EXHIBIT 99.1
EXECUTION COPY
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PINNACLE AIRLINES CORP.
(a Delaware corporation)
$110,000,000
Senior Convertible Notes due 2025
PURCHASE AGREEMENT
Dated: February 3, 2005
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Table of Contents
Page
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SECTION 1. Representations and Warranties......................................2
(a) Representations and Warranties by the Company.......................2
(i) Offering Memorandum........................................3
(ii) Incorporated Documents.....................................3
(iii) Independent Accountants....................................3
(iv) Financial Statements.......................................3
(v) No Material Adverse Change in Business.....................3
(vi) Good Standing of the Company...............................4
(vii) Good Standing of Subsidiary................................4
(viii) Capitalization.............................................4
(ix) Authorization of Agreement.................................5
(x) Authorization of the Indenture.............................5
(xi) Authorization of the Registration Rights Agreement.........5
(xii) Authorization of the Securities............................5
(xiii) Description of the Securities, the Indenture and the
Registration Rights Agreement..............................5
(xiv) Authorization and Description of Common Stock..............5
(xv) Absence of Defaults and Conflicts..........................6
(xvi) Absence of Labor Dispute...................................6
(xvii) Absence of Proceedings.....................................7
(xviii) Absence of Manipulation....................................7
(xix) Possession of Intellectual Property........................7
(xx) Absence of Further Requirements............................7
(xxi) Possession of Licenses and Permits.........................7
(xxii) Title to Property..........................................8
(xxiii) Environmental Laws.........................................8
(xxiv) Investment Company Act.....................................9
(xxv) Similar Offerings..........................................9
(xxvi) Rule 144A Eligibility......................................9
(xxvii) No General Solicitation....................................9
(xxviii) No Registration Required...................................9
(xxix) ERISA ..................................................9
(xxx) Insurance.................................................10
(xxxi) Taxes .................................................10
(xxxii) Internal Controls.........................................10
(xxxiii) No Unlawful Payments......................................10
(xxxiv) No Brokerage Commission; Finder's Fee.....................11
(xxxv) Dividend Payments.........................................11
(xxxvi) Reporting Company.........................................11
(xxxvii) Registration Rights.......................................11
(xxxviii) Other Regulations................................11
(b) Officer's Certificates.............................................11
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SECTION 2. Sale and Delivery to Initial Purchasers; Closing...................11
(a) Initial Securities.................................................11
(b) Option Securities..................................................11
(c) Payment............................................................12
(d) Denominations; Registration........................................12
SECTION 3. Covenants of the Company...........................................13
(a) Offering Memorandum................................................13
(b) Notice and Effect of Material Events...............................13
(c) Amendments to Offering Memorandum and Supplements..................13
(d) Qualifications of Securities for Offer and Sale....................13
(e) Use of Proceeds....................................................14
(f) Listing on Securities Exchange.....................................14
(g) Restriction on Sale of Convertible Securities and Common Stock.....14
(h) PORTAL Designation.................................................14
(i) DTC................................................................14
(j) Reporting Requirements.............................................14
SECTION 4. Payment of Expenses................................................15
(a) Expenses...........................................................15
(b) Termination of Agreement...........................................15
SECTION 5. Conditions of Initial Purchasers' Obligations......................16
(a) Opinions of Counsel for the Company................................16
(b) Opinion of Counsel for Initial Purchasers..........................16
(c) Officers' Certificate..............................................17
(d) Accountants' Comfort Letter........................................17
(e) Bring-down Comfort Letter..........................................17
(f) Lock-up Agreements.................................................17
(g) Indenture and Registration Rights Agreement........................17
(h) Conditions to Purchase of Option Securities........................18
(i) Officers' Certificate.....................................18
(ii) Opinions of Counsel for the Company.......................18
(iii) Opinion of Counsel for Initial Purchasers.................18
(iv) Bring-down Comfort Letter.................................18
(i) PORTAL Market......................................................18
(j) Additional Documents...............................................18
(k) Amendment to Revolving Credit Facility.............................18
SECTION 6. Subsequent Offers and Resales of the Securities....................19
(a) Offer and Sale Procedures..........................................19
(i) Offers and Sales to Qualified Institutional Buyers........19
(ii) No General Solicitation...................................19
(iii) Purchases by Non-Bank Fiduciaries.........................19
(iv) Subsequent Purchaser Notification.........................19
(v) Restriction on Transfer...................................20
(vi) Minimum Principal Amount..................................20
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(b) Covenants of the Company...........................................20
(i) Integration...............................................20
(ii) Rule 144A Information.....................................20
(iii) Restriction on Purchases..................................20
(c) Qualified Institutional Buyer......................................21
SECTION 7. Indemnification....................................................21
(a) Indemnification of Initial Purchasers..............................21
(b) Indemnification of the Company.....................................21
(c) Actions Against Parties; Notification..............................22
(d) Settlement without Consent if Failure to Reimburse.................22
SECTION 8. Contribution ......................................................22
SECTION 9. Representations, Warranties and Agreements to Survive Delivery.....24
SECTION 10. Termination of Agreement..........................................24
(a) Termination; General...............................................24
(b) Liabilities........................................................24
SECTION 11. Default by One or More of the Initial Purchasers..................24
SECTION 12. Notices ..........................................................25
SECTION 13. Parties ..........................................................25
SECTION 14. Governing Law ....................................................25
SECTION 15. Time .............................................................26
SECTION 16. Effect of Headings................................................26
SECTION 17. Counterparts .....................................................26
SCHEDULES
Schedule A List of Initial Purchasers
Schedule B Pinnacle Airlines Corp. - $110,000,000 Senior Convertible Notes due
2025
Schedule C List of Persons Subject to the Lock-Up Letter Agreement
EXHIBITS
Exhibit A Form of Opinion of Baker, Donelson, Bearman, Xxxxxxxx & Xxxxxxxxx,
P.C., Counsel for the Company, to be Delivered Pursuant to Section
5(a)
Exhibit B Form of Lock-Up Letter Agreement
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PINNACLE AIRLINES CORP.
(a Delaware corporation)
$110,000,000
Senior Convertible Notes due 2025
PURCHASE AGREEMENT
February 3, 2005
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
as Representative of the several Initial Purchasers
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Pinnacle Airlines Corp., a Delaware corporation (the "Company"), confirms
its agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated ("Xxxxxxx Xxxxx") and each of the other Initial Purchasers named in
Schedule A hereto (collectively, the "Initial Purchasers," which term shall also
include any initial purchaser substituted as hereinafter provided in Section 11
hereof), for whom Xxxxxxx Xxxxx is acting as representative (in such capacity,
the "Representative"), with respect to the issue and sale by the Company and the
purchase by the Initial Purchasers, acting severally and not jointly, of the
respective principal amounts at maturity set forth in said Schedule A of
$110,000,000 aggregate principal amount at maturity of the Company's Senior
Convertible Notes due 2025 (the "Notes"), and with respect to the grant by the
Company to the Initial Purchasers, acting severally and not jointly, of the
option described in Section 2(b) hereof to purchase all or any part of an
additional $11,000,000 aggregate principal amount at maturity of Notes. The
aforesaid $110,000,000 aggregate principal amount at maturity of Notes (the
"Initial Securities") to be purchased by the Initial Purchasers and all or any
part of the $11,000,000 aggregate principal amount at maturity of Notes subject
to the option described in Section 2(b) hereof (the "Option Securities") are
hereinafter called, collectively, the "Securities." The Securities are to be
issued pursuant to an indenture, to be dated as of the Closing Time (as defined
in Section 2(c)) (the "Indenture"), between the Company and a trustee to be
determined by the Company (the "Trustee").
The Securities are convertible, subject to certain conditions as described
in the Final Offering Memorandum, prior to maturity (unless previously redeemed
or otherwise purchased) into cash and shares of common stock, par value $.01 per
share, of the Company (the "Common Stock"), if any, in accordance with the terms
of the Securities and the Indenture, as described in Schedule B hereto.
Securities issued in book-entry form will be issued to Cede & Co. as nominee of
The Depository Trust Company ("DTC") pursuant to a letter agreement, to be dated
as of the Closing Time (as defined in Section 2(c)) (the "DTC Agreement"), among
the Company, the Trustee and DTC.
