EXHIBIT 4.3
Madison River Capital, LLC
Madison River Finance Corp.
13 1/4% Senior Notes due 2010
_____________
Purchase Agreement
------------------
February 14, 2000
Xxxxxxx, Xxxxx & Co.,
Bear, Xxxxxxx & Co. Inc.
Chase Securities Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
c/o Goldman, Sachs & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Madison River Capital, LLC, a Delaware limited liability company (the
"Company"), and Madison River Finance Corp., a Delaware corporation ("Madison
River Finance" and, together with the Company, the "Issuers") propose, subject
to the terms and conditions stated herein, to issue and sell to the Purchasers
named in Schedule I hereto (the "Purchasers") an aggregate of $200,000,000
principal amount of their Senior Notes specified above (the "Securities").
1. The Issuers, jointly and severally, represent and warrant to, and
agree with, each of the Purchasers that:
(a) A preliminary offering circular, dated January 28, 2000 (the
"Preliminary Offering Circular") and an offering circular, dated
February 14, 2000 (the "Offering Circular"), in each case including the
international supplement thereto, have been prepared in connection with
the offering of the Securities. Any reference to the Preliminary
Offering Circular or the Offering Circular shall be deemed to refer to
and include any Additional Issuer Information (as defined in Section
5(f)) furnished by the Issuers prior to the completion of the
distribution of the Securities. The Preliminary Offering Circular or
the Offering Circular and any amendments or supplements thereto did not
and will not, as of their respective dates, contain an untrue statement
of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by a Purchaser through
Xxxxxxx, Xxxxx & Co. expressly for use therein;
(b) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Offering Circular any material loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Offering Circular; and, since the
respective dates as of which information is given in the Offering
Circular, there has not been any change in the capital stock or
members' capital, as the case may be, or long-term debt of the Company
or any of its subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or members' capital, as the case may be, or
results of operations of the Company or any of its subsidiaries, taken
as a whole, otherwise than as set forth or contemplated in the
Offering Circular;
(c) The Company and its subsidiaries have a good and marketable
title in fee simple to all material real property and good and
marketable title to all material personal property owned by them, in
each case free and clear of all liens, encumbrances and defects except
such as are described in the Offering Circular or such as do not
materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by them; and any
material real property and buildings held under lease by the Company
and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property
and buildings by them.
(d) The Company and its subsidiaries have (i) all licenses,
certificates, permits, authorizations, approvals, franchises and other
rights (collectively, "Permits"), from, and has made all declarations
and filings with, all federal, state and local authorities (including,
without limitation, the Federal Communications Commission (the "FCC")
or any applicable state public utility commissions ("State PUCs")),
all self-regulatory authorities and all courts and other tribunals
(each an "Authorization") necessary to engage in the business
conducted by the Company and its subsidiaries in the manner described
in the Offering Circular, including, without limitation, under any
laws, rules or regulations regulating or relating to the conduct of
its telecommunications business, except as described in the Offering
Circular or except where the failure to possess such Authorizations
and Permits would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole and (ii) neither the Company
nor any of its subsidiaries has received notice of any proceedings
relating to the revocation or modification of any such Permits or
Authorizations, which, singly or in the aggregate if the subject of an
unfavorable decision, would result in a material adverse effect on the
Company and its subsidiaries taken as a whole. All such Authorizations
are valid and in full force and effect and the Company and its
subsidiaries are in compliance in all material respects with the terms
and conditions of all such Authorizations and with the rules and
regulations of the regulatory
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authorities having jurisdiction with respect thereto except insofar as
non-compliance or failure to be in full force and effect would not
have a material adverse effect on the Company and its subsidiaries
taken as a whole;
(e) Except as described in the Offering Circular, the Company
and its subsidiaries own, possess or have the right to employ
sufficient patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, software,
systems or procedures), trademarks, service marks and trade names,
inventions, computer programs, technical data and information
(collectively, the "Intellectual Property Rights") reasonably
necessary to conduct their businesses as now conducted except insofar
as the failure to have such rights would not have a material adverse
effect on the Company and its subsidiaries taken as a whole; and the
expected expiration of any of such Intellectual Property Rights would
not result in a material adverse change;
(f) Each of the Issuers and their subsidiaries has been duly
incorporated or formed, as the case may be, and is validly existing as
a corporation or limited liability company, as the case may be, in
good standing under the laws of its jurisdiction of incorporation or
organization, as the case may be, with corporate power (in the case of
a corporation) or power (in the case of a limited liability company)
and authority (corporate and other) to own its properties and conduct
its business as described in the Offering Circular, and has been duly
qualified as a foreign corporation or limited liability company, as
the case may be, for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification, except where the failure to be so qualified would not
have a material adverse effect on the Company and its subsidiaries
taken as a whole;
(g) All limited liability company interests of the Company are
owned by Madison River Telephone Company, LLC ("Madison River
Telephone"), free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature (each a "Lien"). All
shares of capital stock of Madison River Finance are owned by the
Company, free and clear of any Liens. All outstanding limited
liability company interests of the Company have been duly authorized,
validly issued, are fully paid and non-assessable, and are not subject
to any preemptive or similar rights. All outstanding shares of capital
stock of Madison River Finance have been duly authorized, validly
issued, are fully paid and non-assessable, and are not subject to any
preemptive or similar rights;
(h) The Company has an authorized capitalization as set forth in
the Offering Circular, and all of the issued shares of capital stock
or membership interests, as the case may be, of each subsidiary of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable and (except for directors' qualifying shares
and except as otherwise set forth in the Offering Circular) are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
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(i) this Agreement has been duly authorized, executed and
delivered by the Issuers;
