all of the executive officers and directors of the Company who are
subject to the lock-up agreement does not in the aggregate exceed 200,000 shares of Common Stock)
during such 60-day period without the prior written consent of the Representative (which consent
may be withheld at the sole discretion of the Representative).
(t) Future Reports to Stockholders. The Company will make available to its stockholders as
soon as practicable after the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders’ equity and cash flows of the Company and its consolidated
subsidiaries certified by independent public accountants) and, as soon as practicable after the end
of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending
after the date of the Final Offering Memorandum), to make available to its stockholders
consolidated summary financial information of the Company and its subsidiaries for such quarter in
reasonable detail.
(u) Future Reports to the Representative. During the period of five years hereafter, the
Company will furnish to the Representative (i) as soon as practicable after the end of each fiscal
year, copies of the Annual Report of the Company containing the balance sheet of the Company as of
the close of such fiscal year and statements of income, stockholders’ equity and cash flows for the
year then ended and the opinion thereon of the Company’s independent public or certified public
accountants; (ii) as soon as practicable after the filing thereof, copies of each proxy statement,
Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other
report filed by the Company with the Commission, FINRA or any securities exchange; and (iii) as
soon as available, copies of any report or communication of the Company mailed generally to holders
of its capital stock.
(v) Investment Limitation. The Company shall not invest or otherwise use the proceeds
received by the Company from its sale of the Notes in such a manner as would require the Company or
any of its subsidiaries to register as an investment company under the Investment Company Act.
20
(w) No Manipulation of Price. None of the Company or any of the Guarantors will take,
directly or indirectly, any action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, under the Exchange Act or otherwise, the stabilization or
manipulation of the price of any securities of the Company to facilitate the sale or resale of the
Notes.
(x) Existing Lock-Up Agreements. The Company will enforce all existing agreements between the
Company and any of its security holders that prohibit the sale, transfer, assignment, pledge or
hypothecation of any of the Company’s securities in connection with the Company’s initial public
offering. In addition, the Company will direct the transfer agent to place stop transfer
restrictions upon any such securities of the Company that are bound by such existing “lock-up”
agreements for the duration of the periods contemplated in such agreements.
(y) New Lock-Up Agreements. The Company will enforce all agreements between the Company and
any of its security holders to be entered into pursuant to this agreement that prohibit the sale,
transfer, assignment, pledge or hypothecation of any of the Company’s securities. In addition, the
Company will direct the transfer agent to place stop transfer restrictions upon any such securities
of the Company that are bound by such “lock-up” agreements for the duration of the periods
contemplated in such agreements.
(z) Final Term Sheet. The Company will prepare a final term sheet, containing solely a
description of the Notes and the offering thereof, in the form approved by you and attached as
Schedule C hereto (the “Final Term Sheet”).
Section 4. Payment of Expenses
Each of the Company and the Guarantors, jointly and severally, agrees to pay all costs, fees
and expenses incurred in connection with the performance of its obligations hereunder and in
connection with the transactions contemplated hereby, including without limitation (i) all expenses
incident to the issuance and delivery of the Notes (including all printing and engraving costs),
(ii) all fees and expenses of the Trustee under the Indenture, (iii) all necessary issue, transfer
and other stamp taxes in connection with the issuance and sale of the Notes to the Initial
Purchasers, (iv) all fees and expenses of the Company’s and the Guarantors’ counsel, independent
public or certified public accountants and other advisors, (v) all costs and expenses incurred in
connection with the preparation, printing, shipping and distribution of the materials contained in
the Disclosure Package and the Final Offering Memorandum, all amendments and supplements thereto
and this Agreement, (vi) all filing fees, attorneys’ fees and expenses incurred by the Company, the
Guarantors or the Initial Purchasers in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the Notes for offer and
sale under the state securities or blue sky laws or the provincial securities laws of Canada, and,
if requested by the Representative, preparing and printing a “Blue Sky Survey” or memorandum, and
any supplements thereto, advising the Initial Purchasers of such qualifications, registrations and
exemptions, (vii) the expenses of the Company, the Guarantors and the Initial Purchasers in
connection with the marketing and offering of the Notes, including all transportation and other
expenses incurred in connection with presentations to prospective purchasers of the Notes, except
that the Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other
hand, will each pay 50% of the cost of privately chartered
21
airplanes used for such purposes and (viii) the fees and expenses associated with listing the
Conversion Shares on the Nasdaq Stock Market LLC. Except as provided in this Section 4, Section 7
and Section 11 hereof, the Initial Purchasers shall pay their own expenses, including the fees and
disbursements of their counsel.