The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
agrees that the Initial Purchasers may initially resell, subject to the
conditions set forth herein, all or a portion of the Securities to purchasers
("Subsequent Purchasers") at any time after this Agreement has been executed and
delivered. The Securities are to be sold to the Initial Purchasers and offered
and resold by the Initial Purchasers without being registered under the
Securities Act of 1933, as amended (the "1933 Act"), in reliance upon exemptions
therefrom. Pursuant to the terms of the Securities and the Indenture, investors
that acquire Securities may only resell or otherwise transfer such Securities if
such Securities are hereafter registered under the 1933 Act or pursuant to an
available exemption from the registration requirements of the 1933 Act
(including the exemption afforded by Rule 144A ("Rule 144A") of the rules and
regulations of the Securities and Exchange Commission (the "Commission") under
the 1933 Act (the "1933 Act Regulations"). On or prior to the Closing Time, the
Company will enter into with the Initial Purchasers an agreement (the
"Registration Rights Agreement"), pursuant to which, subject to the conditions
set forth therein, the Company is required to file and use its reasonable
efforts to have declared effective a registration statement (the "Registration
Statement") under the 1933 Act to register resales of the Securities and the
shares of Common Stock issuable upon conversion thereof.
The Company has prepared and delivered to the Initial Purchasers copies of
a preliminary offering memorandum dated February 1, 2005 (the "Preliminary
Offering Memorandum") and has prepared and will deliver to each Initial
Purchaser, on the date hereof or the next succeeding day, copies of a final
offering memorandum dated February 3, 2005 (the "Final Offering Memorandum") to
be used by each Initial Purchaser in connection with its solicitation of
purchases of, or offering of, the Securities. As used herein, "Offering
Memorandum" means, with respect to any date or time referred to in this
Agreement, the most recent offering memorandum delivered by the Company to the
Initial Purchasers (whether the Preliminary Offering Memorandum or the Final
Offering Memorandum, or any amendment or supplement to either such document),
including exhibits thereto and any documents incorporated therein by reference,
which has been prepared and delivered by the Company to the Initial Purchasers
in connection with their solicitation of purchases of, or offering of, the
Securities.
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included," "stated" or "described" in
the Offering Memorandum (or other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information which are incorporated by reference in the Offering Memorandum; and
all references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), which is
incorporated by reference in the Offering Memorandum.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to each Initial Purchaser as of the date hereof, as of the Closing
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Time referred to in Section 2(c) hereof, and as of each Date of Delivery (if
any) referred to in Section 2(b) hereof, and agrees with each Initial Purchaser,
as follows:
(i) Offering Memorandum. The Offering Memorandum does not, and at
Closing Time will not, include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that this representation and warranty shall not apply
to statements in or omissions from the Offering Memorandum made in reliance
upon and in conformity with written information furnished to the Company by
any Initial Purchaser through Xxxxxxx Xxxxx expressly for use in the
Offering Memorandum.
(ii) Incorporated Documents. The Offering Memorandum as delivered from
time to time shall incorporate by reference the most recent Annual Report
of the Company on Form 10-K filed with the Commission and each Quarterly
Report of the Company on Form 10-Q and each Current Report of the Company
on Form 8-K filed with the Commission since the end of the fiscal year to
which such Annual Report relates (the "Incorporated Documents"). At the
time they were or hereafter are filed with the Commission, the Incorporated
Documents complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read together
with the other information in the Offering Memorandum, at the time the
Offering Memorandum was issued and at Closing Time, did not and will not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading.
(iii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Offering
Memorandum are independent public accountants with respect to the Company
and its subsidiaries within the meaning of Regulation S-X under the 1933
Act.
(iv) Financial Statements. The financial statements, together with the
related schedules and notes, included in the Offering Memorandum present
fairly the financial position of the Company and its consolidated
subsidiaries at the dates indicated and the statements of operations,
stockholders' equity (deficit) and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved. The supporting schedules, if any, included in the
Offering Memorandum present fairly in accordance with GAAP the information
required to be stated therein. The selected financial data and the summary
financial information included in the Offering Memorandum present fairly
the information shown therein and have been compiled on a basis consistent
with that of the audited financial statements included in the Offering
Memorandum.
(v) No Material Adverse Change in Business. Since the respective dates
as of which information is given in the Offering Memorandum, except as
otherwise stated therein, (A) there has been no material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs
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or business prospects of the Company and Pinnacle Airlines, Inc., a Georgia
corporation ("Pinnacle Airlines"), considered as one enterprise, whether or
not arising in the ordinary course of business (a "Material Adverse
Effect"); (B) there have been no transactions entered into by the Company
or Pinnacle Airlines, other than those in the ordinary course of business,
which are material with respect to the Company and Pinnacle Airlines
considered as one enterprise; (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class
of its capital stock; and (D) there has been no prohibition or suspension
of the operation of Pinnacle Airlines' aircraft, including as a result of
action taken by the Federal Aviation Administration or the U.S. Department
of Transportation.
(vi) Good Standing of the Company. The Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties, to conduct its business
as described in the Offering Memorandum, and to enter into and perform its
obligations under this Agreement; and the Company is duly qualified as a
foreign corporation to transact business and is in good standing in each
other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect.
(vii) Good Standing of Subsidiary. Pinnacle Airlines has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Georgia, has corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Offering Memorandum, and 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
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect; all of the issued and outstanding shares of
capital stock of Pinnacle Airlines have been duly authorized and validly
issued, are fully paid and non-assessable, and are owned by the Company
directly, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity; and none of the outstanding shares of capital
stock of Pinnacle Airlines was issued in violation of any preemptive or
similar rights of any securityholder of Pinnacle Airlines. Pinnacle
Airlines is the sole subsidiary of the Company.
(viii) Capitalization. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Offering Memorandum in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, pursuant to
reservations, agreements, and employee benefit plans referred to in the
Offering Memorandum, or pursuant to the conversion of convertible
securities or exercise of options, warranties and rights referred to in the
Offering Memorandum); the issued and outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid
and non-assessable; and none of the outstanding shares of capital stock of
the Company was issued in violation of the preemptive or similar rights of
any securityholder of the Company.
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(ix) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(x) Authorization of the Indenture. The Indenture has been duly
authorized by the Company and, when executed and delivered by the Company
and the Trustee, will constitute a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
(xi) Authorization of the Registration Rights Agreement. The
Registration Rights Agreement has been authorized by the Company and, when
executed and delivered by the Company and the Initial Purchaser, will
constitute a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights
generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforceability is considered in
a proceeding in equity or at law).
(xii) Authorization of the Securities. The Securities have been duly
authorized and, at Closing Time, will have been duly executed by the
Company and, when authenticated, issued and delivered in the manner
provided for in the Indenture and delivered against payment of the purchase
price therefor as provided in this Agreement, will constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity or at
law), and will be in the form contemplated by, and entitled to the benefits
of, the Indenture.
(xiii) Description of the Securities, the Indenture and the
Registration Rights Agreement. As of the Closing Time, the terms of the
Securities, the Indenture and the Registration Rights Agreement will
conform in all material respects to the respective descriptions thereof
contained in the Offering Memorandum.
(xiv) Authorization and Description of Common Stock. The Common Stock
conforms in all material respects to all descriptions relating thereto set
forth in the Offering Memorandum. Upon issuance and delivery of the
Securities in accordance with this Agreement and the Indenture, the
Securities will be convertible at the option of the holder thereof into
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shares of Common Stock in accordance with the terms of the Securities and
the Indenture; the shares of Common Stock issuable upon conversion of the
Securities have been duly authorized and reserved for issuance upon such
conversion by all necessary corporate action and such shares, when issued
upon such conversion in accordance with the terms of the Securities, will
be validly issued and will be fully paid and non-assessable; no holder of
such shares will be subject to personal liability by reason of being such a
holder; and the issuance of such shares upon such conversion will not be
subject to the preemptive or other similar rights of any securityholder of
the Company.
(xv) Absence of Defaults and Conflicts. Neither the Company nor
Pinnacle Airlines is in violation of its charter or by-laws or in default
in the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which the Company or Pinnacle Airlines is a party or by which any of them
is or may be bound, or to which any of the property or assets of the
Company or Pinnacle Airlines is subject that is material to the Company and
Pinnacle Airlines taken as a whole (collectively, "Agreements and
Instruments") except for such defaults that would not result in a Material
Adverse Effect; and the execution, delivery and performance by the Company
of this Agreement, the Indenture and the Securities and any other agreement
or instrument entered into or issued or to be entered into or issued by the
Company in connection with the transactions contemplated hereby or thereby
or in the Offering Memorandum and the consummation of the transactions
contemplated herein and in the Offering Memorandum (including the issuance
and sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Offering Memorandum under the caption "Use
of Proceeds") and compliance by the Company with its obligations hereunder
do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or
default or Repayment 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 Pinnacle Airlines pursuant to, the Agreements
and Instruments except for such conflicts, breaches or defaults or
Repayment Events or liens, charges or encumbrances that, singly or in the
aggregate, would not result in a Material Adverse Effect, nor will such
action result in any violation of the provisions of the charter or by-laws
of the Company or Pinnacle Airlines or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or Pinnacle Airlines or any of their assets, properties or
operations. As used herein, a "Repayment Event" means any event or
conditions which gives the holder of any note, debenture or other evidence
of indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or Pinnacle Airlines.