(j) The Securities have been duly authorized and, when issued
and delivered pursuant to this Agreement, will have been duly
executed, authenticated, issued and delivered and will constitute
valid and legally binding obligations of the Issuers entitled to the
benefits provided by the indenture to be dated as of February 17, 2000
(the "Indenture") between the Issuers and Norwest Bank Minnesota,
National Association, as Trustee (the "Trustee"), under which they are
to be issued, which will be substantially in the form previously
delivered to you; the Indenture has been duly authorized and, when
executed and delivered by the Issuers and the Trustee, the Indenture
will constitute a valid and legally binding instrument, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles; and the Securities and the Indenture will conform in all
material respects to the descriptions thereof in the Offering Circular
and will be in substantially the form previously delivered to you;
(k) The exchange and registration rights agreement, to be dated
as of February 17, 2000 (the "Registration Rights Agreement"), between
the Issuers and the Purchasers has been duly authorized by the Issuers
and, when executed and delivered by the Issuers, the Registration
Rights Agreement will constitute a valid and legally binding
instrument of the Issuers enforceable against the Issuers in
accordance with its terms, except to the extent that enforcement
thereof may be limited by bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting
creditors' rights and by general principles of equity. Pursuant to the
Registration Rights Agreement, the Issuers will agree to file with the
Commission, under the circumstances set forth therein, (i) a
registration statement under the United States Securities Act of 1933,
as amended (the "Act"), relating to another series of debt securities
of the Issuers with terms substantially identical to the Securities
(the "Exchange Securities") to be offered in exchange for the
Securities (the "Exchange Offer"), (ii) to the extent required by the
Registration Rights Agreement, a shelf registration statement pursuant
to Rule 415 of the Act relating to the resale by certain holders of
the Securities and (iii) to the extent required by the Registration
Rights Agreement, a market making registration statement, and in each
case, to use all commercially reasonable efforts to cause such
registration statements to be declared effective. The Exchange
Securities have been duly authorized for issuance by the Issuers, and
when issued and authenticated in accordance with the terms of the
Indenture will be the valid and legally binding obligations of the
Issuers, entitled to the benefits provided by the Indenture,
enforceable against the Issuers in accordance with their terms, except
to the extent that enforcement thereof may be limited by bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and by general principles
of equity. The Registration Rights Agreement will conform, in all
material respects, to the description thereof in the Offering Circular
and will be in substantially the form previously delivered to you;
(l) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale
of the Securities) will violate or result in a
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violation of Section 7 of the United States Securities Exchange Act of
1934, as amended (the "Exchange Act"), or any regulation promulgated
thereunder, including, without limitation, Regulations T, U, and X of
the Board of Governors of the Federal Reserve System;
(m) Prior to the date hereof, neither the Issuers nor any of
their affiliates have taken any action which is designed to or which
has constituted or which might have been expected to cause or result
in stabilization or manipulation of the price of any security of the
Issuers in connection with the offering of the Securities;
(n) The issuance and sale of the Securities by the Issuers, the
execution and delivery of the Indenture, the Registration Rights
Agreement and this Agreement by the Issuers, compliance by the Issuers
with the terms thereof and the consummation by the Issuers of the
transactions contemplated thereby, each in accordance with its terms,
will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or
to which any of the property or assets of the Company or any of its
subsidiaries is subject (except such as will not, individually or in
the aggregate have a material adverse effect on the Company and its
subsidiaries taken as a whole), nor will such action result in any
violation of the provisions of the Certificate of Incorporation or
Organization, as the case may be, or By-laws or Limited Liability
Company Agreements, as the case may be, of the Issuers or any statute
or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Issuers or any of its
subsidiaries or any of their properties (including, without
limitation, the Communications Act of 1934 (the "Communications Act")
and the rules and regulations of the FCC; and no consent, approval,
authorization, order, registration or qualification of or with any
such court or governmental agency or body (including, without
limitation, the FCC) is required for the issue and sale of the
Securities or the consummation by the Issuers of the transactions
contemplated by this Agreement or the Indenture, except for the filing
of a registration statement by the Issuers with the Commission
pursuant to the Act pursuant to Section 5(l) hereof and such consents,
approvals, authorizations, registrations or qualifications as may be
required and qualification of the Indenture under the Trust Indenture
Act of 1939, as amended and under state securities or Blue Sky laws in
connection with the purchase and distribution of the Securities by the
Purchasers, and except such as will not, individually or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries taken as a whole;
(o) Neither the Company nor any of its subsidiaries is (1) in
violation of its Certificate of Incorporation or Organization, as the
case may be, or By-laws or Limited Liability Company Agreements, as
the case may be, or (2) in default in the performance or observance of
any obligation, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which it is a party or by which it or any of its
properties may be bound other than, in the case of clause (2) any
default which would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole;
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(p) The statements set forth in the Offering Circular under the
caption "Description of Securities", insofar as they purport to
constitute a summary of the terms of the Securities, under the caption
"Taxation", insofar as they purport to describe the provisions of the
laws and documents referred to therein, fairly describe or summarize
such provisions in all material respects;
(q) Other than as set forth in the Offering Circular, there are
no legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any of their properties
is the subject which, if determined adversely to the Company or any of
its subsidiaries, could individually or in the aggregate reasonably be
expected to have a material adverse effect on the current or future
financial position, stockholders' equity or members' capital, as the
case may be, or results of operations of the Company or its
subsidiaries taken as a whole; and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(r) When the Securities are issued and delivered pursuant to
this Agreement, the Securities will not be of the same class (within
the meaning of Rule 144A under the Act) as securities which are listed
on a national securities exchange registered under Section 6 of the