Section 5. Conditions of the Obligations of the Initial Purchasers
The obligations of the several Initial Purchasers to purchase and pay for the Notes as
provided herein on the Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company set forth in Section 1 hereof as of the date hereof and as of
the Closing Date as though then made to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the timely performance by the Company and the
Guarantors of its covenants and other obligations hereunder, and to each of the following
additional conditions:
(a) Accountants’ Comfort Letter. On the date hereof, the Representative shall have received
from KPMG LLP, independent public accountants for the Company, a letter dated the date hereof
addressed to the Initial Purchasers, the form of which is attached as Exhibit A.
(b) No Material Adverse Change or Ratings Agency Change. For the period from and after the
date of this Agreement and prior to the Closing Date:
(i) in the judgment of the Representative, there shall not have occurred any Material
Adverse Change;
(ii) there shall not have been any change or decrease specified in the letter or
letters referred to in paragraph (a) of this Section 5 which is, in the sole judgment of the
Representative, so material and adverse as to make it impractical or inadvisable to proceed
with the offering or delivery of the Notes as contemplated by the Disclosure Package and the
Final Offering Memorandum; and
(iii) there shall not have occurred any downgrading, nor shall any notice have been
given of any intended or potential downgrading or of any review for a possible change that
does not indicate the direction of the possible change, in the rating accorded any
securities of the Company or any of its subsidiaries by any “nationally recognized
statistical rating organization” as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act.
(c) Opinions of Counsel for the Company and the Guarantors. On the Closing Date, the
Representative shall have received the favorable opinion of (i) Xxxxxx Xxxxxx LLP, counsel for the
Company and the Guarantors, the form of which is attached as Exhibit B, (ii) Xxxxxxx
Xxxxxxxxx, General Counsel of the Company and the Guarantors, the form of which is attached as
Exhibit C, (iii) Birch Xxxxxx Xxxxxxx and Xxxxxx, local Alaska counsel for the Company and
the Guarantors, the form of which is attached as Exhibit D and (iv) Xxxxx Xxxxxxxxx,
special regulatory counsel for the Company and the Guarantors, the form of which is attached as
Exhibit E, each dated as of the Closing Date.
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(d) Opinion of Counsel for the Initial Purchasers. On the Closing Date, the Representative
shall have received the favorable opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, counsel for the
Initial Purchasers, dated as of the Closing Date, in form and substance satisfactory to, and
addressed to, the Representative, with respect to the issuance and sale of the Notes, the
Disclosure Package, the Final Offering Memorandum and other related matters as the Representative
may reasonably require, and the Company shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(e) Officers’ Certificate. On the Closing Date, the Representative shall have received a
written certificate executed by the Chairman of the Board, Chief Executive Officer or President of
each of the Company and the Guarantors and the Chief Financial Officer or Chief Accounting Officer
of each of the Company and the Guarantors, dated as of the Closing Date, to the effect that the
signers of such certificate have carefully examined the Disclosure Package and the Final Offering
Memorandum, any amendments or supplements thereto and this Agreement, to the effect set forth in
subsection (b)(iii) of this Section 5, and further to the effect that:
(i) for the period from and after the date of this Agreement and prior to the Closing
Date, there has not occurred any Material Adverse Change with respect to the Company or such
Guarantor;
(ii) the representations and warranties of the Company and the Guarantors set forth in
Section 1 of this Agreement are true and correct on and as of the Closing Date with the same
force and effect as though expressly made on and as of the Closing Date; and
(iii) the Company and each Guarantor has complied with all the agreements hereunder and
satisfied all the conditions on its part to be performed or satisfied hereunder at or prior
to the Closing Date.