(xvi) Absence of Labor Dispute. Except as described in the Offering
Memorandum, no labor dispute with the employees of the Company or Pinnacle
Airlines which would result in a Material Adverse Effect exists or, to the
knowledge of the Company, is imminent; and except as described in the
Offering Memorandum, the Company is not aware of any existing, threatened
or imminent labor disturbance by the employees of any of its or Pinnacle
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Airlines' principal suppliers, manufacturers, customers or contractors,
which, in either case, would result in a Material Adverse Effect.
(xvii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company, threatened, against or affecting the Company or Pinnacle
Airlines which could reasonably be expected to result in a Material Adverse
Effect, or which could reasonably be expected to materially and adversely
affect the properties or assets of the Company or Pinnacle Airlines or the
consummation of the transactions contemplated by this Agreement or the
performance by the Company of its obligations hereunder. The aggregate of
all pending legal or governmental proceedings to which the Company or
Pinnacle Airlines is a party or of which any of their respective property
or assets is the subject which are not described in the Offering
Memorandum, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material Adverse
Effect.
(xviii) Absence of Manipulation. Neither the Company nor any
affiliate, as such term is defined in Rule 501(b) under the 1933 Act (an
"Affiliate"), of the Company has taken, nor will the Company or any
Affiliate take, directly or indirectly, any action which is designed to or
which has constituted or which would reasonably be 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 Securities.
(xix) Possession of Intellectual Property. The Company and Pinnacle
Airlines own or possess, have the right to use, or can acquire on
reasonable terms, adequate patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") necessary to carry on the
business now operated by them. Neither the Company nor Pinnacle Airlines
has received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property which (if the subject of any unfavorable decision, ruling or
finding), singly or in the aggregate, would result in a Material Adverse
Effect.
(xx) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is required for the performance by the Company of its obligations
hereunder, the issuance or sale of the Securities hereunder, the
consummation of the transactions contemplated by this Agreement, or the due
execution, delivery or performance of the Indenture by the Company, except
such as have been already obtained or would not result in a Material
Adverse Effect or as may be required by the securities or Blue Sky laws of
the various states in connection with the offer and sale of the Securities.
(xxi) Possession of Licenses and Permits. The Company and Pinnacle
Airlines possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies,
7
including the Department of Transportation and the Federal Aviation
Administration, necessary to conduct the business now operated by them,
except where the failure so to possess would not, singly or in the
aggregate, result in a Material Adverse Effect; the Company and Pinnacle
Airlines are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, result in a Material Adverse Effect; all of
such Governmental Licenses are valid and in full force and effect, except
where the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not, singly or
in the aggregate, result in a Material Adverse Effect; and neither the
Company nor Pinnacle Airlines has received any notice of proceedings
relating to the revocation or modification of any such Governmental
Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material Adverse
Effect.
(xxii) Title to Property. The Company and Pinnacle Airlines have good
and marketable title to all real property owned by the Company and Pinnacle
Airlines and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described in the Offering Memorandum or (b) do not, singly or in the
aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company or Pinnacle Airlines; and all of the leases and subleases material
to the business of the Company and Pinnacle Airlines, considered as one
enterprise, and under which the Company or Pinnacle Airlines holds
properties described in the Offering Memorandum, are in full force and
effect, and neither the Company nor Pinnacle Airlines has any notice of any
material claim of any sort that has been asserted by anyone adverse to the
rights of the Company or Pinnacle Airlines under any of the leases or
subleases mentioned above, or affecting or questioning the rights of the
Company or Pinnacle Airlines to the continued possession of the leased or
subleased premises under any such lease or sublease.
(xxiii) Environmental Laws. Except as described in the Offering
Memorandum and except such matters as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company nor
Pinnacle Airlines is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products, asbestos-containing materials or mold
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company
and Pinnacle Airlines have received all permits, authorizations and
approvals required of them under any applicable Environmental Laws to
conduct their respective businesses and are each in compliance with their
requirements, (C) there are no pending or, to the knowledge of the Company
8
or Pinnacle Airlines, threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or Pinnacle Airlines and (D) there
are no costs or liabilities associated with Environmental Laws (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) which would,
singly or in the aggregate, have a Material Adverse Effect.
(xxiv) Investment Company Act. The Company is not required, and upon
the issuance and sale of the offered Securities as herein contemplated and
the application of the net proceeds therefrom as described in the Offering
Memorandum will not be required, to register as an "investment company"
under the Investment Company Act of 1940, as amended (the "1940 Act").
(xxv) Similar Offerings. Neither the Company nor any of its Affiliates
has, directly or indirectly, solicited any offer to buy, sold or offered to
sell or otherwise negotiated in respect of, or will solicit any offer to
buy, sell or offer to sell or otherwise negotiate in respect of, in the
United States or to any United States citizen or resident, any security
which is or would be integrated with the sale of the Securities in a manner
that would require the offered Securities to be registered under the 1933
Act.
(xxvi) Rule 144A Eligibility. The Securities are eligible for resale
pursuant to Rule 144A and will not be, at Closing Time, of the same class
as securities listed on a national securities exchange registered under
Section 6 of the 1934 Act or quoted in a U.S. automated interdealer
quotation system.
(xxvii) No General Solicitation. None of the Company, its Affiliates
or any person acting on its or any of their behalf (other than the Initial
Purchasers, as to whom the Company makes no representation) has engaged or
will engage, in connection with the offering of the offered Securities, in
any form of general solicitation or general advertising within the meaning
of Rule 502(c) under the 1933 Act.
(xxviii) No Registration Required. Subject to compliance by the
Initial Purchasers with the representations and warranties set forth in
Section 2 and the procedures set forth in Section 6 hereof, it is not
necessary in connection with the offer, sale and delivery of the offered
Securities to the Initial Purchasers and to each Subsequent Purchaser in
the manner contemplated by this Agreement and the Offering Memorandum to
register the Securities under the 1933 Act or to qualify the Indenture
under the Trust Indenture Act of 1939, as amended (the "1939 Act").
(xxix) ERISA. Each of the Company and Pinnacle Airlines is in
compliance with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), except
where such noncompliance with such provisions of ERISA would not, singly or
in the aggregate, have a Material Adverse Effect; no "reportable event" (as
9
defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which any Issuer would have any liability; neither
the Company nor Pinnacle Airlines has incurred and does not expect to incur
liability under (A) Title IV of ERISA with respect to the termination of,
or withdrawal from, any "pension plan" or (B) Section 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company or Pinnacle Airlines would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified
in all material respects and nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification.
(xxx) Insurance. The Company and Pinnacle Airlines are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses in
which they are engaged; neither the Company nor Pinnacle Airlines has been
refused any insurance coverage sought or applied for; and neither the
Company nor Pinnacle Airlines has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a Material
Adverse Effect, except as described in the Offering Memorandum.
(xxxi) Taxes. The Company and Pinnacle Airlines have filed all
federal, state and local income and franchise tax returns required to be
filed through the date hereof and have paid all taxes due thereon, except
such as are being contested in good faith by appropriate proceedings, and
no tax deficiency has been determined adversely to the Company or Pinnacle
Airlines which has had, nor does the Company have any knowledge of any tax
deficiency which, if determined adversely to the Company or Pinnacle
Airlines, would have, a Material Adverse Effect.
(xxxii) Internal Controls. The Company and Pinnacle Airlines (A) make
and keep accurate books and records and (B) maintain internal accounting
controls which provide reasonable assurance that (i) transactions are
executed in accordance with management's authorization, (ii) transactions
are recorded as necessary to permit preparation of its financial statements
in conformity with GAAP and to maintain accountability for its assets,
(iii) access to its assets is permitted only in accordance with
management's authorization, and (iv) the reported accountability for its
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xxxiii) No Unlawful Payments. To the Company's knowledge, neither the
Company nor Pinnacle Airlines, nor any director, officer, agent, employee
or other person associated with or acting on behalf of the Company or
Pinnacle Airlines, has used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
10
(xxxiv) No Brokerage Commission; Finder's Fee. To the Company's
knowledge, there are no contracts, agreements or understandings between the
Company or Pinnacle Airlines and any person that would give rise to a valid
claim against the Company or the Initial Purchaser for a brokerage
commission, finder's fee or other like payment in connection with this
offering.