Exchange Act or quoted in a U.S. automated inter-dealer quotation
system;
(s) The Issuers are not, and after giving effect to the offering
and sale of the Securities, will not be an "investment company", as
such term is defined in the United States Investment Company Act of
1940, as amended (the "Investment Company Act");
(t) Neither the Issuers nor any person acting on its or their
behalf (other than the Purchasers and their affiliates as to whom the
Company makes no representation) has offered or sold the Securities by
means of any general solicitation or general advertising within the
meaning of Rule 502(c) under the Act or, with respect to Securities
sold outside the United States to non-U.S. persons (as defined in Rule
902 under the Act), by means of any directed selling efforts within the
meaning of Rule 902 under the Act and the Issuers, any affiliate of the
Issuers and any person acting on its or their behalf (other than the
Purchasers and their affiliates as to whom the Company makes no
representation) has complied with and will implement the "offering
restriction" within the meaning of such Rule 902;
(u) Within the preceding six months, neither the Issuers nor any
other person acting on behalf of the Issuers (other than the Purchasers
and their affiliates as to whom the Company makes no representation)
has offered or sold to any person any Securities, or any securities of
the same or a similar class as the Securities, other than Securities
offered or sold to the Purchasers hereunder. The Issuers will take
reasonable precautions designed to insure that any offer or sale,
direct or indirect, in the United States or to any U.S. person (as
defined in Rule 902 under the Act) of any Securities or any
substantially similar security issued by the Issuers, within six months
subsequent to the date on which the distribution of the Securities has
been completed (as notified to the Company by Xxxxxxx, Sachs & Co.), is
made under restrictions and other circumstances reasonably designed not
to affect the status of the offer and sale of the
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Securities in the United States and to U.S. persons contemplated by
this Agreement as transactions exempt from the registration provisions
of the Act;
(v) Neither the Issuers nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Section 517.075, Florida Statutes; and
(w) Ernst & Young LLP, who has certified certain financial
statements of the Company and its subsidiaries, Xxxxxx Xxxxxxxx LLP,
who has certified certain financial statements of Mebtel
Communications, Inc., and Golden Associates, who has certified certain
financial statements of Coastal Utilities, Inc., are each independent
public accountants as required by the Act and the rules and regulations
of the Commission thereunder;
(x) The Issuers have reviewed their operations and that of their
subsidiaries and any third parties with which the Issuers or any of
their subsidiaries has a material relationship to evaluate the extent
to which the business or operations of the Issuers or any of their
subsidiaries has been or will be affected by the Year 2000 Problem. As
a result of such review, the Issuers have no reason to believe, and do
not believe, that the Year 2000 Problem has had or will have a material
adverse effect on the general affairs, management, the current or
future consolidated financial position, business prospects, members'
capital or stockholders' equity, as applicable, or results of
operations of the Issuers and their subsidiaries or has resulted or
will result in any material loss or interference with the Issuers'
business or operations. The "Year 2000 Problem" as used herein means
any significant risk that computer hardware or software used in the
receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of
mechanical or electrical systems of any kind is not functioning or will
not function, in the case of dates or time periods occurring after
December 31, 1999, at least as effectively as in the case of dates or
time periods occurring prior to January 1, 2000;
2. Subject to the terms and conditions herein set forth, the
Issuers agree to issue and the Issuers agree to sell to each of the Purchasers,
and each of the Purchasers agrees, severally and not jointly, to purchase from
the Issuers, at a purchase price of 95.881% of the principal amount thereof,
plus accrued interest, if any, from February 17, 2000 to the Time of Delivery
hereunder, the principal amount of Securities set forth opposite the name of
such Purchaser in Schedule I hereto.
3. Upon the authorization by you of the release of the Securities,
the several Purchasers propose to offer the Securities for sale upon the terms
and conditions set forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with the Company that:
(a) It will offer and sell the Securities only to: (i) persons
who it reasonably believes are "qualified institutional buyers"
("QIBs") within the meaning of Rule 144A under the Act in transactions
meeting the requirements of Rule 144A or (ii) upon the terms and
conditions set forth in Annex I to this Agreement;
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(b) It is an Institutional Accredited Investor; and
(c) It will not offer or sell the Securities by any form of
general solicitation or general advertising, including but not limited
to the methods described in Rule 502(c) under the Act.
4. (a) The Securities to be purchased by each Purchaser hereunder
will be represented by one or more definitive global Securities in
book-entry form which will be deposited by or on behalf of the Issuers
with The Depository Trust Company ("DTC") or its designated custodian.
The Issuers will deliver the Securities to Xxxxxxx, Sachs & Co., for
the account of each Purchaser, against payment by or on behalf of such
Purchaser of the purchase price therefor by certified or official bank
check or checks, payable to the order of the Issuers in Federal (same
day) funds, by causing DTC to credit the Securities to the account of
Xxxxxxx, Xxxxx & Co. at DTC. The Issuers will cause the certificates
representing the Securities to be made available to Xxxxxxx, Sachs &
Co. for checking at least twenty-four hours prior to the Time of
Delivery (as defined below) at the office of DTC or its designated
custodian (the "Designated Office"). The time and date of such delivery
and payment shall be 9:30 a.m., New York City time, on February 17,
2000 or such other time and date as Xxxxxxx, Xxxxx & Co. and the
Company may agree upon in writing. Such time and date are herein called
the "Time of Delivery".
(b) The documents to be delivered at the Time of Delivery by or
on behalf of the parties hereto pursuant to Section 7 hereof, including
the cross-receipt for the Securities and any additional documents
requested by the Purchasers pursuant to Section 7(j) hereof, will be
delivered at such time and date at the offices of Xxxxxx & Xxxxxxx, 000
Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000 (the "Closing Location"),
and the Securities will be delivered at the Designated Office, all at
the Time of Delivery. A meeting will be held at the Closing Location at
1:00 p.m., New York City time, on the New York Business Day next
preceding the Time of Delivery, at which meeting the final drafts of
the documents to be delivered pursuant to the preceding sentence will
be available for review by the parties hereto. For the purposes of this
Section 4, "New York Business Day" shall mean each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking
institutions in New York are generally authorized or obligated by law
or executive order to close.
