EXHIBIT 1
NEXTLINK Communications, L.L.C.
NEXTLINK Capital, Inc.
12 1/2% Senior Notes due April 15, 2006
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Purchase Agreement
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April 18, 1996
Goldman, Sachs & Co.,
Bear, Stearns & Co. Inc.,
Salomon Brothers Inc,
Toronto Dominion Securities (USA) Inc.,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
NEXTLINK Communications, L.L.C., a limited liability company formed under the
laws of the State of Washington (the "Company") and NEXTLINK Capital, Inc., a
Washington corporation ("Capital"), propose, subject to the terms and conditions
stated herein, to issue and sell to the Purchasers named in Schedule I hereto
(the "Purchasers") an aggregate of $350,000,000 principal amount of the Notes
specified above (the "Securities").
1. The Company and Capital, jointly and severally, represent and warrant to,
and agree with, each of the Purchasers that:
(a) A preliminary offering circular, dated March 28, 1996 (the
"Preliminary Offering Circular") and an offering circular in final form,
dated April 18, 1996 (the "Offering Circular") have been prepared in
connection with the offering of the Securities. Any reference to the
Preliminary Offering Circular or the Offering Circular shall be deemed to
refer to and include any Additional Issuer Information (as defined in Section
5(f)) furnished by the Company or Capital prior to the completion of the
distribution of the Securities. The Preliminary Offering Circular or the
Offering Circular and any amendments or supplements thereto did not and will
not, as of their respective dates, contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company or
Capital by a Purchaser through Goldman, Sachs & Co. expressly for use
therein;
(b) None of the Company, any of its subsidiaries (which term is used
herein as defined in the Indenture referred to in Section 1(g) below) or
Capital has sustained since the date of the latest audited financial
statements included in the Offering Circular any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Offering Circular; and, since the respective dates as of
which information is given in the Offering Circular, there has not been any
material change (except as described therein) in the aggregate level of
membership interests or long-term debt of the Company or any of its
subsidiaries, or in the capital stock or long-term debt of Capital, or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management, financial
position, members' equity, shareholders' equity or results of operations of
the Company, its subsidiaries and Capital, otherwise than as set forth or
contemplated in the Offering Circular;
(c) The Company and its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Offering
Circular or such as do not materially affect the value of such property and
do not materially interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries; and any real property and
buildings held under lease by the Company and its subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions as
are not material and do not materially interfere with the use made and
proposed to be made of such property and buildings by the Company and its
subsidiaries;
(d) The Company has been duly formed and is validly existing as a limited
liability company under the laws of the State of Washington, with power and
authority to own its properties and conduct its business as described in the
Offering Circular, and has been duly qualified as a foreign limited liability
company for the transaction of business under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business
so as to require such qualification, or is subject to no material liability
or disability by reason of the failure to be so qualified in any such
jurisdiction; and each subsidiary of the Company has been duly formed and is
validly existing as a limited liability company or limited partnership under
the laws of its jurisdiction of formation and has been duly qualified as a
foreign limited liability company or limited partnership for the transaction
of business under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by reason
of the failure to be so qualified in any such jurisdiction;
(e) Capital has been duly incorporated and is validly existing as a
corporation under the laws of the State of Washington, with full corporate
power and authority to conduct its business as described in the Offering
Circular, and has been duly qualified as a foreign corporation for the
transaction of business under the laws of each other jurisdiction in which it
conducts any business so as to require such qualification, or is
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subject to no material liability or disability by reason of the failure to be
so qualified in any jurisdiction;
(f) The Company and Capital have an authorized capitalization as set
forth in the Offering Circular, and all of the issued membership interests of
the Company have been duly and validly authorized and issued, and all of the
issued shares of capital stock of Capital have been duly and validly
authorized and issued and are fully paid and non-assessable; and all of the
issued membership interests or partnership interests, as the case may be, of
each subsidiary of the Company have been duly and validly authorized and
issued, and (except as otherwise set forth in the Offering Circular in
respect of the minority interests described therein) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims; and all of the shares of capital stock of Capital owned
by the Company are owned free and clear of all liens, encumbrances, equities
or claims (except as otherwise set forth in the Offering Circular;
(g) The Securities have been duly authorized and, when issued and
delivered pursuant to this Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and legally
binding obligations of the Company and Capital entitled to the benefits
provided by the indenture to be dated as of April 25, 1996 (the "Indenture")
between the Company, Capital and United States Trust Company of New York, as
Trustee (the "Trustee"), under which they are to be issued, which will be
substantially in the form previously delivered to you; the Indenture has been
duly authorized and, when executed and delivered by the Company, Capital and
the Trustee, the Indenture will constitute a valid and legally binding
instrument, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles; and the Securities and the Indenture will conform
to the descriptions thereof in the Offering Circular and will be in
substantially the form previously delivered to you;
(h) None of the transactions contemplated by this Agreement (including,
without limitation, the use of the proceeds from the sale of the Securities)
will violate or result in a violation of Section 7 of the United States
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
regulation promulgated thereunder, including, without limitation, Regulations
G, T, U, and X of the Board of Governors of the Federal Reserve System;
(i) The issue and sale of the Securities and the compliance by the
Company and Capital with all of the provisions of the Securities, the
Indenture, the Registration Rights Agreement (as hereinafter defined in
Section 1(s) hereof), the Pledge Agreement (as hereinafter defined in Section
1(t) hereof) and this Agreement and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument (including without limitation, any license,
franchise, permit, consent or similar authorization granted to the Company or
any subsidiary of the Company by any
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franchising or other governmental body) to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any violation of the
provisions of the Certificate of Formation of the Company or the limited
liability company agreement of the Company, in each case, as in effect at the
applicable time, the Articles of Incorporation or Bylaws of Capital, in each
case, as in effect at the applicable time, or any statute or any order, rule
or regulation of any court or governmental agency or body having jurisdiction
over the Company, any of its subsidiaries or Capital or any of their
properties; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Securities or the consummation by the
Company or Capital of the transactions contemplated by this Agreement, the
Registration Rights Agreement, the Pledge Agreement or the Indenture, except
for the filing of a registration statement by the Company and Capital with
the Securities and Exchange Commission (the "Commission") pursuant to the
United States Securities Act of 1933, as amended (the "Act") pursuant to
Section 5(l) hereof and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the
Securities by the Purchasers;
(j) None of the Company, any of its subsidiaries or Capital is in
violation of its respective organizational documents, as in effect at the
applicable time, or in default in the performance or observance of any