(xxxv) Dividend Payments. Except pursuant to its revolving credit
facility dated January 14, 2003, as amended, with Northwest Airlines, Inc.
(the "Revolving Credit Facility"), Pinnacle Airlines is not currently
prohibited, directly or indirectly, under any agreement or other instrument
to which it is a party or is subject, from paying any dividends to the
Company, from making any other distribution on its capital stock or from
repaying to the Company any loans or advances to it from the Company.
(xxxvi) Reporting Company. The Company is subject to the reporting
requirements of Section 13 or Section 15(d) of the 1934 Act.
(xxxvii) Registration Rights. Except as disclosed in the Offering
Memorandum, there are no persons with registration rights or similar rights
to have any securities registered by the Company under the 1933 Act.
(xxxviii)Other Regulations. Pinnacle Airlines (i) is an "air carrier"
within the meaning of 49 U.S.C. Section 40102(a)(2); (ii) holds an air
carrier operating certificate issued by the Secretary of Transportation
pursuant to Chapter 447 of Title 49 of the United States Code for aircraft
capable of carrying ten or more individuals; and (iii) is a "citizen of the
United States" as defined in 49 U.S.C. Section 40102(a)(15).
(b) Officer's Certificates. Any certificate signed by any officer of the
Company delivered to the Initial Purchasers or to counsel for the Initial
Purchasers shall be deemed a representation and warranty by the Company to the
Initial Purchasers as to the matters covered thereby.
SECTION 2. Sale and Delivery to Initial Purchasers; Closing.
(a) Initial Securities. On the basis of the representations, warranties and
agreements herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Initial Purchaser, severally and not
jointly, and each Initial Purchaser, severally and not jointly, agrees to
purchase from the Company, at the price set forth in Schedule B, the principal
amount at maturity of the Initial Securities set forth opposite the name of such
Initial Purchaser in Schedule A plus any additional principal amount at maturity
of Initial Securities that such Initial Purchaser may become obligated to
purchase pursuant to the provisions of Section 11 hereof.
(b) Option Securities. In addition, on the basis of the representations,
warranties and agreements herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the Initial
Purchasers, severally and not jointly, to purchase up to an additional
$11,000,000 aggregate principal amount at maturity of Option Securities at the
same price per Security set forth in Schedule B for the Initial Securities. The
option hereby granted will expire 30 days after the date hereof and may be
exercised at any time upon notice by the Representative to the Company setting
11
forth the number of Option Securities as to which the Initial Purchasers are
then exercising the option and the time and date of payment and delivery for
such Option Securities. Any such time and date of delivery (a "Date of
Delivery") shall be determined by the Representative, but shall not be later
than seven full business days after the exercise of said option, nor in any
event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the Initial
Purchasers, acting severally and not jointly, will purchase that proportion of
the principal amount at maturity of Option Securities then being purchased which
the principal amount at maturity of Initial Securities set forth opposite the
name of such Initial Purchaser in Schedule A bears to the total principal amount
at maturity of Initial Securities.
(c) Payment. Payment of the purchase price for, and delivery of one or more
global certificates for, the Initial Securities shall be made at the offices of
Shearman & Sterling LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at
such other place as shall be agreed upon by the Representative and the Company,
at 9:00 A.M. (New York time) on the third business day after the date hereof
(unless postponed in accordance with the provisions of Section 11 hereof), or at
such other time not later than ten business days after such date as shall be
agreed upon by the Representative and the Company (such time and date of payment
and delivery being herein called the "Closing Time").
In addition, in the event that the Initial Purchasers have exercised their
option to purchase all or any of the Option Securities, payment of the purchase
price for, and delivery of one or more global certificates for, such Option
Securities shall be made at the above-mentioned offices, or at such other place
as shall be agreed upon by the Representative and the Company, on each Date of
Delivery as specified in the notice from the Representative to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representative for the respective accounts of the Initial Purchasers of the
Securities to be purchased by them. It is understood that each Initial Purchaser
has authorized the Representative, for its account, to accept delivery of,
receipt for, and make payment of the purchase price for, the Initial Securities
and the Option Securities, if any, which it has agreed to purchase. Xxxxxxx
Xxxxx, individually and not as representative of the Initial Purchasers, may
(but shall not be obligated to) make payment of the purchase price for the
Initial Securities or the Option Securities, if any, to be purchased by any
Initial Purchaser whose funds have not been received by the Closing Time or the
relevant Date of Delivery, as the case may be, but such payment shall not
relieve such Initial Purchaser from its obligation hereunder.
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations ($1,000 or
integral multiples thereof) and registered in such names as the Representative
may request in writing at least one full business day before the Closing Time or
the relevant Date of Delivery, as the case may be; provided that any Securities
in global form will be registered in the name of Cede & Co. The certificates for
the Initial Securities and the Option Securities, if any, will be made available
for examination and packaging by the Initial Purchasers in The City of New York
not later than 10:00 A.M. (Eastern time) on the business day prior to the
Closing Time or the relevant Date of Delivery, as the case may be.
12
SECTION 3. Covenants of the Company. The Company covenants with each
Initial Purchaser as follows:
(a) Offering Memorandum. The Company, as promptly as possible, will furnish
to the Initial Purchasers, without charge, such number of copies of the Offering
Memorandum and any amendments and supplements thereto and any Incorporated
Documents as the Initial Purchasers may reasonably request.
(b) Notice and Effect of Material Events. The Company will immediately
notify each Initial Purchaser, and confirm such notice in writing, of (x) any
filing made by the Company of information relating to the offering of the
Securities with any securities exchange or any other securities regulatory body
in the United States or any other jurisdiction, and (y) prior to the completion
of the placement of the Securities by the Initial Purchasers as evidenced by a
notice from the Initial Purchasers to the Company, any material changes in or
material events affecting the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and Pinnacle
Airlines considered as one enterprise which (i) make any statement in the
Offering Memorandum false or misleading or (ii) are not disclosed in the
Offering Memorandum. In such event or if during such time any event shall occur
as a result of which it is necessary, in the reasonable opinion of any of the
Company, its counsel, the Initial Purchasers or counsel for the Initial
Purchasers, to amend or supplement the Offering Memorandum in order that the
Offering Memorandum not include any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances then existing, the Company will
forthwith amend or supplement the Offering Memorandum by preparing and
furnishing to each Initial Purchaser an amendment or amendments of, or a
supplement or supplements to, the Offering Memorandum (in form and substance
satisfactory in the reasonable opinion of counsel for the Initial Purchasers) so
that, as so amended or supplemented, the Offering Memorandum will not include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
existing at the time it is delivered to a Subsequent Purchaser, not misleading.
(c) Amendments to Offering Memorandum and Supplements. The Company will
advise each Initial Purchaser promptly of any proposal to amend or supplement
the Offering Memorandum and will not effect any such amendment or supplement
without the consent of the Initial Purchasers. Neither the consent of the
Initial Purchasers, nor the Initial Purchasers' delivery of any such amendment
or supplement, shall constitute a waiver of any of the conditions set forth in
Section 5 hereof.
(d) Qualifications of Securities for Offer and Sale. The Company shall use
its best efforts, in cooperation with the Initial Purchasers, to qualify the
Securities and the shares of Common Stock issuable upon conversion of the
Securities for offering and sale under the applicable securities laws of such
states and other jurisdictions as the Representative may designate and will
maintain such qualification in effect as long as required in connection with the
distribution of the Securities; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
13
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities or such shares of Common Stock issuable
upon conversion of the Securities have been so qualified, the Company will file
such statements and reports as may be required by the laws of such jurisdiction
to continue such qualification in effect for so long as may be required in
connection with the distribution of the Securities.
(e) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner indicated in the Offering
Memorandum under "Use of Proceeds."
(f) Listing on Securities Exchange. The Company will use its reasonable
best efforts to cause all shares of Common Stock issuable upon conversion of the
Securities to be listed on the Nasdaq National Market or listed on a "national
securities exchange" registered under Section 6 of the 1934 Act.