5. Each of the Issuers, jointly and severally, agrees with each of
the Purchasers:
(a) To prepare the Offering Circular in a form approved by you;
to make no amendment or any supplement to the Offering Circular which
shall be disapproved by you promptly after reasonable notice thereof;
and to furnish you with copies thereof as reasonably requested;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities for offering and sale
under the securities laws of such jurisdictions as you may reasonably
request and to comply with such laws so as to permit the continuance of
sales and dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of the Securities, provided that
in connection therewith neither of the Issuers shall
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be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
(c) To furnish the Purchasers with copies of the Offering
Circular and each amendment or supplement thereto with the independent
accountants' report(s) in the Offering Circular, and any amendment or
supplement containing amendments to the financial statements covered by
such report(s), signed by the accountants, and additional copies
thereof in such quantities as you may from time to time reasonably
request, and if, at any time prior to the expiration of nine months
after the date of the Offering Circular, any event shall have occurred
as a result of which the Offering Circular as then amended or
supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Offering Circular is delivered, not misleading, or,
if for any other reason it shall be necessary or desirable during such
same period to amend or supplement the Offering Circular, to notify you
and upon your request to prepare and furnish without charge to each
Purchaser and to any dealer in securities as many copies as you may
from time to time reasonably request of an amended Offering Circular or
a supplement to the Offering Circular which will correct such statement
or omission or effect such compliance;
(d) During the period beginning from the date hereof and
continuing until the date six months after the Time of Delivery, not to
offer, sell, contract to sell or otherwise dispose of, except as
provided hereunder any securities of the Issuers that are substantially
similar to the Securities;
(e) Not to be or become, at any time prior to the expiration of
three years after the Time of Delivery, an open-end investment company,
unit investment trust, closed-end investment company or face-amount
certificate company that is or is required to be registered under
Section 8 of the Investment Company Act;
(f) At any time when the Company is not subject to Section 13 or
15(d) of the Exchange Act, for or the benefit of holders from time to
time of Securities, to furnish at its expense, upon request, to holders
of Securities and prospective purchasers of securities information (the
"Additional Issuer Information") satisfying the requirements of
subsection (d)(4)(i) of Rule 144A under the Act;
(g) If requested by you, to use its best efforts to cause such
Designated Securities to be eligible for the PORTAL trading system of
the National Association of Securities Dealers, Inc.;
(h) To generally make available to the holders of the Securities
as soon as practicable after the end of each fiscal year an annual
report (including a balance sheet and statements of income,
stockholders' equity or members' capital, as the case may be, and cash
flows of the Company and its consolidated subsidiaries certified by
independent public accountants) and, as soon as practicable after the
end of each of the first three quarters of each fiscal year (beginning
with the fiscal quarter ending after the date of the Offering
Circular), to make available to its
9
stockholders or members, as the case may be, consolidated summary
financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
(i) During a period of five years from the date of the Offering
Circular, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders or
members, as the case may be, of the Issuers, and to deliver to you (i)
as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any securities
exchange on which the Securities or any class of securities of the
Issuers is listed; and (ii) such additional information concerning the
business and financial condition of the Issuers as you may from time to
time reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Issuers and its
subsidiaries are consolidated in reports furnished to their
stockholders or members, as the case may be, generally or to the
Commission);
(j) During the period of two years after the Time of Delivery,
the Issuers will not, and will not permit any of its "affiliates" (as
defined in Rule 144 under the Act) to, resell any of the Securities
which constitute "restricted securities" under Rule 144 that have been
reacquired by any of them;
(k) The Issuers shall file and use their best efforts cause to
be declared or become effective under the Act, on or prior to 180 days
after the Time of Delivery, a registration statement on Form S-4
providing for the registration of (i) the Exchange Securities, with
terms identical to the Securities, and the exchange of the Securities
for the Exchange Securities, all in a manner which will permit persons
who acquire the Exchange Securities to resell the Exchange Securities
pursuant to Section 4(1) of the Act; and
(l) To use the net proceeds received by it from the sale of the
Securities pursuant to this Agreement in the manner specified in the
Offering Circular under the caption "Use of Proceeds".
6. Each of the Issuers, jointly and severally, covenants and agrees
with the several Purchasers that the Issuers will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of their counsel and
accountants in connection with the issue of the Securities and all other
expenses in connection with the preparation, printing and filing of the
Preliminary Offering Circular and the Offering Circular and any amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Purchasers and dealers; (ii) the cost of printing or producing any Agreement
among Purchasers, this Agreement, the Indenture, the Blue Sky and Legal
Investment Memoranda, closing documents (including any compilations thereof) and
any other documents in connection with the offering, purchase, sale and delivery
of the Securities; (iii) all expenses in connection with the qualification of
the Securities for offering and sale under state securities laws as provided in
Section 5(b) hereof, including the fees and disbursements of counsel for the
Purchasers in connection with such qualification and in connection with the Blue
Sky and legal investment surveys; (iv) any fees charged by securities rating
services for rating the Securities; (v) the cost of preparing the Securities;
(vi) the fees and expenses of the Trustee and any agent of the Trustee and the
fees and disbursements of
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counsel for the Trustee in connection with the Indenture and the Securities;
(vii) any cost incurred in connection with the designation of the Securities for
trading in PORTAL and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, and Sections 8 and 11 hereof, the Purchasers will pay
all of their own costs and expenses, including the fees of their counsel,
transfer taxes on resale of any of the Securities by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Purchasers hereunder shall be subject, in
their discretion, to the condition that all representations and warranties and
other statements of the Issuers herein are, at and as of the Time of Delivery,
true and correct, the condition that each of the Issuers shall have performed
all of their respective obligations hereunder theretofore to be performed, and
the following additional conditions:
(a) Xxxxxx & Xxxxxxx, counsel for the Purchasers, shall have
furnished to you such opinion or opinions, dated the Time of Delivery,
with respect to the matters covered in paragraphs (1), (3), (4), (5),
(6), and (13) of Annex III hereof as well as such other related matters
as you may reasonably request, and such counsel shall have received
such papers and information as they may reasonably request to enable
them to pass upon such matters;
(b) Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois), counsel for
the Issuers, shall have furnished to you their written opinion, dated
the Time of Delivery, in form and substance satisfactory to you, as set
forth in Annex III;
(c) Xxxx Xxxxxxxx, general counsel for the Issuers or local
counsel for the Issuers, shall have furnished to you their written
opinion, dated the Time of Delivery, in form and substance satisfactory
to you, to the effect that:
(i) Each of the Issuers, Gulf Telephone Company, Mebtel, Inc.,
and Gallatin River Communications, LLC has been duly qualified as a
foreign corporation or limited liability company, as the case may be,
for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification, except where
the failure to be so qualified in any such jurisdiction would not have
a material adverse effect on the Issuers and their subsidiaries taken
as a whole (such counsel being entitled to rely in respect of the
opinion in this clause solely upon good standing certificates issued by
the appropriate Secretary of State);
(ii) Gulf Telephone Company, Mebtel, Inc. and Gallatin River
Communications, LLC have each been duly incorporated or formed, as the
case may be, and is validly existing as a corporation or limited
liability company, as the case may be, in good standing under the laws
of its jurisdiction of incorporation or organization, as the case may
be; and all of the issued shares of capital stock or membership
interests, as the case may be, of Gulf Telephone Company, Mebtel, Inc.
and Gallatin River Communications, LLC have been duly and validly
authorized and issued, are fully paid and non-assessable, and (except
for directors' qualifying shares and
11
except as otherwise set forth in the Offering Circular) based solely on
a review of the stock transfer books of such subsidiaries, are owned
directly or indirectly by the Issuers and, to such counsel's knowledge
and other than as disclosed in the Offering Circular, are free and
clear of all liens, encumbrances, equities or claims (such counsel
being entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Issuers or their subsidiaries, provided
that such counsel shall state that they believe that both you and they
are justified in relying upon such opinions and certificates);
(iii) To the best of such counsel's knowledge and other than as
set forth in the Offering Circular, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is
a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate reasonably be expected to have a material adverse effect on
the current or future consolidated financial position, stockholders'
equity or members' capital, as the case may be, or results of
operations of the Company and its subsidiaries; and, to the best of
such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(iv) Neither the execution and delivery of this Agreement and
the operative documents nor the sale of the Securities contemplated
hereby will violate any rules or regulations of the North Carolina or
Alabama public utility commissions as interpreted as of this date.