material obligation, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument (including without limitation, any license, franchise, permit,
consent or similar authorization granted to the Company, any subsidiary or
Capital by any franchising or other governmental body) to which it is a party
or by which it or any of its properties may be bound;
(k) The statements set forth in the Offering Circular under the caption
"Description of Notes", insofar as they purport to constitute a summary of
the terms of the Securities, and under the captions "Business -- Regulatory
Overview", "Certain United States Federal Income Tax Consequences" and "Offer
and Resale", insofar as they purport to describe the provisions of the laws
and documents referred to therein, are accurate and complete;
(l) Other than as set forth in the Offering Circular, there are no legal
or governmental proceedings pending to which the Company, any of its
subsidiaries or Capital is a party or of which any property of the Company,
any of its subsidiaries or Capital is the subject which, if determined
adversely to the Company, any of its subsidiaries or Capital, would
individually or in the aggregate have a material adverse effect on the
current or future financial position, members' equity, shareholders' equity
or results of operations of the Company, its subsidiaries and Capital; and,
to the best of the Company's and Capital's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others;
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(m) When the Securities are issued and delivered pursuant to this
Agreement, the Securities will not be of the same class (within the meaning
of Rule 144A under the Securities Act) as securities which are listed on a
national securities exchange registered under Section 6 of the Exchange Act
or quoted in a U.S. automated inter-dealer quotation system;
(n) Neither the Company nor Capital is or, after giving effect to the
offering and sale of the Securities, will be an "investment company", or an
entity "controlled" by an "investment company", as such terms are defined in
the United States Investment Company Act of 1940, as amended (the "Investment
Company Act");
(o) None of the Company, Capital or any person acting on its or their
behalf has offered or sold the Securities by means of any general
solicitation or general advertising within the meaning of Rule 502(c) under
the Act or, with respect to Securities sold outside the United States to non-
U.S. persons (as defined in Rule 902 under the Act), by means of any directed
selling efforts within the meaning of Rule 902 under the Securities Act and
the Company, Capital, any affiliate of either of them and any person acting
on its or their behalf has complied with and will implement the "offering
restriction" within the meaning of such Rule 902; provided, however, no
representation is made with respect to any actions that may have been taken
by the Purchasers or any of their affiliates other than Capital, the Company,
the Company's subsidiaries, and their respective members and officers;
(p) Within the preceding six months, none of the Company, Capital or any
other person acting on their behalf has offered or sold to any person any
Securities, or any securities of the same or a similar class as the
Securities, other than Securities offered or sold to the Purchasers
hereunder;
(q) None of the Company, Capital or any of their affiliates does business
with the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes;
(r) Arthur Andersen LLP, who have audited certain financial statements of
the Company and its subsidiaries, are independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder;
(s) The Exchange and Registration Rights Agreement between the Company,
Capital and the Purchasers to be dated as of April 25, 1996 (the
"Registration Rights Agreement") has been duly authorized, and, when executed
and delivered by the Company and Capital (assuming due authorization,
execution and delivery by the Purchasers), will constitute a valid and
legally binding agreement of the Company and Capital enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights, to general equity principles and, as to
enforcement of rights to indemnity and contribution thereunder, to
limitations under applicable securities laws or public policy; and the
Registration Rights Agreement will conform in all material respects to the
description thereof in the Offering Circular;
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(t) The Collateral Pledge and Security Agreement between the Company and
the Trustee to be dated as of April 25, 1996 (the "Pledge Agreement") has
been duly authorized, and, when executed and delivered by the Company
(assuming due authorization, execution and delivery by the Trustee), will
constitute a valid and legally binding agreement of the Company enforceable
in accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights, to general equity principles and, as to
enforcement of rights to indemnity and contribution thereunder, to
limitations under applicable securities laws or public policy; and the Pledge
Agreement will conform in all material respects to the description thereof in
the Offering Circular. Upon the Company's purchase of the Pledged Securities
(as defined in the Pledge Agreement), the Company will be the sole beneficial
owner of the Pledged Securities and no lien, encumbrance, equity or claim
will exist upon such Pledged Securities (and no right or option to acquire
the same will exist in favor of any other person or entity), except for the
pledge and security interest in favor of the Trustee for the ratable benefit
of the holders of the Securities to be created or provided for in the Pledge
Agreement, which pledge and security interest constitute a first priority
perfected pledge and security interest in and to all of the Pledged
Securities.
(u) This Agreement has been duly authorized, executed and delivered by
the Company and Capital;
(v) No holder of any security of the Company or Capital has or will have
any right to require the registration of such security by virtue of any
transactions contemplated by this Agreement, the Pledge Agreement or the
Registration Rights Agreement other than any such right that has been
expressly waived in writing;
(w) Except as set forth in or contemplated by the Offering Circular with
respect to systems under development and the offering of dial tone service,
each of the Company and its subsidiaries has all material certificates,
consents, exemptions, orders, permits, licenses, authorizations, franchises
or other material approvals (each, an "Authorization") of and from, and has
made all material declarations and filings with, all Federal, state, local
and other governmental authorities, all self-regulatory organizations and all
courts and other tribunals, necessary or appropriate for the Company and its
subsidiaries to own, lease, license, use and construct its properties and
assets and to conduct its business in the manner described in the Offering
Circular, except to the extent that the failure to obtain any such
Authorizations or make any such declaration or filing would not, singularly
or in the aggregate, reasonably be expected to have a material adverse effect
on the current or future consolidated financial position, members' equity or
results of operations of the Company and its subsidiaries. All such
Authorizations are in full force and effect with respect to the Company and
its subsidiaries; to the best knowledge of the Company, no event has occurred
that permits, or after notice or lapse of time could permit, the revocation,
termination or modification of any such Authorization; the Company and its
subsidiaries are in compliance in all material respects with the terms and
conditions of all such Authorizations and with the rules and regulations of
the regulatory authorities and governing bodies having jurisdiction with
respect thereto; and, except as set forth in the Offering Circular, the
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Company has no knowledge that any person is contesting or intends to contest
the granting of any material Authorization; and
(x) Neither the execution and delivery of this Agreement, the Indenture,
the Pledge Agreement or the Registration Rights Agreement, nor the
consummation of the transactions contemplated hereby or thereby nor
compliance with the terms, conditions and provisions thereof by the Company
or Capital will cause any suspension, revocation, impairment, forfeiture,
nonrenewal or termination of any Authorization.
2. Subject to the terms and conditions herein set forth, the Company and
Capital agree to issue and sell to each of the Purchasers, and each of the
Purchasers agrees, severally and not jointly, to purchase from the Company and
Capital, at a purchase price of 97.25% of the principal amount thereof, plus
accrued interest, if any, from April 25, 1996, the principal amount of
Securities set forth opposite the name of such Purchaser in Schedule I hereto.