(g) Restriction on Sale of Convertible Securities and Common Stock. During
a period of 90 days from the date of the Offering Memorandum, the Company will
not, without the prior written consent of Xxxxxxx Xxxxx, (i) offer, pledge,
announce the intention to sell, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant for the sale of, lend or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or securities convertible
into or exchangeable or exercisable for or repayable with Common Stock, or file
any registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into any swap or other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, any of the economic
consequence of ownership of the Common Stock, or any securities convertible into
or exchangeable or exercisable for or repayable with Common Stock, whether any
such swap or transaction described in clause (i) or (ii) above is to be settled
by delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (A) the Securities to be sold hereunder or
the Common Stock to be delivered upon conversion thereof, (B) the resale
registration statement to be filed by the Company pursuant to the Registration
Rights Agreement relating to the resale of the Securities and the shares of
Common Stock or any other registration statement filed pursuant to registration
rights described in the Offering Memorandum, (C) shares of Common Stock to be
issued and options to purchase Common Stock to be granted pursuant to employee
benefit plans, qualified stock option plans or other employee compensation
benefit plans or pursuant to currently outstanding options, warrants or rights
existing on the date hereof and referred to in the Offering Memorandum.
(h) PORTAL Designation. The Company shall use its best efforts to permit
the Securities to be designated as PORTAL securities in accordance with the
rules and regulations adopted by the National Association of Securities Dealers,
Inc. ("NASD") relating to the PORTAL Market.
(i) DTC. The Company shall cooperate with the Representative and use its
best efforts to permit the Securities to be eligible for clearance and
settlement through the facilities of DTC.
(j) Reporting Requirements. The Company, during the period when the
Offering Memorandum is required to be delivered, will file all documents
required to be filed with the Commission pursuant to the 1934 Act within the
time periods required by the 1934 Act and the 1934 Act Regulations.
14
SECTION 4. Payment of Expenses.
(a) Expenses. The Company shall pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing, delivery to the Initial Purchasers and any filing of the
Offering Memorandum (including financial statements and any schedules or
exhibits and any Incorporated Document) and of each amendment or supplement
thereto, (ii) the preparation, printing and delivery to the Initial Purchasers
of this Agreement, the Indenture, the Securities, the Registration Rights
Agreement and such other documents as may be required in connection with the
offer, purchase, sale, issuance or delivery of the Securities or the issuance or
delivery of the Common Stock issuable upon conversion thereof, (iii) the
preparation, issuance and delivery of the certificates for the Securities to the
Initial Purchasers and the certificates for the Common Stock issuable upon
conversion thereof, including any transfer taxes, any stamp or other duties
payable upon the sale, issuance and delivery of the Securities to the Initial
Purchasers, the issuance and delivery of the Common Stock issuable upon
conversion thereof and any charges of DTC in connection therewith, (iv) the fees
and disbursements of the Company's counsel, accountants and other advisors, (v)
the qualification of the Securities and the shares of Common Stock issuable upon
conversion of the Securities under securities laws in accordance with the
provisions of Section 3(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Initial Purchasers in connection therewith
and in connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) any fees of the NASD in connection with the Securities, (vii) the
fees and expenses of the Trustee, including the fees and disbursements of
counsel for the Trustee in connection with the Indenture and the Securities,
(viii) the costs and expenses of the Company relating to investor presentations
on any "road show" undertaken in connection with the marketing of the Securities
including, without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the
cost of aircraft and other transportation chartered in connection with the road
show, (ix) the fees and expenses of any transfer agent or registrar for the
Common Stock, (x) any fees payable in connection with the rating of the
Securities, and (xi) any fees and expenses payable in connection with the
initial and continued designation of the Securities as PORTAL securities under
the PORTAL Market Rules pursuant to NASD Rule 5322.
(b) Termination of Agreement. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
a single counsel for the Initial Purchasers.
15
SECTION 5. Conditions of Initial Purchasers' Obligations. The obligations
of the several Initial Purchasers hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any of its subsidiaries
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Opinions of Counsel for the Company. At the Closing Time, the
Representative shall have received the favorable opinions of:
(i) Baker, Donelson, Bearman, Xxxxxxxx & Xxxxxxxxx, P.C., counsel for
the Company, in form and substance satisfactory to counsel for the Initial
Purchaser and dated as of the Closing Time, to the effect set forth in
Exhibit A hereto and to such further effect as counsel to the Initial
Purchasers may reasonably request; and
(ii) Xxxxxxx, Scoutt & Rasenberger, L.L.P., special regulatory counsel
for the Company, dated as of the Closing Time, to the effect that:
(A) Pinnacle Airlines (1) is an "air carrier" within the meaning
of 49 U.S.C. Section 40102(a)(2); (2) is a "citizen of the United
States" as defined in 49 U.S.C. Section 40102(a)(15); and (3) holds an
air carrier operating certificate issued pursuant to Chapter 447 of
Title 49 of the United States Code for aircraft capable of carrying
ten or more individuals;
(B) Pinnacle Airlines holds Government Licenses issued by the
U.S. Department of Transportation and the Federal Aviation
Administration ("DOT Licenses") necessary to conduct its commercial
airline operations as described in the Offering Memorandum; all of the
DOT Licenses are valid and in full force and effect, except where the
invalidity of such DOT Licenses or the failure of such DOT Licenses to
be in full force and effect would not have a Material Adverse Effect;
and no DOT Licenses held by Pinnacle Airlines are the subject of any
"show cause" or other order of, or any proceeding before, or any
investigation by, the U.S. Department of Transportation, which in the
opinion of such counsel, could reasonably be expected to result in a
final order impairing the validity of such DOT Licenses; and
(C) the statements relating to legal matters, documents or
proceedings included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2003 under the caption "Business --
Regulations", which is incorporated by reference in the Offering
Memorandum, fairly summarizes in all material respects such matters,
documents or proceedings.
(b) Opinion of Counsel for Initial Purchasers. At the Closing Time, the
Representative shall have received the opinion, dated as of the Closing Time, of
Shearman & Sterling LLP, counsel for the Initial Purchasers, together with
16
signed or reproduced copies of such letter for each of the other Initial
Purchasers. In giving such opinion such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the law of the State of New
York, the federal law of the United States and the General Corporation Law of
the State of Delaware, upon the opinions of counsel satisfactory to the
Representative. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and certificates of
public officials.
(c) Officers' Certificate. At the Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Final Offering Memorandum (exclusive of any amendments or
supplements thereto after the date of this Agreement), any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, and
the Representative shall have received a certificate of the President or a
Senior Vice President of the Company and of the chief financial officer or chief
accounting officer of the Company, dated as of the Closing Time, to the effect
that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1 hereof are true and correct with the
same force and effect as though expressly made at and as of the Closing Time,
and (iii) the Company has complied with all of the agreements entered into in
connection with the transaction contemplated herein and satisfied all conditions
on its part to be performed or satisfied at or prior to the Closing Time.
(d) Accountants' Comfort Letter. At the time of the execution of this
Agreement, the Representative shall have received from Ernst & Young LLP a
letter dated such date, in the form and substance satisfactory to the
Representative, together with signed or reproduced copies of such letter for
each of the other Initial Purchasers, containing statements and information of
the type ordinarily included in accountants' "comfort letters" to initial
purchasers with respect to the financial statements and certain financial
information contained, or incorporated by reference, in the Offering Memorandum.
(e) Bring-down Comfort Letter. At the Closing Time, the Representative
shall have received from Ernst & Young LLP a letter, dated as of the Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (d) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to the
Closing Time.
(f) Lock-up Agreements. On or prior to the date of this Agreement, the
Representative shall have received an agreement substantially in the form of
Exhibit C hereto signed by the persons listed in Schedule C hereto.
(g) Indenture and Registration Rights Agreement. At or prior to the Closing
Time, the Company and the Trustee shall have executed and delivered the
Indenture, and the Company, and the Initial Purchasers shall have executed and
delivered the Registration Rights Agreement.
17
(h) Conditions to Purchase of Option Securities. In the event that the
Initial Purchasers exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the obligation of the
Initial Purchasers to purchase such Option Securities is subject to the accuracy
as of each Date of Delivery of the representations and warranties of the Company
contained in Section 1 or in certificates of any officer of the Company
delivered pursuant to the provisions hereof, to the performance by the Company
of their covenants and other obligations hereunder, and at the relevant Date of
Delivery, the Representative shall have received:
(i) Officers' Certificate. A certificate, dated such Date of Delivery,
of the President or Senior Vice President of the Company and the chief
financial officer or chief accounting officer of the Company confirming
that the certificate delivered at the Closing Time pursuant to Section 5(c)
hereof remains true and correct as of such Date of Delivery.