(v) Each of the Company and Madison River Finance has all
certificates, orders, permits, licenses, authorizations, consents and
approvals (collectively, the "Permits") of and from, and has made all
filings and registrations with, the FCC and any of the North Carolina,
Illinois or Alabama public utility commissions necessary to (a) conduct
its business in all material respects as described in the Offering
Circular and (b) consummate the transactions contemplated in this
Agreement.
(d) On the date of the Offering Circular prior to the execution
of this Agreement and also at the Time of Delivery, Ernst & Young LLP
shall have furnished to you a letter or letters, dated the respective
dates of delivery thereof, in form and substance satisfactory to you,
to the effect set forth in Annex II hereto;
(e) On the date of the Offering Circular prior to the execution
of this Agreement and also at the Time of Delivery, Golden Associates
shall have furnished to you a letter or letters, dated the respective
dates of delivery thereof, in form and substance satisfactory to you,
to the effect set forth in Annex II hereto;
(f) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Offering Circular any loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court
or governmental action, order or
12
decree, otherwise than as set forth or contemplated in the Offering
Circular, and (ii) since the respective dates as of which information
is given in the Offering Circular there shall not have been any change
in the capital stock or members' capital, as the case may be, or long-
term debt of the Company or any of its subsidiaries or any change, or
any development involving a prospective change, in or affecting the
general affairs, management, financial position, stockholders' equity
or members' capital, as the case may be, or results of operations of
the Company or any of its subsidiaries, otherwise than as set forth or
contemplated in the Offering Circular, the effect of which, in any such
case described in clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities on the terms and in the manner contemplated in this
Agreement and in the Offering Circular;
(g) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded to any of the Issuers' debt securities
by any "nationally recognized statistical rating organization", as that
term is defined by the Commission for purposes of Rule 436(g)(2) under
the Act, and (ii) no such organization shall have publicly announced
that it has under surveillance or review, with possible negative
implications, its rating of any of the Issuers' debt securities;
(h) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange; (ii) a
general moratorium on commercial banking activities declared by either
Federal or New York or State authorities; (iii) the outbreak or
escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if the
effect of any such event specified in this clause (iii) in the judgment
of the Representatives makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Securities on the terms
and in the manner contemplated in the Offering Circular; or (iv) the
occurrence of any material adverse change in the existing, financial,
political or economic conditions in the United States or elsewhere
which, in the judgment of the Representatives, would materially and
adversely affect the financial markets or the markets for the
Securities and other debt securities;
(i) The Securities have been designated for trading on PORTAL;
and
(j) The Issuers shall have furnished or caused to be furnished
to you at the Time of Delivery certificates of officers of the Issuers
satisfactory to you as to the accuracy of the representations and
warranties of the Issuers herein at and as of such Time of Delivery, as
to the performance by the Issuers of all of its obligations hereunder
to be performed at or prior to such Time of Delivery, as to the matters
set forth in subsections (a) and (e) of this Section and as to such
other matters as you may reasonably request.
(k) Prior to February 17, 2000, the Issuers shall have furnished
or caused to be furnished to you a copy of the consent required to
allow the issuance of the Securities under the loan agreement by and
between the Rural Telephone Finance Cooperative (the "RTFC") and
13
the Company, dated as of September 29, 1999, in a form reasonably
satisfactory to you and your counsel and such that no condition exists
or would exist that would constitute a default under such agreement.
8. (a) The Issuers, jointly and severally, will indemnify and hold
harmless each Purchaser against any losses, claims, damages or
liabilities, joint or several, to which such Purchaser may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Offering Circular or the
Offering Circular, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein
a material fact necessary to make the statements therein not
misleading, and will reimburse each Purchaser for any legal or other
expenses reasonably incurred by such Purchaser in connection with
investigating or defending any such action or claim as such expenses
are incurred. The Issuers shall not be required to indemnify a
Purchaser for any amount paid or payable by such Purchaser in the
settlement of any action, proceeding or investigation without the
written consent of the Issuers, which consent shall not be unreasonably
withheld; provided, however, that neither of the Issuers shall be
liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
Preliminary Offering Circular or the Offering Circular or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Purchaser through Xxxxxxx,
Sachs & Co. expressly for use therein.
(b) Each Purchaser will indemnify and hold harmless the Issuers
against any losses, claims, damages or liabilities to which the Issuers
may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Offering
Circular or the Offering Circular, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact or necessary to make the
statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in any Preliminary Offering
Circular or the Offering Circular or any such amendment or supplement
in reliance upon and in conformity with written information furnished
to the Company by such Purchaser through Xxxxxxx, Xxxxx & Co. expressly
for use therein; and will reimburse the Issuers for any legal or other
expenses reasonably incurred by the Issuers in connection with
investigating or defending any such action or claim as such expenses
are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify
the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified
14
party otherwise than under such subsection. In case any such action
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any
legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent
to the entry of any judgment with respect to, any pending or threatened
action or claim in respect of which indemnification or contribution may
be sought hereunder (whether or not the indemnified party is an actual
or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the
indemnified party from all liability arising out of such action or
claim and (ii) does not include a statement as to, or an admission of,
fault, culpability or a failure to act, by or on behalf of any
indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received
by the Issuers on the one hand and the Purchasers on the other from the
offering of the Securities. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Issuers on the one hand and the
Purchasers on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Issuers on the
one hand and the Purchasers on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Issuers bear to the total
underwriting discounts and commissions received by the Purchasers, in
each case as set forth in the Offering Circular. The relative fault
shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information
supplied by the Issuers on the one hand or the Purchasers on the other
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Issuers and the Purchasers agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were
determined
15
by pro rata allocation (even if the Purchasers were treated as one
entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to above
in this subsection (d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d)
shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of
this subsection (d), no Purchaser shall be required to contribute any
amount in excess of the amount by which the total price at which the
Securities underwritten by it and distributed to investors were offered
to investors exceeds the amount of any damages which such Purchaser has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. The Purchasers'
obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Issuers under this Section 8 shall be
in addition to any liability which the Issuers may otherwise have and
shall extend, upon the same terms and conditions, to each person, if
any, who controls any Purchaser within the meaning of the Act; and the
obligations of the Purchasers under this Section 8 shall be in addition
to any liability which the respective Purchasers may otherwise have and
shall extend, upon the same terms and conditions, to each officer and
director of the Issuers, and to each person, if any, who controls the
Issuers within the meaning of the Act.