3. Upon the authorization by you of the release of the Securities, the
several Purchasers propose to offer the Securities for sale upon the terms and
conditions set forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with the Company and
Capital that:
(a) It will offer and sell the Securities only to: (i) persons who it
reasonably believes are "qualified institutional buyers" ("QIBs") within the
meaning of Rule 144A under the Act in transactions meeting the requirements
of Rule 144A, (ii) institutions which it reasonably believes are "accredited
investors" ("Institutional Accredited Investors") within the meaning of Rule
501 under the Act or, (iii) upon the terms and conditions set forth in Annex
I to this Agreement;
(b) It is an Institutional Accredited Investor; and
(c) It will not offer or sell the Securities by any form of general
solicitation or general advertising, including but not limited to the methods
described in Rule 502(c) under the Act.
4. (a) Except as set forth in the next paragraph, the Securities to be
purchased by each Purchaser hereunder will be represented by one or more
definitive global Securities in book-entry form which will be deposited by or on
behalf of the Company and Capital with The Depository Trust Company ("DTC") or
its designated custodian. The Company and Capital will deliver the Securities
to Goldman, Sachs & Co., for the account of each Purchaser, against payment by
or on behalf of such Purchaser of the purchase price therefor by electronic
transfer to the order of the Company in Federal (same day) funds, by causing DTC
to credit the Securities to the account of Goldman, Sachs & Co. at DTC. The
Company and Capital will cause the certificates representing the Securities to
be made available to Goldman, Sachs & Co. for checking at least twenty-four
hours prior to the Time of Delivery (as defined below) at the office of DTC or
its designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be 9:30 a.m., New York City time, on April 25, 1996
or
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such other time and date as Goldman, Sachs & Co. and the Company may agree upon
in writing. Such time and date are herein called the "Time of Delivery".
Such Securities, if any, as Goldman, Sachs & Co. may request upon at least
forty-eight hours' prior notice to the Company or Capital (such request to
include the authorized denominations and the names in which they are to be
registered), shall be delivered in definitive certificated form, by or on behalf
of the Company and Capital to Goldman, Sachs & Co. for the account of certain of
the Purchasers, against payment by or on behalf of such Purchaser of the
purchase price therefor by electronic transfer to the order of the Company in
Federal (same day) funds. The Company and Capital will cause the certificates
representing the Securities to be made available for checking and packaging at
least twenty-four hours prior to the Time of Delivery at the office of Goldman,
Sachs & Co., 85 Broad Street, New York, New York 10004.
(b) The documents to be delivered at the Time of Delivery by or on behalf of
the parties hereto pursuant to Section 7 hereof, including the cross-receipt for
the Securities and any additional documents requested by the Purchasers pursuant
to Section 7(k) hereof, will be delivered at such time and date at the offices
of Sullivan & Cromwell, 125 Broad Street, New York, New York 10004 (the "Closing
Location"), and the Securities will be delivered at the Designated Office, all
at the Time of Delivery. A meeting will be held at the Closing Location at 2:00
p.m., New York City time, on the New York Business Day next preceding the Time
of Delivery, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. For the purposes of this Section 4, "New York Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close.
5. The Company and Capital, jointly and severally, agree with each of the
Purchasers:
(a) To prepare the Offering Circular in a form approved by you; to make
no amendment or any supplement to the Offering Circular which shall be
disapproved by you promptly after reasonable notice thereof; and to furnish
you with copies thereof;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Securities for offering and sale under the securities
laws of such jurisdictions as you may request and to comply with such laws so
as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Securities, provided that in connection therewith neither the Company nor
Capital shall be required to qualify as a foreign limited liability company
or foreign corporation, as the case may be, or to file a general consent to
service of process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York Business Day
next succeeding the date of this Agreement and from time to time, to furnish
the Purchasers with copies of the Offering Circular in New York City and each
amendment or supplement thereto, together with the independent accountants'
report(s) in the Offering Circular, and any amendment or supplement
containing amendments to the financial
8
statements covered by such report(s), signed by the accountants, and
additional copies thereof in such quantities as you may from time to time
reasonably request, and if, at any time prior to the expiration of nine
months after the date of the Offering Circular, any event shall have occurred
as a result of which the Offering Circular as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made when such Offering Circular
is delivered, not misleading, or, if for any other reason it shall be
necessary or desirable during such same period to amend or supplement the
Offering Circular, to notify you and upon your request to prepare and furnish
without charge to each Purchaser and to any dealer in securities as many
copies as you may from time to time reasonably request of an amended Offering
Circular or a supplement to the Offering Circular which will correct such
statement or omission or effect such compliance;
(d) During the period beginning from the date hereof and continuing until
the date 90 days after the Time of Delivery, not to offer, sell, contract to
sell or otherwise dispose of, except as provided hereunder any securities of
the Company or Capital that are substantially similar to the Securities
(other than as contemplated by the Registration Rights Agreement) or any
securities of the Company or Capital convertible or exchangeable for
securities of the Company or Capital, as the case may be, that are
substantially similar to the Securities without the prior written consent of
Goldman, Sachs & Co.; in addition, the Company and Capital will take
reasonable precautions designed to insure that any offer or sale, direct or
indirect, in the United States or to any U.S. person (as defined in Rule 902
under the Act) of any Securities or any substantially similar security issued
by the Company and Capital, within six months subsequent to the date on which
the distribution of the Securities has been completed (as notified to the
Company and Capital by Goldman, Sachs & Co.), is made under restrictions and
other circumstances reasonably designed not to affect the status of the offer
and sale of the Securities in the United States and to U.S. persons
contemplated by this Agreement as transactions exempt from the registration
provisions of the Securities Act;
(e) Not to be or become, at any time prior to the expiration of three
years after the Time of Delivery, an open-end investment company, unit
investment trust, closed-end investment company or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act;
(f) At any time when the Company or Capital is not subject to Section 13
or 15(d) of the Exchange Act, for the benefit of holders from time to time of
Securities, to furnish at its expense, upon request, to holders of Securities
and prospective purchasers of securities information (the "Additional Issuer
Information") satisfying the requirements of subsection (d)(4)(i) of Rule
144A under the Act;
(g) If requested by you, to use its reasonable best efforts to cause such