(ii) Opinions of Counsel for the Company. The favorable opinions of
Baker, Donelson, Bearman, Xxxxxxxx & Xxxxxxxxx, P.C., and Xxxxxxx, Scoutt &
Rasenberger, L.L.P., each in form and substance satisfactory to the Initial
Purchasers, dated such Date of Delivery, relating to the Option Securities
to be purchased on such Date of Delivery and otherwise to the same effect
as the opinions required by Section 5(a) hereof.
(iii) Opinion of Counsel for Initial Purchasers. The opinion of
Shearman & Sterling LLP, counsel for the Initial Purchasers, dated such
Date of Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion required
by Section 5(b) hereof.
(iv) Bring-down Comfort Letter. A letter from Ernst & Young LLP, in
form and substance satisfactory to the Initial Purchasers and dated such
Date of Delivery, substantially in the same form and substance as the
letter furnished to the Initial Purchasers pursuant to Section 5(d) hereof,
except that the "specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than three business days prior to such
Date of Delivery.
(i) PORTAL Market. At the Closing Time, the Securities and the Common Stock
issuable upon conversion of the Securities shall have been designated for
trading on PORTAL.
(j) Additional Documents. At the Closing Time and at each Date of Delivery,
counsel for the Initial Purchasers shall have been furnished with such
documents, certificates and opinions as they may require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy and completeness of any of
the representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection with
the issuance and sale of the Securities as herein contemplated shall be
satisfactory in form and substance to the Initial Purchaser ands counsel for the
Initial Purchasers.
(k) Amendment to Revolving Credit Facility. At the Closing Time, the
Company shall have entered into an amendment to the Revolving Credit Facility
18
which will permit Pinnacle Airlines to make dividends or other distributions to
the Company in an aggregate amount of at least $1,500,000.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement (or, in the case of any
condition to the purchase of Option Securities, on a Date of Delivery which is
after the Closing Time, the obligations of the several Initial Purchasers to
purchase the relevant Option Securities on such Date of Delivery) may be
terminated by the Initial Purchasers by notice to the Company at any time at or
prior to the Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party except as
provided in Section 4 and except that Sections 1, 7, 8 and 9 shall survive any
such termination and remain in full force and effect.
SECTION 6. Subsequent Offers and Resales of the Securities.
(a) Offer and Sale Procedures. Each of the Initial Purchasers and the
Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) Offers and Sales to Qualified Institutional Buyers. Offers and
sales of the Securities shall only be made to persons whom the offeror or
seller reasonably believes to be qualified institutional buyers, as defined
in Rule 144A under the 1933 Act ("Qualified Institutional Buyers").
(ii) No General Solicitation. No general solicitation or general
advertising (within the meaning of Rule 502(c) under the 0000 Xxx) shall be
used in the United States in connection with the offering or sale of the
Securities.
(iii) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
Subsequent Purchaser of Securities acting as a fiduciary for one or more
third parties, each third party shall, in the judgment of the applicable
Initial Purchaser, be a Qualified Institutional Buyer.
(iv) Subsequent Purchaser Notification. Each Initial Purchaser will
take reasonable steps to inform, and cause each of its United States
Affiliates to take reasonable steps to inform, persons acquiring Securities
from such Initial Purchaser or its Affiliate that the Securities (A) have
not been and will not be registered under the 1933 Act, (B) are being sold
to them without registration under the 1933 Act in reliance on Rule 144A or
in accordance with another exemption from registration under the 1933 Act,
as the case may be, and (C) may not be offered, sold or otherwise
transferred except (1) to the Company, (2) outside the United States in
accordance with Regulation S under the 1933 Act or (3) inside the United
States in accordance with (x) Rule 144A to a person whom the seller
reasonably believes is a Qualified Institutional Buyer that is purchasing
such Securities for its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the offer, sale or
transfer is being made in reliance on Rule 144A or (y) pursuant to another
available exemption from registration under the 1933 Act.
19
(v) Restriction on Transfer. The transfer restrictions and the other
provisions set forth in the Offering Memorandum under the caption "Transfer
Restrictions," including the legend required thereby, shall apply to the
Securities except as otherwise agreed by the Company and the Initial
Purchasers. Following the sale of the Securities by the Initial Purchasers
to each Subsequent Purchaser pursuant to the terms hereof, the Initial
Purchasers shall not be liable or responsible to the Company for any
losses, damages or liabilities suffered or incurred by the Company,
including any losses, damages or liabilities under the 1933 Act, arising
from or relating to any subsequent resale or transfer of any Security.
(vi) Minimum Principal Amount. No sale of the Securities to any one
Subsequent Purchaser will be for less than U.S. $1,000 principal amount and
no Security will be issued in a smaller principal amount. If the Subsequent
Purchaser is a non-bank fiduciary acting on behalf of others, each person
for whom it is acting must purchase at least U.S. $1,000 principal amount
of the Securities.
(b) Covenants of the Company. The Company covenants with each Initial
Purchaser as follows:
(i) Integration. The Company agrees that it will not and will cause
its Affiliates not to, directly or indirectly, solicit any offer to buy,
sell or make any offer or sale of, or otherwise negotiate in respect of,
securities of the Company or any Affiliate thereof of any class if, as a
result of the doctrine of "integration" referred to in Rule 502 under the
1933 Act, such offer and sale would render invalid (for the purpose of (A)
the sale of the Securities by the Company to the Initial Purchasers, (B)
the resale of the Securities by the Initial Purchasers to Subsequent
Purchasers, or (C) the resale of the Securities by such Subsequent
Purchasers to others) the exemption from the registration requirements of
the 1933 Act provided by Section 4(2) thereof or by Rule 144A thereunder or
otherwise.
(ii) Rule 144A Information. The Company agrees that, in order to
render the Securities eligible for resale pursuant to Rule 144A under the
1933 Act, while any of the Securities remain outstanding, it will make
available, upon request, to any holder of Securities or prospective
purchasers of Securities the information specified in Rule 144A(d)(4),
unless the Company furnishes information to the Commission pursuant to
Section 13 or 15(d) of the 1934 Act.
(iii) Restriction on Purchases. Until the expiration of two years
after the original issuance of the Securities, the Company will not, and
will cause its Affiliates not to, purchase or agree to purchase or
otherwise acquire any Securities which are "restricted securities" (as such
term is defined under Rule 144(a)(3) under the 1933 Act), whether as
beneficial owner or otherwise (except as agent on behalf of and for the
account of customers in the ordinary course of business as a securities
broker in unsolicited broker's transactions).
20
(c) Qualified Institutional Buyer. Each Initial Purchaser, severally and
not jointly, represents and warrants to, and agrees with, the Company that it is
a Qualified Institutional Buyer.
SECTION 7. Indemnification.
(a) Indemnification of Initial Purchasers. The Company agrees to indemnify
and hold harmless each Initial Purchaser, its Affiliates ("Initial Purchaser's
Affiliates"), its selling agents and each person, if any, who controls such
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Offering
Memorandum or the Final Offering Memorandum (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
7(d) below) any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Xxxxxxx Xxxxx), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Initial Purchaser through Xxxxxxx Xxxxx expressly for use in the Offering
Memorandum (or any amendment or supplement thereto).
(b) Indemnification of the Company. Each Initial Purchaser severally agrees
to indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Offering Memorandum (or any
amendment or supplement thereto) in reliance upon and in conformity with written
21
information furnished to the Company by such Initial Purchaser through Xxxxxxx
Xxxxx expressly for use in the Offering Memorandum (or any amendment or
supplement thereto.
(c) Actions Against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 7(a) above,
counsel to the indemnified parties shall be selected by Xxxxxxx Xxxxx, and, in
the case of parties indemnified pursuant to Section 7(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 7 or Section
8 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 7(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into, and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 8. Contribution. If the indemnification provided for in Section 7
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Initial Purchasers on the other hand from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
22
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Initial Purchasers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Initial
Purchasers, bear to the aggregate initial offering price of the Securities.
The relative fault of the Company 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 or by the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 8. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 8 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities purchased and sold by it hereunder exceeds
the amount of any damages which such Initial Purchaser has otherwise been
required to pay by reason of any such untrue or alleged untrue statement or
omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act and each of the Initial Purchaser's Affiliates and selling
agents shall have the same rights to contribution as such Initial Purchaser, and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company. The Initial Purchasers' respective obligations to
23
contribute pursuant to this Section are several in proportion to the principal
amount of Securities set forth opposite their respective names in Schedule A
hereto and not joint.