9. (a) If any Purchaser shall default in its obligation to purchase
the Securities which it has agreed to purchase hereunder, you may in
your discretion arrange for you or another party or other parties to
purchase such Securities on the terms contained herein. If within
thirty-six hours after such default by any Purchaser you do not arrange
for the purchase of such Securities, then the Issuers shall be entitled
to a further period of thirty-six hours within which to procure another
party or other parties satisfactory to you to purchase such Securities
on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the
purchase of such Securities, or the Company notifies you that it has so
arranged for the purchase of such Securities, you or the Company shall
have the right to postpone the Time of Delivery for a period of not
more than seven days, in order to effect whatever changes may thereby
be made necessary in the Offering Circular, or in any other documents
or arrangements, and the Issuers agree to prepare promptly any
amendments to the Offering Circular which in your opinion may thereby
be made necessary. The term "Purchaser" as used in this Agreement shall
include any person substituted under this Section with like effect as
if such person had originally been a party to this Agreement with
respect to such Securities.
(b) If, after giving effect to any arrangements for the purchase
of the Securities of a defaulting Purchaser or Purchasers by you and
the Issuers as provided in subsection (a) above, the aggregate
principal amount of such Securities which remains unpurchased does not
exceed one-eleventh of the aggregate principal amount of all the
Securities, then the Issuers shall have the right to require each
non-defaulting Purchaser to purchase the principal amount of
16
Securities which such Purchaser agreed to purchase hereunder and, in
addition, to require each non-defaulting Purchaser to purchase its pro
rata share (based on the principal amount of Securities which such
Purchaser agreed to purchase hereunder) of the Securities of such
defaulting Purchaser or Purchasers for which such arrangements have not
been made; but nothing herein shall relieve a defaulting Purchaser from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase
of the Securities of a defaulting Purchaser or Purchasers by you and
the Issuers as provided in subsection (a) above, the aggregate
principal amount of Securities which remains unpurchased exceeds
one-eleventh of the aggregate principal amount of all the Securities,
or if the Issuers shall not exercise the right described in subsection
(b) above to require non-defaulting Purchasers to purchase Securities
of a defaulting Purchaser or Purchasers, then this Agreement shall
thereupon terminate, without liability on the part of any
non-defaulting Purchaser or the Issuers, except for the expenses to be
borne by the Issuers and the Purchasers as provided in Section 6 hereof
and the indemnity and contribution agreements in Section 8 hereof; but
nothing herein shall relieve a defaulting Purchaser from liability for
its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Issuers and the several Purchasers, as
set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of any Purchaser or any controlling person of any Purchaser or the
Issuers, or any officer or director or controlling person of the Issuers, and
shall survive delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, neither of the Issuers shall then be under any liability to any
Purchaser except as provided in Sections 6 and 8 hereof; but, if for any other
reason, the Securities are not delivered by or on behalf of the Issuers as
provided herein, the Issuers, jointly and severally, will reimburse the
Purchasers through you for all out-of-pocket expenses approved in writing by
you, including reasonable fees and disbursements of counsel, reasonably incurred
by the Purchasers in making preparations for the purchase, sale and delivery of
the Securities, but neither of the Issuers shall then be under any further
liability to any Purchaser except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or given
by you jointly or by Xxxxxxx, Xxxxx & Co. on behalf of you as the
representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Xxxxxxx, Sachs &
Co., 00 Xxx Xxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration
Department, and if to the Issuers shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the Offering
Circular, Attention: Secretary; provided, however, that any notice to a
Purchaser pursuant to Section 8(c) hereof
17
shall be delivered or sent by mail, telex or facsimile transmission to such
Purchaser at its address set forth in its Purchasers' Questionnaire, or telex
constituting such Questionnaire, which address will be supplied to the Company
by you upon request. Any such statements, requests, notices or agreements shall
take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Purchasers and the Issuers and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Issuers, and each
person who controls the Issuers or any Purchaser, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Securities from any Purchaser shall be deemed a successor or assign
by reason merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us 7 counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Purchasers, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Purchasers and the
Issuers. It is understood that your acceptance of this letter on behalf of each
of the Purchasers is pursuant to the authority set forth in a form of Agreement
among Purchasers, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
[Signature pages follow]
18
Very truly yours,
Madison River Capital, LLC
By: /s/ J. Xxxxxxx Xxxxxxxxxxx
--------------------------------
Name: J. Xxxxxxx Xxxxxxxxxxx
Title: Chief Executive Officer
Accepted as of the date hereof: Madison River Finance Corp.
Xxxxxxx, Xxxxx & Co. By: /s/ Xxxx X. Xxxx
Bear, Xxxxxxx & Co. Inc.... --------------------------------
Chase Securities Inc....... Name: Xxxx X. Xxxx
Xxxxxx Xxxxxxx & Co. Incorporated Title: Secretary & Treasurer
By: /s/ Xxxxxxx, Sachs & Co.
--------------------------------
(Xxxxxxx, Xxxxx & Co.)