(f) Bring-down Comfort Letter. On the Closing Date, the Representative shall have received
from KPMG LLP, independent public accountants for the Company, a letter dated such date, in form
and substance satisfactory to the Representative, to the effect that they reaffirm the statements
made in the letter furnished by them pursuant to subsection (a) of this Section 5, except that the
specified date referred to therein for the carrying out of procedures shall be no more than three
business days prior to the Closing Date.
(g) Lock-Up Agreement from Certain Securityholders of the Company. On or prior to the date
hereof, the Company and the Guarantors shall have furnished to the Representative an agreement in
the form of Exhibit F hereto from each director and executive officer of the company listed
in Schedule D, and such agreement shall be in full force and effect on the Closing Date.
(h) Listing. The Company and the Guarantors shall have caused the Conversion Shares to be
approved for listing, subject to notice of issuance, on the Nasdaq Stock Market LLC.
(i) Additional Documents. On or before the Closing Date, the Representative and counsel for
the Initial Purchasers shall have received such information, documents and opinions
23
as they may reasonably require for the purposes of enabling them to pass upon the issuance and
sale of the Notes as contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the conditions or agreements, herein
contained.
If any condition specified in this Section 5 is not satisfied when and as required to be
satisfied, this Agreement may be terminated by the Representative by notice to the Company and the
Guarantors at any time on or prior to the Closing Date, which termination shall be without
liability on the part of any party to any other party, except that Section 4, Section 7, Section 8,
Section 9 and Section 14 shall at all times be effective and shall survive such termination.
Section 6. Representations, Warranties and Agreements of the Initial Purchasers
Each of the Initial Purchasers represents and warrants that it is a “qualified institutional
buyer”, as defined in Rule 144A of the Securities Act. Each Initial Purchaser agrees with the
Company that:
(a) it has not offered or sold, and will not offer or sell, any Notes within the United States
or to, or for the account or benefit of, U.S. persons (x) as part of their distribution at any time
or (y) otherwise until one year after the later of the commencement of the offering and the date of
closing of the offering except to those it reasonably believes to be “qualified institutional
buyers” (as defined in Rule 144A under the Act);
(b) neither it nor any person acting on its behalf has made or will make offers or sales of
the Notes in the United States by means of any form of general solicitation or general advertising
(within the meaning of Regulation D) in the United States;
(c) in connection with each sale pursuant to Section 6(a)(i), it has taken or will take
reasonable steps to ensure that the purchaser of such Notes is aware that such sale is being made
in reliance on Rule 144A;
(d) any information provided by the Initial Purchasers to publishers of publicly available
databases about the terms of the Notes and the Indenture shall include a statement that the Notes
have not been registered under the Act and are subject to restrictions under Rule 144A under the
Act;
(e) it acknowledges that additional restrictions on the offer and sale of the Notes and the
Common Stock issuable upon conversion thereof are described in the Disclosure Package and the Final
Offering Memorandum.
Section 7. Reimbursement of Initial Purchasers’ Expenses
If this Agreement is terminated pursuant to Section 5 or Section 11, or if the sale to the
Initial Purchasers of the Notes on the Closing Date is not consummated because of any refusal,
inability or failure on the part of the Company or any Guarantor to perform any agreement herein or
to comply with any provision hereof, each of the Company and the Guarantors, jointly and severally,
agrees to reimburse the Representative and the other Initial Purchasers (or such Initial
24
Purchasers as have terminated this Agreement with respect to themselves), severally, upon
demand for all out-of-pocket expenses that shall have been reasonably incurred by the
Representative and the Initial Purchasers in connection with the proposed purchase and the offering
and sale of the Notes, including but not limited to fees and disbursements of counsel, printing
expenses, travel expenses, postage, facsimile and telephone charges.