Securities to be eligible for the PORTAL trading system of the National
Association of Securities Dealers, Inc.;
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(h) To file with the Commission, not later than 15 days after the Time of
Delivery, five copies of a notice on Form D under the Act (one of which will
be manually signed by a person duly authorized by the Company); to otherwise
comply with the requirements of Rule 503 under the Act; and to furnish
promptly to you evidence of each such required timely filing (including a
copy thereof);
(i) To furnish to the holders of the Securities as soon as practicable
after the end of each fiscal year an annual report (including a consolidated
balance sheet and consolidated statements of income, equity and cash flows of
the Company, its consolidated subsidiaries and Capital certified by
independent public accountants) and, as soon as practicable after the end of
each of the first three quarters of each fiscal year (beginning with the
fiscal quarter ending after the date of the Offering Circular), consolidated
summary financial information of the Company, its subsidiaries and Capital
for such quarter in reasonable detail;
(j) During a period of five years from the date of the Offering Circular,
to furnish to you copies of all financial reports furnished to members or
stockholders, as applicable, and to deliver to you (i) as soon as they are
available, copies of any reports and financial statements furnished to or
filed with the Commission or any securities exchange on which the Securities
or any class of securities of the Company, or Capital is listed; and (ii)
such additional information concerning the business and financial condition
of the Company or Capital as you may from time to time reasonably request
(such financial statements to be on a consolidated basis to the extent the
accounts of the Company, its subsidiaries and Capital are consolidated in
reports furnished to its members generally or to the Commission);
(k) During the period of three years after the Time of Delivery, neither
the Company nor Capital will, nor will they permit any of their "affiliates"
(as defined in Rule 144 under the Securities Act) to, resell any of the
Securities which constitute "restricted securities" under Rule 144 that have
been reacquired by any of them except pursuant to an effective registration
statement under the Act;
(l) Pursuant to the Registration Rights Agreement, the Company and
Capital shall file on or prior to the 30th day after the Time of Delivery,
and use their reasonable best efforts to cause to be declared or become
effective under the Securities Act, as soon as practicable thereafter, a
registration statement on Form S-4 providing for the registration of another
series of debt securities of the Company and Capital, with terms identical to
the Securities (the "Exchange Securities"), and the exchange of the
Securities for the Exchange Securities, all in a manner which will permit
persons who acquire the Exchange Securities to resell the Exchange Securities
pursuant to Section 4(1) of the Securities Act; and
(m) To use the net proceeds received by them from the sale of the
Securities pursuant to this Agreement in the manner specified in the Offering
Circular under the caption "Use of Proceeds".
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6. The Company covenants and agrees with the several Purchasers that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the counsel and accountants of the Company and Capital in
connection with the issue of the Securities and all other expenses in connection
with the preparation, printing and filing of the Preliminary Offering Circular
and the Offering Circular and any amendments and supplements thereto and the
mailing and delivering of copies thereof to the Purchasers and dealers; (ii) the
cost of printing or producing any Agreement among Purchasers, this Agreement,
the Indenture, the Registration Rights Agreement, the Pledge Agreement, the Blue
Sky and Legal Investment Memoranda, closing documents (including any
compilations thereof) and any other documents in connection with the offering,
purchase, sale and delivery of the Securities; (iii) all expenses in connection
with the qualification of the Securities for offering and sale under state
securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Purchasers in connection with such
qualification and in connection with the Blue Sky and legal investment surveys;
(iv) any fees charged by securities rating services for rating the Securities;
(v) the cost of preparing the Securities; (vi) the fees and expenses of the
Trustee and any agent of the Trustee and the fees and disbursements of counsel
for the Trustee in connection with the Indenture and the Securities; (vii) any
cost incurred in connection with the designation of the Securities for trading
in PORTAL; and (viii) all other costs and expenses incident to the performance
of its obligations hereunder which are not otherwise specifically provided for
in this Section. It is understood, however, that, except as provided in this
Section, and Sections 8 and 11 hereof, the Purchasers will pay all of their own
costs and expenses, including the fees of their counsel, transfer taxes on
resale of any of the Securities by them, and any advertising expenses connected
with any offers they may make. The Purchasers have also agreed to reimburse the
Company for certain of its expenses incurred in connection with the transactions
contemplated by this Agreement, in an aggregate amount of $625,000.
7. The obligations of the Purchasers hereunder shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company and Capital herein are, at and as of the Time of
Delivery, true and correct, the condition that the Company and Capital shall
have performed all of its obligations hereunder theretofore to be performed, and
the following additional conditions:
(a) Sullivan & Cromwell, counsel for the Purchasers, shall have furnished
to you such opinion or opinions, dated the Time of Delivery, with respect to
the formation of the Company, the incorporation of Capital, the validity of
the Indenture, the Securities, the Pledge Agreement and the Registration
Rights Agreement, the Offering Circular, and such other related matters as
you may reasonably request, and such counsel shall have received such papers
and information as they may reasonably request to enable them to pass upon
such matters;
(b) Willkie Farr & Gallagher, counsel for the Company and Capital, shall
have furnished to you their written opinion, dated the Time of Delivery, in
form and substance satisfactory to you, to the effect that:
11
(i) The Company has been duly formed and is validly existing as a
limited liability company under the laws of the State of Washington, with
power and authority to own its properties and conduct its business as
described in the Offering Circular;
(ii) Capital has been duly incorporated and is validly existing as
a corporation under the laws of the State of Washington with corporate power
and authority to conduct its business as described in the Offering Circular;
(iii) The Company and Capital have an authorized capitalization as
set forth in the Offering Circular, and all of the issued membership
interests of the Company have been duly and validly authorized and issued,
and all of the issued shares of capital stock of Capital have been duly and
validly authorized and issued and are fully paid and non-assessable; all of
the outstanding shares of capital stock of Capital owned by the Company are
owned free and clear of all liens, encumbrances, equities or claims (except
as otherwise set forth in the Offering Circular);
(iv) The Company has been duly qualified as a foreign limited
liability company for the transaction of business under the laws of each
other jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, or is subject to no material
liability or disability by reason of the failure to be so qualified in any
such jurisdiction;