On behalf of each of the Purchasers
Purchase Agreement
Signature Page
SCHEDULE I
Principal
Amount of
Securities
to be
Purchaser Purchased
--------- ---------
Xxxxxxx, Sachs & Co....................................... $110,000,000
Bear, Xxxxxxx & Co. Inc................................... 10,000,000
Chase Securities Inc...................................... 40,000,000
Xxxxxx Xxxxxxx & Co. Incorporated......................... 40,000,000
------------
Total........................................... $200,000,000
============
S-1
ANNEX I
(1) The Securities have not been and will not be registered under the
Act and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Regulation S under
the Act or pursuant to an exemption from the registration requirements of the
Act. Each Purchaser represents that it has offered and sold the Securities, and
will offer and sell the Securities (i) as part of their distribution at any time
and (ii) otherwise until 40 days after the later of the commencement of the
offering and the Time of Delivery, only in accordance with Rule 903 of
Regulation S or Rule 144A under the Act. Accordingly, each Purchaser agrees that
neither it, its affiliates nor any persons acting on its or their behalf has
engaged or will engage in any directed selling efforts with respect to the
Securities, and it and they have complied and will comply with the offering
restrictions requirement of Regulation S. Each Purchaser agrees that, at or
prior to confirmation of sale of Securities (other than a sale pursuant to Rule
144A), it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Securities from it
during the restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933 (the "Securities Act") and may not be
offered and sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at any time
or (ii) otherwise until 40 days after the later of the commencement of
the offering and the closing date, except in either case in accordance
with Regulation S (or Rule 144A if available) under the Securities
Act. Terms used above have the meaning given to them by Regulation S."
Terms used in this paragraph have the meanings given to them by Regulation S.
Each Purchaser further agrees that it has not entered and will not
enter into any contractual arrangement with respect to the distribution or
delivery of the Securities, except with its affiliates or with the prior written
consent of the Issuers.
(2) Notwithstanding the foregoing, Securities in registered form may
be offered, sold and delivered by the Purchasers in the United States and to
U.S. persons pursuant to Section 3 of this Agreement without delivery of the
written statement required by paragraph (1) above.
(3) Each Purchaser further represents and agrees that (i) it has not
offered or sold and will not offer or sell any Securities to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (b) it
has complied, and will comply, with all applicable provisions of the Financial
Services Act of 1986 of Great Britain with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United Kingdom,
and (c) it has only issued or passed on
A-1
and will only issue or pass on in the United Kingdom any document received by it
in connection with the issuance of the Securities to a person who is of a kind
described in Article 11(3) of the Financial Services Xxx 0000 (Investment
Advertisements) (Exemptions) Order 1996 of Great Britain or is a person to whom
the document may otherwise lawfully be issued or passed on.
(4) Each Purchaser agrees that it will not offer, sell or deliver any
of the Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action is required to permit
its purchase and resale of the Securities in such jurisdictions. Each Purchaser
understands that no action has been taken to permit a public offering in any
jurisdiction outside the United States where action would be required for such
purpose. Each Purchaser agrees not to cause any advertisement of the Securities
to be published in any newspaper or periodical or posted in any public place and
not to issue any circular relating to the Securities, except in any such case
with Xxxxxxx, Sachs & Co.'s express written consent and then only at its own
risk and expense.
A-2
ANNEX II
Pursuant to Section 7(d) of the Purchase Agreement, the accountants shall
furnish letters to the Purchasers to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries under rule 101 of the American
Institute of Certified Public Accountants' Code of Professional Conduct,
and its interpretations and rulings;
(ii) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Offering Circular
agrees with the corresponding amounts (after restatements where applicable)
in the audited consolidated financial statements for such five fiscal
years;
(iii) On the basis of limited procedures not constituting an audit in
accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and its subsidiaries, inspection of the minute
books of the Company and its subsidiaries since the date of the latest
audited financial statements included in the Offering Circular, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Offering Circular are not in conformity with generally
accepted accounting principles applied on the basis substantially
consistent with the basis for the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Offering Circular;
(B) any other unaudited income statement data and balance sheet
items included in the Offering Circular do not agree with the
corresponding items in the unaudited consolidated financial statements
from which such data and items were derived, and any such unaudited
data and items were not determined on a basis substantially consistent
with the basis for the corresponding amounts in the audited
consolidated financial statements included in the Offering Circular;
(C) the unaudited financial statements which were not included
in the Offering Circular but from which were derived any unaudited
condensed financial statements referred to in clause (A) and any
unaudited income statement data and balance sheet items included in
the Offering Circular and referred to in clause (B) were not
determined on a basis substantially consistent with the basis for the
audited consolidated financial statements included in the Offering
Circular;
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(D) any unaudited pro forma consolidated condensed financial
statements included in the Offering Circular do not comply as to form
in all material respects with the applicable accounting requirements
or the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest financial statements
included in the Offering Circular or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any decreases
in consolidated net current assets or stockholders' equity or other
items specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included in the Offering
Circular except in each case for changes, increases or decreases which
the Offering Circular discloses have occurred or may occur or which
are described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Offering Circular to the specified date
referred to in clause (E) there were any decreases in consolidated net
revenues or operating profit or the total or per share amounts of
consolidated net income or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Representatives, except in each case for
decreases or increases which the Offering Circular discloses have
occurred or may occur or which are described in such letter; and
iv) In addition to the examination referred to in their report(s)
included in the Offering Circular and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraphs
(iii) and (iv) above, they have carried out certain specified procedures,
not constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from the
general accounting records of the Company and its subsidiaries, which
appear in the Offering Circular, and have compared certain of such amounts,
percentages and financial information with the accounting records of the
Company and its subsidiaries and have found them to be in agreement.
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February __, 2000
Dear Ernst & Young:
Xxxxxxx, Xxxxx & Co., as representatives of the Purchasers of 13 1/4%
Senior Notes due 2010 to be issued by Madison River Capital, LLC (the "Company")
and Madison River Finance Corp. ("Madison River Finance" and, together with the
Company, the "Issuers") will be reviewing certain information relating to the
Issuers that will be included (incorporated by reference) in the Offering
Circular. This review process, applied to the information relation to the issue,
is (will be) substantially consistent with the due diligence review process that
we would perform if this placement of securities were being registered pursuant
to the Securities Act of 1933 (the Act). It is recognized however that what is
"substantially consistent" may vary from situation to situation and may not be
the same as that done in a registered offering of the same securities for the
same issuer and whether the procedures being, or to be, followed will be
"substantially consistent" will be determined by us on a case-by-case basis. We
are knowledgeable with respect to the due diligence review process that would be
performed if this placement of securities were being registered pursuant to the
Act. We hereby request that you deliver to us a "comfort" letter concerning the
financial statements of the issuer and certain statistical and other data
included in the offering document. We will contact you to identify the
procedures we wish you to follow and the form we wish the comfort letter to
take.