Section 8. Indemnification
(a) Indemnification of the Initial Purchasers. Each of the Company and the Guarantors,
jointly and severally, agrees to indemnify and hold harmless each Initial Purchaser, its directors,
officers, employees and agents, and each person, if any, who controls any Initial Purchaser within
the meaning of the Securities Act or the Exchange Act against any loss, claim, damage, liability or
expense, as incurred, to which such Initial Purchaser, director, officer, employee, agent or
controlling person may become subject, insofar as such loss, claim, damage, liability or expense
(or actions in respect thereof as contemplated below) arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in the Disclosure Package, the
Final Offering Memorandum, the information contained in the Final Term Sheet or any other written
information used by or on behalf of the Company in connection with the offer or sale of the Notes
(or any amendment or supplement to the foregoing), or the omission or alleged omission therefrom of
a material fact, in each case, necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and to reimburse each Initial
Purchaser, its officers, directors, employees, agents and each such controlling person for any and
all expenses (including the fees and disbursements of counsel chosen by the Representative) as such
expenses are reasonably incurred by such Initial Purchaser, or its officers, directors, employees,
agents or such controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or action;
provided, however, that the foregoing indemnity agreement shall not apply to any
loss, claim, damage, liability or expense to the extent, but only to the extent, arising out of or
based upon any untrue statement or alleged untrue statement or omission or alleged omission based
upon and in conformity with written information furnished to the Company and the Guarantors by any
Initial Purchaser through the Representative expressly for use in the Disclosure Package, the Final
Offering Memorandum, the Final Term Sheet or any other written information used by or on behalf of
the Company in connection with the offer or sale of the Notes (or any amendment or supplement
thereto), it being understood and agreed that the only such information furnished by any Initial
Purchaser consists of the information described as such in Section 8(b) hereof. The indemnity
agreement set forth in this Section 8(a) shall be in addition to any liabilities that the Company
and the Guarantors may otherwise have.
(b) Indemnification of the Company, the Guarantors and their Directors and Officers. Each
Initial Purchaser agrees, severally and not jointly, to indemnify and hold harmless the Company and
each Guarantor, each of their respective directors, each of their respective officers and each
person, if any, who controls the Company or any such Guarantor within the meaning of the Securities
Act or the Exchange Act, against any loss, claim, damage, liability or expense, as incurred, to
which the Company, any such Guarantor, or any such director, officer or controlling person may
become subject, insofar as such loss, claim, damage, liability or expense (or actions in respect
thereof as contemplated below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in the Disclosure Package, the Final Offering
25
Memorandum, the information contained in the Final Term Sheet or any other written information
used by or on behalf of the Company and the Guarantors in connection with the offer or sale of the
Notes (or any amendment or supplement thereto), or arises out of or is based upon the omission or
alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, and only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged omission was made in
the Disclosure Package, the Final Offering Memorandum, the Final Term Sheet or any other written
information used by or on behalf of the Company and the Guarantors in connection with the offer or
sale of the Notes (or any amendment or supplement thereto), in reliance upon and in conformity with
written information furnished to the Company and the Guarantors by the Representative expressly for
use therein; and to reimburse the Company, any such Guarantor, or any such director, officer or
controlling person for any legal and other expense reasonably incurred by the Company, any such
Guarantor, or any such director, officer or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage, liability, expense or
action. Each of the Company and the Guarantors hereby acknowledges that the only information that
the Initial Purchasers have furnished to the Company and the Guarantors expressly for use in the
Disclosure Package, the Final Offering Memorandum, the Final Term Sheet or any other written
information used by or on behalf of the Company in connection with the offer or sale of the Notes
(or any amendment or supplement thereto) are the statements set forth in Schedule E. The
indemnity agreement set forth in this Section 8(b) shall be in addition to any liabilities that
each Initial Purchaser may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly after receipt by an
indemnified party under this Section 8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 8, notify the indemnifying party in writing of the commencement thereof, but the
failure to so notify the indemnifying party (i) will not relieve it from liability under paragraph
(a) or (b) above unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial rights and defenses and
(ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b) above. In case any
such action is brought against any indemnified party and such indemnified party seeks or intends to
seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate
in, and, to the extent that it shall elect, jointly with all other indemnifying parties similarly
notified, by written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof with counsel
satisfactory to such indemnified party; provided, however, if the defendants in any
such action include both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that a conflict may arise between the positions of the indemnifying
party and the indemnified party in conducting the defense of any such action or that there may be
legal defenses available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of such indemnifying
party’s election so to assume the defense of such action and approval by the indemnified party of
counsel, the
26
indemnifying party will not be liable to such indemnified party under this Section 8 for any
legal or other expenses subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance
with the proviso to the preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate counsel (other than local
counsel), reasonably approved by the indemnifying party (or by the Representative in the case of
Section 8(b)), representing the indemnified parties who are parties to such action) or (ii) the
indemnifying party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of commencement of the
action, in each of which cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.