(v) Capital has been duly qualified as a foreign corporation for
the transaction of business under the laws of each other jurisdiction in
which it conducts any business so as to require such qualification, or is
subject to no material liability or disability by reason of the failure to be
so qualified in any such jurisdiction;
(vi) The Company will be classified for United States federal
income tax purposes as a partnership within the meaning of Section 7701(a)(2)
of the Internal Revenue Code of 1986, as amended;
(vii) Each subsidiary of the Company has been duly formed and is
validly existing as a limited liability company or limited partnership under
the laws of its jurisdiction of formation; and all of the issued membership
interests or partnership interests of each such subsidiary have been duly and
validly authorized and issued, and (except as otherwise set forth in the
Offering Circular in respect of the minority interests described therein) are
owned directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
(viii) This Agreement has been duly authorized, executed and
delivered by the Company and Capital;
(ix) The Securities have been duly and validly authorized and
executed by the Company and Capital and, assuming due authentication of the
Securities by the Trustee, upon delivery to the Purchasers against payment
therefor in accordance with the terms of this Agreement, will have been
validly issued and delivered and will constitute valid and legally binding
obligations of the Company and Capital entitled to the benefits
12
provided by the Indenture, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
or affecting creditors' rights and to general equity principles; and the
Securities and the Indenture conform in all material respects to the
descriptions thereof in the Offering Circular;
(x) The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company, Capital and, assuming due
authorization, execution and delivery by the Purchasers, constitutes a valid
and legally binding obligation of the Company and Capital enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles and, as to
enforcement of rights to indemnity and contribution thereunder, to
limitations under applicable securities laws or public policy; and the
Registration Rights Agreement conforms in all material respects to the
summary thereof in the Offering Circular;
(xi) The Indenture has been duly authorized, executed and delivered
by the Company and Capital and, assuming due execution and delivery by the
Trustee, constitutes a valid and legally binding instrument, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles;
(xii) The Pledge Agreement has been duly authorized, executed and
delivered by the Company, Capital and, assuming due authorization, execution
and delivery by the Trustee, constitutes a valid and legally binding
obligation of the Company and Capital enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles and, as to enforcement of rights to
indemnity and contribution thereunder, to limitations under applicable
securities laws or public policy; and the Pledge Agreement conforms in all
material respects to the summary thereof in the Offering Circular, without
expressing any opinion as to the priority of the security interest created
under the Pledge Agreement;
(xiii) The issue and sale of the Securities and the compliance by
the Company and Capital with all of the provisions of the Securities, the
Indenture, the Registration Rights Agreement, the Pledge Agreement and this
Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument
known to such counsel to which the Company, any of its subsidiaries or
Capital is a party or by which the Company, any of its subsidiaries or
Capital is bound or to which any of the property or assets of the Company or
any of its subsidiaries is subject, nor will such actions result in any
violation of the provisions of the Certificate of Formation of the Company or
the limited liability company agreement of the Company, in each case, as in
effect at the applicable time, or the Articles of Incorporation or Bylaws of
Capital, in each case, as in effect at the applicable time, or any order,
rule or regulation, known to such counsel to be applicable to the Company
13
or Capital and any of their respective subsidiaries or properties, of any
court or governmental agency or body having jurisdiction over the Company,
any of its subsidiaries or Capital or any of their properties;
(xiv) To the best of such counsel's knowledge, no consent,
approval, authorization, order, registration or qualification of or with any
such court or governmental agency or body is required for the issue and sale
of the Securities, the consummation by the Company and Capital of the
transactions contemplated by this Agreement, the Indenture, the Pledge
Agreement or the Registration Rights Agreement, except such consents,
approvals, authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Purchasers, and such consents,
approvals, authorizations, orders, registrations and qualifications as may be
required under the Act, the United States Trust Indenture Act of 1939 (the
"Trust Indenture Act") and state or foreign securities or Blue Sky laws in
connection with the filing of a registration statement by the Company and
Capital with the Commission pursuant to the Act in accordance with Section
5(l) hereof and the exchange offer or resale registration contemplated by the
Registration Rights Agreement described in the Offering Circular;
(xv) The statements set forth in the Offering Circular under the
caption "Description of Notes", insofar as they purport to constitute a
summary of the terms of the Securities, and under the captions "Business --
Regulatory Overview", "Certain United States Federal Income Tax Consequences"
and "Offer and Resale", insofar as they purport to describe the provisions of
the laws and documents referred to therein, are accurate and complete;
(xvi) No registration of the Securities under the Act, and no
qualification of an indenture under the Trust Indenture Act with respect
thereto, is required for the offer, sale and initial resale of the Securities
by the Purchasers in the manner contemplated by this Agreement;
(xvii) Neither the Company nor Capital is or, after giving effect
to the offering contemplated hereby, will be, an "investment company" or an
entity "controlled" by an "investment company", as such terms are defined in
the Investment Company Act;
(xviii) The provisions of the Pledge Agreement are effective to
create in favor of the Trustee for the benefit of the holders of Securities
the security interest purported to be created therein in all right, title and
interest of the Issuers in and to Pledged Securities that from time to time
are transferred to the Trustee on behalf of the holders of Securities and the
proceeds thereof received from time to time by the Trustee; and
(xix) The security interest of the Trustee in the Pledged
Securities, initially consisting of Government Securities (as defined in the
Indenture), created pursuant to the Pledge Agreement, upon transfer of such
Pledged Securities to the Trustee for the benefit of the holders of
Securities, will be a perfected security interest.
14
Such counsel shall also state that they have no reason to believe that the
Offering Circular and any further amendments or supplements thereto made by the
Company and Capital prior to the Time of Delivery (other than the financial
statements therein, as to which such counsel need express no opinion) contained
as of its date or contains as of the Time of Delivery an untrue statement of a
material fact or omitted or omits, as the case may be, to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Such counsel will be entitled to
rely as to matters of Washington law upon opinions of local counsel and in
respect of matters of fact upon certificates of officers of the Company,
provided that such counsel shall state that they believe that both you and they
are justified in relying upon such opinions and certificates.