SECTION 9. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of any Initial Purchaser or any of
the Initial Purchaser's Affiliates or selling agents, any person controlling an
Initial Purchaser (within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act), its officers or directors or any person controlling the
Company, and (ii) delivery of and payment for the Securities.
SECTION 10. Termination of Agreement.
(a) Termination; General. The Representative may terminate this Agreement,
by notice to the Company, at any time at or prior to the Closing Time (i) if
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Final Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or in the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any material adverse change in national
or international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Representative,
impracticable or inadvisable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in any securities of the
Company has been suspended or materially limited by the Commission or the Nasdaq
National Market or if trading generally on the New York Stock Exchange, the
American Stock Exchange or in the Nasdaq National Market has been suspended or
materially limited, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the NASD or any other governmental
authority, or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States, or (iv) if a
banking moratorium has been declared by either federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 7,
8 and 9 shall survive such termination and remain in full force and effect.
SECTION 11. Default by One or More of the Initial Purchasers. If one or
more of the Initial Purchasers shall fail at the Closing Time to purchase the
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), the Representative shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Initial Purchasers, or any other initial purchasers, to purchase all, but not
24
less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, the Representative shall not
have completed such arrangements within such 24 hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
aggregate principal amount of the Securities to be purchased hereunder,
each of the non-defaulting Initial Purchasers shall be obligated, severally
and not jointly, to purchase the full amount thereof in the proportions
that their respective purchase obligations hereunder bear to the purchase
obligations of all non-defaulting Initial Purchasers, or
(b) if the number of Defaulted Securities exceeds 10% of the aggregate
principal amount of the Securities to be purchased hereunder, this
Agreement shall terminate without liability on the part of any
non-defaulting Initial Purchaser.
No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representative or the Company shall have the right to
postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Offering Memorandum or in any other documents
or arrangements. As used herein, the term "Initial Purchaser" includes any
person substituted for an Initial Purchaser under this Section.
SECTION 12. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchasers shall be directed to Xxxxxxx Xxxxx at 0 Xxxxx Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, attention Syndicate Department; and notices to the Company
shall be directed to it at 0000 Xxxxxxxxx Xxxx., Xxxxx 000, Xxxxxxx, Xxxxxxxxx
00000, attention of Chief Financial Officer (Fax: (000) 000-0000).
SECTION 13. Parties. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchasers and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchasers and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 7 and 8
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Initial Purchasers and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any Initial Purchaser shall be deemed to be a successor by reason merely of such
purchase.
SECTION 14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
25
SECTION 15. Time. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 16. Effect of Headings. The Article and Section headings herein and
the Table of Contents are for convenience only and shall not affect the
construction hereof.
SECTION 17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
PINNACLE AIRLINES CORP.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive
Officer
CONFIRMED AND ACCEPTED, as of
the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
For itself and the other Initial Purchasers named in Schedule A hereto.
By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Authorized Signatory
26
SCHEDULE A
Principal
Amount at
Maturity of
Name of Initial Purchaser Securities
------------------------- -----------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated................................ $ 101,530,000
Xxxxxxx Xxxxx & Associates, Inc....................... 8,470,000
--------------
Total............................... $ 110,000,000
SCH A-1
SCHEDULE B
PINNACLE AIRLINES CORP.
$110,000,000 SENIOR CONVERTIBLE NOTES DUE 2025
(i) The initial public offering price per $1,000 principal amount of the
Securities shall be 100% of the principal amount thereof, plus accrued interest,
if any, from the date of issuance.
(ii) The purchase price per $1,000 principal amount to be paid by the
Initial Purchasers for the Initial Securities shall be 96.75% of the principal
amount thereof.
(iii) The interest rate on the Securities shall be 3.25% per annum.
(iv) The Securities shall be convertible as described and under the
circumstances set forth in the Final Offering Memorandum into cash and shares of
common stock, par value $.01 per share, of the Company, if any, at a conversion
rate of 75.6475 shares per $1,000 principal amount of Securities (equivalent to
an initial conversion price of approximately $13.22 per share).
(v) At any time on or after February 15, 2010, the Company may redeem for
cash all or a portion of the Securities at a redemption price equal to the 100%
of the principal amount of the Securities plus accrued and unpaid interest, if
any, to the applicable redemption date.
(vi) Holders may require the Company to purchase for cash all or a portion
of their Securities on February 15, 2010, February 15, 2015 and February 15,
2020 at a purchase price equal to 100% of the principal amount of the Securities
to be repurchased plus accrued and unpaid interest, if any, to the purchase
date.
(vii) Upon specified change of control events described in the Final
Offering Memorandum, holders will have the option, subject to the Company's
right described in the Final Offering Memorandum in the event of a public
acquiror change of control, to require the Company to purchase all or any
portion of the Securities at a price equal to 100% of the principal amount of
the Securities, plus accrued and unpaid interest, if any, to the purchase date
and a make-whole premium upon conditions described in the Final Offering
Memorandum.
SCH B-1
SCHEDULE C
LIST OF PERSONS SUBJECT TO THE LOCK-UP LETTER AGREEMENT
Northwest Airlines, Inc.
Xxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxx
J. Xxxxxxx Xxxxxxx
Xxxxxx X. Xxxx
Xxxxx X. XxXxxxx, Xx.
Xxxxxx X. Xxxxxx
R. Xxxxxx Xxxxxxx
Xxxxxx X. Xxxxxxxx, Xx.
Xxxxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxx X. Xxxxx
Xxxxx X. Xxxx
Xxxxx X. Xxxx
Xxxxxx X. Xxxx
Xxxxx X. Xxxxxxxxxx
D. Xxxxxx Xxxx, Xx.
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxx
SCH C-1
EXHIBIT A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(a)
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the Offering
Memorandum and to enter into and perform its obligations under the Purchase
Agreement.
(iii) The Company is duly qualified as a foreign corporation to transact
business and is in good standing in the State of Tennessee.
(iv) The authorized, issued and outstanding capital stock of the Company is
as set forth in the Offering Memorandum in the column entitled "Actual" under
the caption "Capitalization" (except for subsequent issuances, if any, pursuant
to the Purchase Agreement, pursuant to reservations, agreements, and employee
benefit plans referred to in the Offering Memorandum, or pursuant to the
conversion of convertible securities or the exercise of options, warrants and
rights referred to in the Offering Memorandum); the issued and outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable; and none of the outstanding shares
of capital stock of the Company was issued in violation of the preemptive or
similar rights of any securityholder of the Company.
(v) Pinnacle Airlines has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Georgia, has
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Offering Memorandum, and is duly
qualified as a foreign corporation to transact business and is in good standing
in each of the jurisdictions listed on Schedule A attached hereto; all of the
issued and outstanding capital stock of Pinnacle Airlines has been duly
authorized and validly issued, is fully paid and non-assessable and, to our
knowledge after due inquiry, is owned by the Company directly, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or equity.
(vi) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
(vii) The Indenture has been duly authorized, executed and delivered by the
Company and (assuming the due authorization, execution and delivery thereof by
the Trustee) constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws relating to or affecting enforcement of creditors'
rights generally, or by general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
Exhibit A-1
(viii) The Registration Rights Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
(ix) The Securities are in the form contemplated by the Indenture, have
been duly authorized by the Company and, when executed by the Company,
authenticated by the Trustee in the manner provided in the Indenture (assuming
the due authorization, execution and delivery of the Indenture by the Trustee),
and issued and delivered against payment of the purchase price therefor, will
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or other similar
laws affecting enforcement of creditor's rights generally and except as
enforcement thereof is subject to general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law), and
will be entitled to the benefits of the Indenture.
(x) Upon issuance and delivery of the Securities in accordance with the
Purchase Agreement and the Indenture, the Securities shall be convertible at the
option of the holder thereof for shares of Common Stock in accordance with the
terms of the Securities and the Indenture; the shares of Common Stock issuable
upon conversion of the Securities have been duly authorized and reserved for
issuance upon such conversion by all necessary corporate action; such shares of
Common Stock, when issued upon such conversion in accordance with the terms of
the Securities, will be validly issued and will be fully paid and
non-assessable; and no holder of such shares of Common Stock will be subject to
personal liability by reason of being such a holder.
(xi) The issuance of the shares of Common Stock upon conversion of the
Securities is not subject to the preemptive or similar rights of any
securityholder of the Company.
(xii) The form of certificate used to evidence the Common Stock complies in
all material respects with all applicable statutory requirements, any applicable
requirements of the certificate of incorporation and bylaws of the Company, and
the requirements of the Nasdaq National Market.