(d) Settlements. The indemnifying party under this Section 8 shall not be liable for any
settlement of any proceeding effected without its written consent, which shall not be withheld
unreasonably, but if settled with such consent or if there is a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party against any loss, claim, damage,
liability or expense by reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated by Section 8(c)
hereof, the indemnifying party agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall
not have reimbursed the indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party is or could have
been a party and indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent (x) includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of such action, suit or
proceeding and (y) 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.
Section 9. Contribution
If the indemnification provided for in Section 8 is for any reason unavailable to or otherwise
insufficient to hold harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party shall contribute to the
aggregate amount paid or payable by such indemnified party, as incurred, as a result of any losses,
claims, damages, liabilities or expenses referred to therein (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the Guarantors, on the one
hand, and the Initial Purchasers, on the other hand, from the offering of the Notes pursuant to
this Agreement or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and the Guarantors, on
the one hand, and the Initial Purchasers, on the other hand, in connection with the untrue
statements or omissions or alleged untrue statements or alleged omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant equitable
considerations.
27
The relative benefits received by the Company and the Guarantors, on the one hand, and the
Initial Purchasers, on the other hand, in connection with the offering of the Notes pursuant to
this Agreement shall be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Notes pursuant to this Agreement (before deducting expenses) received by
the Company and the Guarantors, and the total purchase discount received by the Initial Purchasers
bear to the aggregate initial offering price of the Notes. The relative fault of the Company and
the Guarantors, 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 Company and the Guarantors, on the one hand, or the Initial Purchasers, on the
other hand, and the parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the limitations set forth in
Section 8(c), any legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim.
The Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other
hand, agree that it would not be just and equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation or by any other method of allocation (even if the Initial
Purchasers were treated as one entity for such purpose) that does not take account of the equitable
considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, no Initial Purchaser shall be required to
contribute any amount in excess of the purchase discount or commission received by such Initial
Purchaser in connection with the Notes purchased by it hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers’ obligations to contribute pursuant to this Section 9 are several, and not joint, in
proportion to their respective purchasing commitments as set forth opposite their names in
Schedule A. For purposes of this Section 9, each director, officer, employee and agent of
an Initial Purchaser and each person, if any, who controls an Initial Purchaser within the meaning
of the Securities Act and the Exchange Act shall have the same rights to contribution as such
Initial Purchaser, and each director of the Company or any Guarantor, each officer of the Company
or any Guarantor, and each person, if any, who controls the Company or any Guarantor within the
meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the
Company or any such Guarantor.