(c) R. Bruce Easter, Esq., Vice President, General Counsel and Secretary
of the Company, shall have furnished to you his written opinion, dated the
Time of Delivery, in form and substance satisfactory to you, to the effect
that:
(i) The Company has the power and authority to own its properties
and conduct its business as described in the Offering Circular;
(ii) Capital has the corporate power and authority to conduct its
business as described in the Offering Circular;
(iii) The Company and Capital have an authorized capitalization as
set forth in the Offering Circular, and all of the issued membership
interests of the Company and all of the issued shares of capital stock of
Capital have been duly and validly authorized and issued and are fully paid
and non-assessable; all of the outstanding shares of capital stock of Capital
owned by the Company are owned free and clear of all liens, encumbrances,
equities or claims (except as otherwise set forth in the Offering Circular);
(iv) The Company has been duly qualified as a foreign limited
liability company for the transaction of business under the laws of each
other jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, or is subject to no material
liability or disability by reason of the failure to be so qualified in any
such jurisdiction (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the Company, provided that
such counsel shall state that he believes that both you and he are justified
in relying upon such opinions and certificates);
(v) Capital has been duly qualified as a foreign corporation for
the transaction of business under the laws of each other jurisdiction in
which it conducts any business so as to require such qualification, or is
subject to no material liability or disability by reason of the failure to be
so qualified in any such jurisdiction (such counsel being entitled to rely in
respect of the opinion in this clause upon opinions of local counsel and in
respect of matters of fact upon certificates of officers of Capital, provided
that such counsel shall state that he believes that both you and he are
justified in relying upon such opinions and certificates);
15
(vi) Each subsidiary of the Company has been duly formed and is
validly existing as a limited liability company or a limited partnership
under the laws of its jurisdiction of formation and has been duly qualified
as a foreign limited liability company or a foreign limited partnership for
the transaction of business under the laws of each other jurisdiction in
which it owns or leases properties or conducts any business so as to require
such qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction ; and all
of the issued membership interests of each such subsidiary have been duly and
validly authorized and issued, are fully paid and non-assessable, and (except
as otherwise set forth in the Offering Circular in respect of the minority
interests described therein) are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims (such counsel
being entitled to rely in respect of the opinion in this clause upon opinions
of local counsel and in respect of matters of fact upon certificates of
officers of the Company or its subsidiaries, provided that such counsel shall
state that they believe that both you and they are justified in relying upon
such opinions and certificates);
(vii) To the best of such counsel's knowledge and other than as set
forth in the Offering Circular, there are no legal or governmental
proceedings pending to which the Company, any of its subsidiaries or Capital
is a party or of which any property of the Company, any of its subsidiaries
or Capital is the subject which, if determined adversely to the Company, any
of its subsidiaries or Capital, would individually or in the aggregate have a
material adverse effect on the consolidated financial position, members'
equity, shareholders' equity, results of operations or general affairs of the
Company, its subsidiaries or Capital; and, to the best of such counsel's
knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(viii) To the best knowledge of such counsel and except as set forth
in or contemplated by the Offering Circular with respect to systems under
development, (a) each of the Company and its subsidiaries has all
Authorizations of and from, and has made all declarations and filings with,
all Federal, state, local and other governmental authorities, all self-
regulatory organizations and all courts and other tribunals, which are
necessary or appropriate for the Company and its subsidiaries to own, lease,
license, use and construct its properties and assets and to conduct its
business in the manner described in the Offering Circular, except to the
extent that the failure to obtain any such Authorizations or make any such
declaration or filing would not, singularly or in the aggregate, reasonably
be expected to have a material adverse effect on the consolidated financial
position, members' equity, shareholders' equity, results of operations or
general affairs of the Company or its subsidiaries, (b) all such
Authorizations are in full force and effect with respect to the Company and
its subsidiaries, (c) no event has occurred that permits, or after notice or
lapse of time could permit, the revocation, termination or modification of
any such Authorization and (d) the Company and its subsidiaries are in
compliance in all material respects with the terms and conditions of all such
Authorizations and with the rules and regulations of the regulatory
authorities and governing bodies having jurisdiction with respect thereto;
16
(ix) To the best knowledge of such counsel, neither the execution
and delivery of this Agreement, the Indenture, the Pledge Agreement or the
Registration Rights Agreement, the issuance and sale of the Securities by the
Company and Capital to the Purchasers, nor the consummation by the Company
and Capital of the transactions contemplated hereby or thereby nor compliance
with the terms, conditions and provisions thereof by the Company or Capital
will cause any suspension, revocation, impairment, forfeiture, nonrenewal or
termination of any Authorization; and
(x) The statements set forth in the Offering Circular under the
caption "Business -- Regulatory Overview", insofar as they purport to
describe certain of the provisions of the laws, legal proceedings and
documents referred to therein, are accurate summaries of such provisions in
all material respects.
(d) Davis Wright Tremaine, special Washington counsel for the Company
and Capital, shall have furnished to you their written opinion, dated the
Time of Delivery, in form and substance satisfactory to you, to the effect
that:
(i) the Company has been duly formed and is validly existing as a
limited liability company under the laws of the State of Washington;
(ii) Capital has been duly incorporated and is an existing corporation
under the laws of the State of Washington;
(iii) each of the Indenture, this Agreement, the Pledge Agreement and
the Registration Rights Agreement has been duly authorized, executed and
delivered by the Company and Capital;
(iv) the Securities have been duly authorized, executed, issued and
delivered by the Company and Capital;
(v) the execution and delivery of the Securities, the Indenture, this
Agreement, the Pledge Agreement and the Registration Rights Agreement do not
and will not conflict with, contravene or result in a breach of the Company's
current Amended and Restated Limited Liability Company Agreement or its
Certificate of Formation;
(vi) the execution and delivery of the Securities, the Indenture, this
Agreement, the Pledge Agreement and the Registration Rights Agreement do not
and will not conflict with, contravene or result in a breach of Capital's
Articles of Incorporation or Bylaws; and
(vii) no consent, authorization, approval, order, registration or other
action by, and no notice to or filing with, any governmental authority or
regulatory body of the State of Washington is required for the due execution
and delivery by the Company or Capital of the Indenture, this Agreement, the
Pledge Agreement and the Registration Rights Agreement, nor for the due
execution, issue and delivery of the Securities, except such consents,
approvals, authorizations, registrations or qualifications as may be required
17
under securities or Blue Sky laws of the State of Washington in connection
with the purchase and distribution of the Securities by the Purchasers.
(e) On the date of the Offering Circular prior to the execution of this
Agreement and also at the Time of Delivery, Arthur Andersen LLP shall have
furnished to you a letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, to the effect set forth
in Annex II hereto;
(f) (i) None of the Company, any of its subsidiaries or Capital shall
have sustained since the date of the latest audited financial statements
included in the Offering Circular any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Offering
Circular, and (ii) since the respective dates as of which information is
given in the Offering Circular there shall not have been any change in the
aggregate level of membership interests, partnership interests or long-term
debt of the Company or any of its subsidiaries, or in the capital stock or
long-term debt of Capital, or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, members' equity, shareholders' equity or results of
operations of the Company, its subsidiaries and Capital, otherwise than as
set forth or contemplated in the Offering Circular, the effect of which, in
any such case described in Clause (i) or (ii), is in the judgment of the
Purchasers so material and adverse as to make it impracticable or inadvisable
to proceed with the offering or the delivery of the Securities on the terms
and in the manner contemplated in this Agreement and in the Offering
Circular;
(g) On or after the date hereof (i) no downgrading shall have occurred in
the rating accorded the debt securities of the Company and Capital by any
"nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the Act, and
(ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of
any of the debt securities of the Company and Capital;
(h) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a general moratorium on
commercial banking activities declared by either Federal or New York State
authorities; (iii) the outbreak or escalation of hostilities involving the
United States or the declaration by the United States of a national emergency
or war, if the effect of any such event specified in this Clause (iii) in the
judgment of the Purchasers makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Securities on the terms and
in the manner contemplated in the Offering Circular; or (iv) the occurrence
of any material adverse change in the existing, financial, political or
economic conditions in the United States or elsewhere which, in the judgment
of the Purchasers, would materially and adversely affect the financial
markets for the Securities and other debt securities;
(i) The Securities shall have been designated for trading on PORTAL;
18
(j) The Registration Rights Agreement shall have been duly authorized,
executed and delivered by the Company and Capital;
(k) The Pledge Agreement shall have been duly authorized, executed and
delivered by the Company and Capital; and
(l) The Company and Capital shall have furnished or caused to be
furnished to you at the Time of Delivery certificates of officers of the
Company and Capital satisfactory to you as to the accuracy of the
representations and warranties of the Company and Capital herein at and as of
such Time of Delivery, as to the performance by the Company and Capital of
all of their obligations hereunder to be performed at or prior to such Time
of Delivery, as to the matters set forth in subsections (a) and (f) of this
Section and as to such other matters as you may reasonably request.