(xiii) The Securities, the Indenture and the Registration Rights Agreement
conform in all material respects to the descriptions thereof contained in the
Offering Memorandum.
(xiv) The Incorporated Documents (other than the financial statements,
notes thereto and supporting schedules therein, as to which no opinion is
rendered), when they were filed with the Commission, complied as to form in all
material respects with the requirements of the 1934 Act and the 1934 Act
Regulations.
Exhibit A-2
(xv) To our knowledge after due inquiry, no litigation, investigation or
administrative proceeding of or before any court or governmental authority is
pending or threatened against the Company or Pinnacle Airlines which would
reasonably be expected to result in a Material Adverse Effect, or which would
reasonably be expected to materially and adversely affect the properties or
assets of the Company or Pinnacle Airlines, the consummation of the transactions
contemplated in the Purchase Agreement, or the performance by the Company of its
obligations thereunder.
(xvi) The information included in the Offering Memorandum under
"Description of Notes", "Material United States Federal Income Tax
Considerations" and "Description of Capital Stock", to the extent that it
constitutes matters of law, summaries of legal matters, the Company's
certificate of incorporation and bylaws, or legal conclusions, has been reviewed
by us and is accurate in all material respects.
(xvii) To our knowledge after due inquiry, there are no contracts or other
documents that would be required to be described in the Offering Memorandum that
are not so described.
(xviii) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority is required for the authorization, execution, delivery and performance
by the Company of the Purchase Agreement or the Indenture, the offering,
issuance, sale or delivery of the Securities to the Initial Purchasers, or the
resale by the Initial Purchasers in accordance with the terms of the Purchase
Agreement, except such as (a) have been already obtained, (b) may be required by
the securities or Blue Sky laws of the various states in connection with the
offer and sale of the Securities or (c) if not made or obtained, would not
result in a Material Adverse Effect or expose the Initial Purchasers to any
liability.
(xix) Subject to compliance by the Initial Purchasers with the
representations and warranties set forth in Section 2 of the Purchase Agreement
and the procedures set forth in Section 6 thereof, it is not necessary in
connection with the offer, sale and delivery of the Securities to the Initial
Purchasers and to each Subsequent Purchaser in the manner contemplated by the
Purchase Agreement and the Offering Memorandum to register the Securities under
the 1933 Act or to qualify the Indenture under the 1939 Act.
(xx) The execution, delivery and performance of the Purchase Agreement, the
DTC Agreement, the Indenture, the Registration Rights Agreement and the
Securities, and the consummation of the transactions contemplated in the
Purchase Agreement, the Registration Rights Agreement and the Offering
Memorandum (including the use of the proceeds from the sale of the Securities as
described in the Offering Memorandum under the caption "Use Of Proceeds"), and
compliance by the Company with its obligations under the Purchase Agreement, the
Indenture, the Registration Rights Agreement and the Securities do not and will
not, whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined in Section 1(a)(xv) of the Purchase Agreement) under or result in the
Exhibit A-3
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any subsidiary thereof pursuant to any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or any
other agreement or instrument, known to us, to which the Company or Pinnacle
Airlines is a party or by which it or Pinnacle Airlines may be bound, or to
which any of the property or assets of the Company or Pinnacle Airlines is
subject (except for such conflicts, breaches, defaults or Repayment Events or
liens, charges or encumbrances that would not have a Material Adverse Effect),
nor will such action result in any violation of the provisions of the
certificate or articles of incorporation or bylaws of the Company or Pinnacle
Airlines, or any applicable law, statute, rule, regulation, judgment, order,
writ or decree, known to us, of any government, governmental authority or court,
domestic or foreign, having jurisdiction over the Company or Pinnacle Airlines
or any of their respective properties, assets or operations.
(xxii) The Company is not required, and upon the issuance and sale of the
Securities as herein contemplated and the application of the net proceeds
therefrom as described in the Offering Memorandum will not be required, to
register as an "investment company" under the 1940 Act.
We have participated in conferences with officers of the Company and your
representatives at which the contents of the Offering Memorandum and related
matters were discussed. 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 Memorandum (except as set forth in numbered paragraphs
(xiii) and (xvi) of this opinion), we advise you that, based on the foregoing,
no facts have come to our attention that would lead us to believe that the
Offering Memorandum or any amendment or supplement thereto (except for financial
statements, notes and schedules and other financial data included or
incorporated by reference therein or omitted therefrom, as to which we make no
statement), at the time the Offering Memorandum was issued, at the time any such
amended or supplemented Offering Memorandum was issued or at Closing Time,
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
the light of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely, as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
Exhibit A-4
EXHIBIT B
FORM OF LOCK-UP LETTER AGREEMENT
February [ ], 2005
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
as Representative of the several
Initial Purchasers named in the
within-mentioned Purchase Agreement
4 World Financial Center
Xxx Xxxx, Xxx Xxxx 00000
Re: Proposed Offering by Pinnacle Airlines Corp.
Ladies and Gentlemen:
The undersigned understands that you, as Representative of the several
Initial Purchasers, propose to enter into a Purchase Agreement (the "Purchase
Agreement") with Pinnacle Airlines Corp., a Delaware corporation (the
"Company"), providing for the offering (the "Offering"), pursuant to Rule 144A
under the Securities Act of 1933, as amended (the "Securities Act"), by the
several Initial Purchasers named in Schedule A to the Purchase Agreement (the
"Initial Purchasers") of Senior Convertible Notes due 2025 of the Company (the
"Initial Securities") and the grant by the Company to the Initial Purchasers of
the option to purchase additional Senior Convertible Notes due 2025 (the "Option
Securities"). The Initial Securities, together with the Option Securities, are
collectively referred to as the "Securities". Capitalized terms used herein and
not otherwise defined shall have the meanings set forth in the Purchase
Agreement.
In recognition of the benefit that such an offering will confer on the
undersigned, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the undersigned hereby agrees
that, without the prior written consent of the Representative on behalf of the
Initial Purchasers, the undersigned will not, during the period commencing the
date hereof and ending 901 days from the date of the Offering Memorandum
relating to the Offering, (1) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant for the sale of, or lend or otherwise dispose of or
transfer any shares of the Company's common stock, $.01 par value (the "Common
Stock"), or any securities convertible into or exercisable or exchangeable for
or repayable with Common Stock (including without limitation, Common Stock which
may be deemed to be beneficially owned by the undersigned in accordance with the
rules and regulations of the Securities and Exchange Commission and securities
which may be issued upon exercise of a stock option or warrant), whether now
----------------------
1 75 days in the case of Northwest Airlines, Inc.
Exhibit B-1
owned or hereafter acquired by the undersigned or with respect to which the
undersigned has or thereafter acquires the power of disposition, or (2) enter
into any swap or other agreement or any transaction that transfers, in whole or
in part, directly or indirectly, the economic consequence of ownership of the
Common Stock, or any securities convertible into or exchangeable or exercisable
for or repayable with Common Stock, whether any such transaction or swap
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise. The foregoing sentence shall
not apply to (a) transactions relating to shares of Common Stock or such other
securities acquired in open-market transactions after the completion of the
issuance of the Securities to the Initial Purchaser so long as such transactions
will not require the filing of a Schedule 13D or Schedule 13G with the
Securities and Exchange Commission pursuant to the 1934 Act, or (b) transactions
relating to shares of Common Stock or such other securities effected pursuant to
a trading plan established pursuant to Rule 10b5-1 of the 1934 Act Regulations.
The undersigned agrees that, without the prior written consent of the
Representative on behalf of the Initial Purchasers, it will not, during the
period commencing the date hereof and ending 902 days from the date of the
Offering Memorandum, make any demand for or exercise any right with respect to,
the registration of any shares of Common Stock or any security convertible into
or exercisable or exchangeable for or repayable with Common Stock.
In furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities described
herein, is hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Lock-Up Letter
Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement. All
authority herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The undersigned understands that, if the Purchase Agreement does not become
effective, or if the Purchase Agreement (other than the provisions thereof which
survive termination) shall terminate or be terminated prior to payment for and
delivery of the Securities to be sold thereunder, the undersigned shall be
released from all obligations under this Lock-Up Letter Agreement.
The undersigned understands that the Initial Purchasers are entering into
the Purchase Agreement and proceeding with the Offering in reliance upon this
Lock-Up Letter Agreement.
This Lock-Up Letter Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflict of laws principles thereof.
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2 75 days in the case of Northwest Airlines, Inc.
Exhibit B-2
Very truly yours,
Signature: _____________________________
Print Name: ____________________________
Exhibit B-3