Section 10. Default of One or More of the Several Initial Purchasers
If, on the Closing Date, any one or more of the several Initial Purchasers shall fail or
refuse to purchase Notes that it or they have agreed to purchase hereunder on such date, and the
aggregate principal amount of Notes which such defaulting Initial Purchaser or Initial Purchasers
agreed but failed or refused to purchase does not exceed 10% of the aggregate principal amount of
the Notes to be purchased on such date, the other Initial Purchasers shall be obligated, severally,
in the proportions that the aggregate principal amount of Notes set forth opposite their
28
respective names on Schedule A bears to the aggregate principal amount of Notes set
forth opposite the names of all such non-defaulting Initial Purchasers, or in such other
proportions as may be specified by the Representative with the consent of the non-defaulting
Initial Purchasers, to purchase the Notes which such defaulting Initial Purchaser or Initial
Purchasers agreed but failed or refused to purchase on such date. If, on the Closing Date, any one
or more of the Initial Purchasers shall fail or refuse to purchase Notes and the aggregate
principal amount of Notes with respect to which such default occurs exceeds 10% of the aggregate
principal amount of Notes to be purchased on such date, and arrangements satisfactory to the
Representative, one the one hand, and the Company and the Guarantors, on the other hand, for the
purchase of such Notes are not made within 48 hours after such default, this Agreement shall
terminate without liability of any party to any other party except that the provisions of Section
4, Section 8 and Section 9 shall at all times be effective and shall survive such termination. In
any such case either the Representative, on the one hand, or the Company and the Guarantors, on the
other hand, shall have the right to postpone the Closing Date, but in no event for longer than
seven days in order that the required changes, if any, to the Final Offering Memorandum or any
other documents or arrangements may be effected.
As used in this Agreement, the term “Initial Purchaser” shall be deemed to include any person
substituted for a defaulting Initial Purchaser under this Section 10. Any action taken under this
Section 10 shall not relieve any defaulting Initial Purchaser from liability in respect of any
default of such Initial Purchaser under this Agreement.
Section 11. Termination of this Agreement
This Agreement may be terminated in the absolute discretion of the Representative, by notice
to the Company, if after the execution and delivery of this Agreement and on or prior to the
Closing Date (i) trading generally shall have been suspended or materially limited on the Nasdaq
Stock Market LLC, the New York Stock Exchange or the over-the-counter market; (ii) trading of any
securities issued or guaranteed by the Company or any of the Guarantors shall have been suspended
on any exchange or in any over-the-counter market; (iii) a general moratorium on commercial banking
activities shall have been declared by federal or New York State authorities; or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis, either within or outside the United States, that, in the judgment of the
Representative, is material and adverse and makes it impracticable or inadvisable to proceed with
the offering, sale or delivery, of the Notes on the terms and in the manner contemplated by this
Agreement, the Disclosure Package and the Offering Memorandum. Any termination pursuant to this
Section 11 shall be without liability on the part of (a) the Company or any Guarantor to any
Initial Purchaser, except that the Company and the Guarantors shall be obligated to reimburse the
expenses of the Representative and the other Initial Purchasers pursuant to Sections 4 and 7 hereof
or (b) any Initial Purchaser to the Company or any Guarantor.
Section 12. No Advisory or Fiduciary Responsibility
Each of the Company and Guarantors acknowledges and agrees that: (i) the purchase and sale of
the Notes pursuant to this Agreement, including the determination of the offering price of the
Notes and any related discounts and commissions, is an arm’s-length commercial transaction
29
between the Company and the Guarantors, on the one hand, and the several Initial Purchasers,
on the other hand, and the Company and the Guarantors are capable of evaluating and understanding
and understands and accepts the terms, risks and conditions of the transactions contemplated by
this Agreement; (ii) in connection with each transaction contemplated hereby and the process
leading to such transaction each Initial Purchaser is and has been acting solely as a principal and
is not the financial advisor, agent or fiduciary of the Company, the Guarantors or their respective
affiliates, stockholders, creditors or employees or any other party; (iii) no Initial Purchaser has
assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Company or
any Guarantor with respect to any of the transactions contemplated hereby or the process leading
thereto (irrespective of whether such Initial Purchaser has advised or is currently advising the
Company or any Guarantor on other matters) and no Initial Purchaser has any obligation to the
Company or any Guarantor with respect to the offering contemplated hereby except the obligations
expressly set forth in this Agreement; (iv) the several Initial Purchasers and their respective
affiliates may be engaged in a broad range of transactions that involve interests that differ from
those of the Company and the Guarantors and that the several Initial Purchasers have no obligation
to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and
(v) the Initial Purchasers have not provided any legal, accounting, regulatory or tax advice with
respect to the offering contemplated hereby and each of the Company and the Guarantors has
consulted its own legal, accounting, regulatory and tax advisors to the extent it deemed
appropriate.