8. (a) The Company and Capital, jointly and severally, will indemnify and
hold harmless each Purchaser against any losses, claims, damages or liabilities,
joint or several, to which such Purchaser may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Offering
Circular or the Offering Circular, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact necessary to make the statements therein not misleading, and
will reimburse each Purchaser for any legal or other expenses reasonably
incurred by such Purchaser in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that
neither the Company nor Capital shall be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Offering Circular or the Offering Circular or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company or Capital by any Purchaser through
Goldman, Sachs & Co. expressly for use therein.
(b) Each Purchaser will indemnify and hold harmless the Company and
Capital against any losses, claims, damages or liabilities to which the Company
or Capital may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Offering Circular or the Offering
Circular, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary Offering
Circular or the Offering Circular or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company or Capital by such Purchaser through Goldman, Sachs & Co. expressly for
use therein; and will reimburse the Company and Capital, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such action or claim as such expenses are incurred.
19
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or threatened
action or claim in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified party is an actual or potential
party to such action or claim) unless such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to act, by
or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and Capital on the one hand and the Purchasers on the other from
the offering of the Securities. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company and Capital on
the one hand and the Purchasers on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and Capital on
the one hand and the Purchasers on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and Capital (considered as one party for this
purpose) bear to the total underwriting discounts and commissions received by
the Purchasers, in each case as set forth in the Offering Circular. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
20
Company and Capital on the one hand or the Purchasers on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, Capital and the
Purchasers agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to
investors were offered to investors exceeds the amount of any damages which such
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. The Purchasers' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company and Capital under this Section 8
shall be in addition to any liability which the Company and Capital may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Purchaser within the meaning of the Act; and
the obligations of the Purchasers under this Section 8 shall be in addition to
any liability which the respective Purchasers may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company or Capital and to each person, if any, who controls the Company or
Capital within the meaning of the Act.
9. (a) If any Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, you may in your discretion
arrange for you or another party or other parties to purchase such Securities on
the terms contained herein. If within thirty-six hours after such default by
any Purchaser you do not arrange for the purchase of such Securities, then the
Company and Capital shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to you to
purchase such Securities on such terms. In the event that, within the
respective prescribed periods, you notify the Company or Capital that you have
so arranged for the purchase of such Securities, or the Company or Capital
notifies you that it has so arranged for the purchase of such Securities, you,
the Company or Capital shall have the right to postpone the Time of Delivery for
a period of not more than seven days, in order to effect whatever changes may
thereby be made necessary in the Offering Circular, or in any other documents or
arrangements, and the Company and Capital agree to prepare promptly any
amendments to the Offering Circular which in your opinion may thereby be made
necessary. The term "Purchaser" as used in this Agreement shall include any
person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by you and the Company or
Capital as provided in
21
subsection (a) above, the aggregate principal amount of such Securities which
remains unpurchased does not exceed one-eleventh of the aggregate principal
amount of all the Securities, then the Company and Capital shall have the right
to require each non-defaulting Purchaser to purchase the principal amount of
Securities which such Purchaser agreed to purchase hereunder and, in addition,
to require each non-defaulting Purchaser to purchase its pro rata share (based
on the principal amount of Securities which such Purchaser agreed to purchase
hereunder) of the Securities of such defaulting Purchaser or Purchasers for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Purchaser from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by you and the Company or
Capital as provided in subsection (a) above, the aggregate principal amount of
Securities which remains unpurchased exceeds one-eleventh of the aggregate
principal amount of all the Securities, or if neither the Company nor Capital
exercises the right described in subsection (b) above to require non-defaulting
Purchasers to purchase Securities of a defaulting Purchaser or Purchasers, then
this Agreement shall thereupon terminate, without liability on the part of any
non-defaulting Purchaser, the Company or Capital, except for the expenses to be
borne by the Company, Capital and the Purchasers as provided in Section 6 hereof
and the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Purchaser from liability for its default.
10. The respective indemnities, agreements, representations, warranties and
other statements of the Company, Capital and the several Purchasers, as set
forth in this Agreement or made by or on behalf of them, respectively, pursuant
to this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Purchaser or any controlling person of any Purchaser, or the Company,
Capital, or any officer or director or controlling person of the Company or
Capital, and shall survive delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor Capital shall then be under any liability to any
Purchaser except as provided in Sections 6 and 8 hereof; but, if for any other
reason, the Securities are not delivered by or on behalf of the Company and
Capital as provided herein, the Company and Capital will reimburse the
Purchasers through you for all out-of-pocket expenses approved in writing by
you, including fees and disbursements of counsel, reasonably incurred by the
Purchasers in making preparations for the purchase, sale and delivery of the
Securities, but the Company and Capital shall then be under no further liability
to any Purchaser except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or given
by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representative.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you as
22
the representatives in care of Goldman, Sachs & Co., 85 Broad Street, New York,
New York 10004, Attention: Registration Department; and if to the Company or
Capital shall be delivered or sent by mail, telex or facsimile transmission to
the address of the Company set forth in the Offering Circular, Attention:
Secretary; provided, however, that any notice to a Purchaser pursuant to Section
8(c) hereof shall be delivered or sent by mail, telex or facsimile transmission
to such Purchaser at its address set forth in its Purchasers' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit of,
the Purchasers, the Company, Capital and, to the extent provided in Sections 8
and 10 hereof, the officers and directors of the Company and each person who
controls the Company, Capital or any Purchaser, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Securities from any Purchaser shall be deemed a successor or assign
by reason merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such respective counterparts shall together constitute one and the same
instrument.