Very truly yours,
_______________________________
(Xxxxxxx, Sachs & Co.)
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ANNEX III
1. Each of the Issuers has been duly incorporated or formed, as the case
may be, and is validly existing as a corporation or limited liability
company, as the case may be, in good standing under the laws of its
jurisdiction of incorporation or organization, as the case may be,
with corporate power (in the case of a corporation) or power (in the
case of a limited liability company) and authority (corporate and
other) to own its properties and conduct its business as described in
the Offering Circular;
2. Based solely on our review of the stock transfer records of Madison
River Finance and the records of the Company, the Company is the
holder of all of the outstanding capital stock of Finance and Madison
River Telephone Company, LLC ("Madison River Telephone") is the holder
of all of the outstanding limited liability interests of the Company.
All outstanding limited liability company interests of the Company
have been duly authorized, validly issued and are not subject to any
preemptive or similar rights under applicable state law and its
limited liability company agreement. All outstanding shares of capital
stock of Madison River Finance have been duly authorized and validly
issued and are fully paid, non-assessable and not subject to any
preemptive or similar rights under applicable state law and its
charter and by-laws;
3. The Purchase Agreement has been duly authorized, executed and
delivered by the Issuers;
4. The Securities have been duly authorized and executed by the Issuers
and when duly authenticated in accordance with the terms of the
Indenture, and issued and delivered to and paid for by you pursuant to
the Purchase Agreement, will be valid and legally binding obligations
of the Issuers entitled to the benefits of the Indenture, enforceable
against the Issuers in accordance with their terms, except to the
extent that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding at
law or in equity);
5. The Indenture has been duly authorized, executed and delivered by the
Issuers and is a valid and legally binding agreement of the Issuers,
enforceable against the Issuers in accordance with its terms, except
to the extent that enforcement thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating
to or affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity);
6. The Registration Rights Agreement has been duly authorized, executed
and delivered by the Issuers and is a valid and legally binding
obligation of the Issuers, enforceable against the Issuers in
accordance with its terms, except to the extent that (a) enforcement
thereof
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may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to or affecting creditors' rights
generally and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity), and
(b) the enforceability of indemnification and contribution provisions
may be limited by federal and state securities laws and the policies
underlying such laws;
7. The issuance and sale of the Securities by the Issuers, the execution
and delivery of the Indenture, the Registration Rights Agreement and
the Purchase Agreement by the Issuers, compliance by the Issuers with
the terms thereof and the consummation by the Issuers of the
transactions contemplated thereby, each in accordance with its terms,
will not (i) constitute a violation of or a default under the terms of
any Applicable Contract (except that we do not express any opinion as
to any covenant, restriction or provision of any such agreement or
instrument with respect to financial covenants, ratios or tests or any
aspect of the financial condition or results of operations of the
Issuers or any of their subsidiaries) or (ii) result in any
contravention of any Applicable Law or any Applicable Order; and such
actions will not result in any violation of the provisions of the
Certificate of Incorporation or Organization, as the case may be, or
By-laws or Limited Liability Company Agreements, as the case may be,
of the Issuers;
8. Neither the execution and delivery of this Agreement and the operative
documents nor the sale of the Securities contemplated hereby will
violate (i) the Communications Act as interpreted as of this date,
(ii) the Telecommunications Act of 1996 (the "Telecom Act of 1996") as
interpreted as of this date, (iii) any rules or regulations of the
Federal Communications Commission (the "FCC") applicable to the
Issuers as interpreted as of this date or (iv) any rules or
regulations of the Illinois public utility commissions as interpreted
as of this date.
9. No consent, approval, authorization, order, registration or
qualification of or with any federal or New York governmental agency
or body or any federal or New York court is required for the issue and
sale by the Issuers of the Securities and Exchange Securities and the
compliance by the Issuers with all the provisions of the Purchase
Agreement, the Indenture and the Registration Rights Agreement, except
for the filing of a registration statement by the Issuers with the
Commission under the Securities Act pursuant to the Registration
Rights Agreement and the related qualification of the Indenture under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), in connection with the registration of the Securities or
Exchange Securities and such other consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws or the rules of the National
Association of Securities Dealers, Inc.;
10. The statements set forth in the Offering Circular under the caption
"Description of Notes", insofar as they purport to constitute a
summary of the terms of the documents described
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therein, and under the caption "Taxation", insofar as they purport to
describe the provisions of the laws and documents referred to therein,
fairly summarize the provisions of such documents purported to be
described therein all material respects;
11. The statements in the Offering Circular under the headings of
"Regulation: Federal Regulation", to the extent such statements
constitute summaries of the Telecom Act of 1996 or rules and
regulations of the FCC, are accurate in all material respects.
12. Assuming (i) the accuracy of the representations and warranties of the
Issuers set forth in Section 1 of the Purchase Agreement (except for
clause (k) of such Section 1) and of your representations, warranties
and agreements set forth in Section 3 of the Purchase Agreement, (ii)
the due performance by the Issuers of the covenants and agreements set
forth in Section 5 of the Purchase Agreement, and (iii) the compliance
by the Issuers and you with the offering and transfer procedures and
restrictions described in the Offering Circular, the offer, sale and
delivery of the Securities to you in the manner contemplated by the
Purchase Agreement and the Offering Circular, and the initial resale
of the Securities by you in the manner contemplated in the Offering
Circular and the Purchase Agreement, do not require registration under
the Securities Act, and the Indenture does not require qualification
under the Trust Indenture Act, it being understood that we do not
express any opinion as to any subsequent resale of any Security; and
13. The Issuers are not subject to registration or regulation as an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended.
In addition, we have participated in conferences with officers and
other representatives of the Issuers, internal counsel for the Issuers,
representatives of the independent accountants for the Issuers, and you and
your counsel at which the contents of the Offering Circular and related
matters were discussed and, although we are not passing upon, and do not
assume any responsibility for, the accuracy, completeness or fairness of
the statements contained in the Offering Circular and have made no
independent check or verification thereof (except to the extent referred to
in paragraph (7) above), on the basis of the foregoing, no facts have come
to our attention that have led us to believe that the Offering Circular, as
of its date or as of the date hereof, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that we do
not express any opinion or belief with respect to the financial statements
and related notes and other financial data include therein or excluded
therefrom.
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