This Agreement supersedes all prior agreements and understandings (whether written or oral)
among the Company, the Guarantors and the several Initial Purchasers, or any of them, with respect
to the subject matter hereof. Each of the Company and the Guarantors hereby waives and releases, to
the fullest extent permitted by law, any claims that the Company or any Guarantor may have against
the several Initial Purchasers with respect to any breach or alleged breach of agency or fiduciary
duty.
Section 13. Research Analyst Independence
Each of the Company and the Guarantors acknowledges that the Initial Purchasers’ research
analysts and research departments are required to be independent from their respective investment
banking divisions and are subject to certain regulations and internal policies, and that such
Initial Purchasers’ research analysts may hold views and make statements or investment
recommendations and/or publish research reports with respect to the Company, the Guarantors and/or
the offering that differ from the views of their respective investment banking divisions. Each of
the Company and the Guarantors hereby waives and releases, to the fullest extent permitted by law,
any claims that the Company or any Guarantor may have against the Initial Purchasers with respect
to any conflict of interest that may arise from the fact that the views expressed by their
independent research analysts and research departments may be different from or inconsistent with
the views or advise communicated to the Company or any Guarantor by the Initial Purchasers’
investment banking divisions. Each of the Company and the Guarantors acknowledges that each of the
Initial Purchasers is a full service securities firm and as such from time to time, subject to
applicable securities laws, may effect transactions for its own account or the account of its
customers and hold long or short positions in debt or equity securities of the companies that may
be the subject of the transactions contemplated by this Agreement.
30
Section 14. Representations and Indemnities to Survive Delivery
The respective indemnities, agreements, representations, warranties and other statements of
the Company and each Guarantor, of their respective officers and of the several Initial Purchasers
set forth in or made pursuant to this Agreement (i) will remain operative and in full force and
effect, regardless of any (A) investigation, or statement as to the results thereof, made by or on
behalf of any Initial Purchaser, the officers or employees of any Initial Purchaser, or any person
controlling the Initial Purchaser, the Company, any Guarantor, the officers or employees of the
Company or any Guarantor, or any person controlling the Company or any Guarantor, as the case may
be or (B) acceptance of the Notes and payment for them hereunder and (ii) will survive delivery of
and payment for the Notes sold hereunder and any termination of this Agreement.
Section 15. Notices
All communications hereunder shall be in writing and shall be mailed, hand delivered or
telecopied and confirmed to the parties hereto as follows:
If to the Representative:
X.X. Xxxxxx Securities LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
Attention: Equity Syndicate Desk
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
Attention: Equity Syndicate Desk
with a Copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxx Xxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxx Xxxxxxx
If to the Company or any Guarantor:
Alaska Communications Systems Group, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxx 00000-6091
Facsimile: 000-000-0000
Attention: Xxxxxxx Xxxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxx 00000-6091
Facsimile: 000-000-0000
Attention: Xxxxxxx Xxxxxxxxx
with a Copy to:
Sidley Austin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
31
Facsimile: 212-839-5599
Attention: Xxxxx X. Xxxxxx
Attention: Xxxxx X. Xxxxxx
Any party hereto may change the address for receipt of communications by giving written notice
to the others.
Section 16. Successors and Assigns
This Agreement will inure to the benefit of and be binding upon the parties hereto, including
any substitute Initial Purchasers pursuant to Section 10 hereof, and to the benefit of (i) the
Company and the Guarantors, their respective directors, any person who controls the Company or any
Guarantor within the meaning of the Securities Act or the Exchange Act, (ii) the Initial
Purchasers, the officers, directors, employees and agents of the Initial Purchasers and each
person, if any, who controls any Initial Purchaser within the meaning of the Securities Act or the
Exchange Act and (iii) the respective successors and assigns of any of the above, all as and to the
extent provided in this Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term “successors and assigns” shall not include a purchaser of any of
the Notes from any of the several Initial Purchasers merely because of such purchase.
Section 17. Partial Unenforceability
The invalidity or unenforceability of any Section, paragraph or provision of this Agreement
shall not affect the validity or enforceability of any other Section, paragraph or provision
hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be
invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.
Section 18. Governing Law Provisions
(a) Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) Consent to Jurisdiction. Any legal suit, action or proceeding arising out of or based
upon this Agreement or the transactions contemplated hereby may be instituted in the federal courts
of the United States of America located in the City and County of New York, Borough of Manhattan or
the courts of the State of New York in each case located in the City and County of New York,
Borough of Manhattan (collectively, the “Specified Courts”), and each party irrevocably submits to
the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a
judgment of any such court, as to which such jurisdiction is non-exclusive) of such courts in any
such suit, action or proceeding. Service of any process, summons, notice or document by mail to
such party’s address set forth above shall be effective service of process for any suit, action or
other proceeding brought in any such court. The parties irrevocably and unconditionally waive any
objection to the laying of venue of any suit, action or other proceeding in the Specified Courts
and irrevocably and unconditionally waive and agree
32
not to plead or claim in any such court that any such suit, action or other proceeding brought
in any such court has been brought in an inconvenient forum.
Section 19. General Provisions
This Agreement constitutes the entire agreement of the parties to this Agreement and
supersedes all prior written or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may be executed in two or
more counterparts, each one of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein (express or
implied) may be waived unless waived in writing by each party whom the condition is meant to
benefit. The Section headings herein are for the convenience of the parties only and shall not
affect the construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated business person who was
adequately represented by counsel during negotiations regarding the provisions hereof, including,
without limitation, the indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties hereto further
acknowledges that the provisions of Sections 8 and 9 hereto fairly allocate the risks in light of
the ability of the parties to investigate the Company, its affairs and its business in order to
assure that adequate disclosure has been made in the Disclosure Package and the Final Offering
Memorandum.
If the foregoing is in accordance with your understanding of our agreement, kindly sign and
return to the Company and the Guarantors the enclosed copies hereof, whereupon this instrument,
along with all counterparts hereof, shall become a binding agreement in accordance with its terms.
Very truly yours, |
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC. |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
ACS OF ALASKA, INC. |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
ACS OF ANCHORAGE, INC. |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
ACS LONG DISTANCE, INC. |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer |
ACS INFOSOURCE, INC. |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
ACS OF THE NORTHLAND, INC. |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
ACS OF FAIRBANKS, INC. |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
ACS WIRELESS, INC. |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
ACS INTERNET, INC. |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
ACS CABLE SYSTEMS, INC. |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer |
[Signature Page to Purchase Agreement]
ACS SERVICES, INC. |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
CREST COMMUNICATIONS CORPORATION |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
ALASKA NORTHSTAR COMMUNICATIONS, LLC |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
WCI LIGHTPOINT LLC |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
WORLD NET COMMUNICATIONS, INC. |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
ALASKA COMMUNICATIONS LLC |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer |
ACS MESSAGING, INC. |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
WCI CABLE, INC. |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
WCIC HILLSBORO, LLC |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
NORTHERN LIGHTS HOLDINGS, INC. |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
ALASKA FIBER STAR, LLC |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer | |||
ALASKA FIBER STAR CORPORATION |
||||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | Chief Financial Officer |
[Signature Page to Purchase Agreement]
The foregoing Agreement is hereby confirmed and accepted by the Initial Purchasers as of the date
first above written.
X.X. XXXXXX SECURITIES LLC
For itself and on behalf of the
several Initial Purchasers listed
in Schedule A hereto.
several Initial Purchasers listed
in Schedule A hereto.
By: | /s/ Xxxx Xxxxxxxxx | |||
Name: | Xxxx Xxxxxxxxx | |||
Title: | Managing Director | |||
[Signature Page to Purchase Agreement]