23
If the foregoing is in accordance with your understanding, please sign and
return to us counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Purchasers, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Purchasers, the Company and
Capital. It is understood that your acceptance of this letter on behalf of each
of the Purchasers is pursuant to the authority set forth in a form of Agreement
among Purchasers, the form of which shall be submitted to the Company and
Capital for examination upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
NEXTLINK Communications, L.L.C.
By: NEXTLINK, Inc.
By: /s/ R. Bruce Easter, Jr.
------------------------
Name: R. Bruce Easter, Jr.
Title: Vice President
NEXTLINK Capital, Inc.
By: /s/ R. Bruce Easter, Jr.
------------------------
Name: R. Bruce Easter, Jr.
Title: Vice President
Accepted as of the date hereof:
Goldman, Sachs & Co.
Bear, Stearns & Co. Inc.
Salomon Brothers Inc
Toronto Dominion Securities (USA) Inc.
By: /s/ Goldman, Sachs & Co.
------------------------
(Goldman, Sachs & Co.)
24
SCHEDULE I
Principal
Amount of
Securities
to be
Purchaser Purchased
--------- ---------
Goldman, Sachs & Co............................................... $199,500,000
Bear, Stearns & Co. Inc........................................... 73,500,000
Salomon Brothers Inc.............................................. 56,000,000
Toronto Dominion Securities (USA) Inc............................. 21,000,000
Total.......................................................... $350,000,000
25
ANNEX I
(1) The Securities have not been and will not be registered under the Act and
may not be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except in accordance with Regulation S under the Act or
pursuant to an exemption from the registration requirements of the Act. Each
Purchaser represents that it has offered and sold the Securities, and will offer
and sell the Securities (i) as part of their distribution at any time and (ii)
otherwise until 40 days after the later of the commencement of the offering and
the Time of Delivery, only in accordance with Rule 903 of Regulation S or Rule
144A under the Act. Accordingly, each Purchaser agrees that neither it, its
affiliates nor any persons acting on its or their behalf has engaged or will
engage in any directed selling efforts with respect to the Securities, and it
and they have complied and will comply with the offering restrictions
requirement of Regulation S. Each Purchaser agrees that, at or prior to
confirmation of sale of Securities (other than a sale pursuant to Rule 144A), it
will have sent to each distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases Securities from it during
the restricted period a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered and sold
within the United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or (ii) otherwise until
40 days after the later of the commencement of the offering and the closing
date, except in either case in accordance with Regulation S (or Rule 144A if
available) under the Securities Act. Terms used above have the meaning given
to them by Regulation S."
Terms used in this paragraph have the meanings given to them by Regulation S.
Each Purchaser further agrees that it has not entered and will not enter into
any contractual arrangement with respect to the distribution or delivery of the
Securities, except with its affiliates or with the prior written consent of the
Company and Capital.
(2) Notwithstanding the foregoing, Securities in registered form may be
offered, sold and delivered by the Purchasers in the United States and to U.S.
persons pursuant to Section 3 of this Agreement without delivery of the written
statement required by paragraph (1) above.
(3) Each Purchaser further represents and agrees that (i) it has not offered
or sold, and will not offer or sell, in the United Kingdom by means of any
document, any Securities other than to persons whose ordinary business it is to
buy or sell debentures, whether as principal or as agent, or in circumstances
which do not constitute an offer to the public within the meaning of the
Companies Act 1985 of the United Kingdom, (ii) it has complied, and will comply,
with all applicable provisions of the Financial Services Act 1986 of the United
Kingdom with respect to anything done by it in relation to the Securities in,
from or otherwise involving the United Kingdom, and (iii) it has only issued or
passed on, and will only issue or pass on, in the United Kingdom, any document
received by it in connection with the issuance of the Securities to a person who
is of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1995 of the United
A-1
Kingdom or is a person to whom the document may otherwise lawfully be issued or
passed on.
(4) Each Purchaser agrees that it will not offer, sell or deliver any of the
Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action is required to permit
its purchase and resale of the Securities in such jurisdictions. Each Purchaser
understands that no action has been taken to permit a public offering in any
jurisdiction outside the United States where action would be required for such
purpose. Each Purchaser agrees not to cause any advertisement of the Securities
to be published in any newspaper or periodical or posted in any public place and
not to issue any circular relating to the Securities, except in any such case
with Goldman, Sachs & Co.'s express written consent and then only at its own
risk and expense.
A-2
ANNEX II
Pursuant to Section 7(e) of the Purchase Agreement, the accountants shall
furnish letters to the Purchasers to the effect that:
(i) They are independent certified public accountants with respect to
the Company, its subsidiaries and Capital under rule 101 of the American
Institute of Certified Public Accountants' Code of Professional Conduct, and
its interpretations and rulings;
(ii) In their opinion, the consolidated financial statements and
financial statement schedules audited by us and included in the Offering
Circular comply as to form in all material respects with generally accepted
accounting principles;
(iii) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company for
the two most recent fiscal years included in the Offering Circular agrees
with the corresponding amounts (after restatements where applicable) in the
audited consolidated financial statements for such two fiscal years;
(iv) On the basis of limited procedures not constituting an audit in
accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information referred
to below, a reading of the latest available interim financial statements of
the Company, its subsidiaries and Capital, inspection of the minute books of
the Company, its subsidiaries and Capital since the date of the latest
audited financial statements included in the Offering Circular, inquiries of
officials of the Company, its subsidiaries and Capital responsible for
financial and accounting matters and such other inquiries and procedures as
may be specified in such letter, nothing came to their attention that caused
them to believe that:
(A) the unaudited consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Offering Circular are not in conformity with generally accepted accounting
principles applied on the basis substantially consistent with the basis for
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Offering Circular;
(B) any other unaudited income statement data and balance sheet items
included in the Offering Circular do not agree with the corresponding items
in the unaudited consolidated financial statements from which such data and
items were derived, and any such unaudited data and items were not determined
on a basis substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included in the
Offering Circular;
(C) the unaudited financial statements which were not included in the
Offering Circular but from which were derived any unaudited condensed
financial statements referred to in Clause (A) and any unaudited income
statement data and balance sheet items included in the Offering Circular and
referred to in Clause (B) were not determined
on a basis substantially consistent with the basis for the audited
consolidated financial statements included in the Offering Circular;
(D) any unaudited pro forma consolidated condensed financial statements
included in the Offering Circular do not comply as to form in all material
respects with the applicable accounting requirements or the pro forma
adjustments have not been properly applied to the historical amounts in the
compilation of those statements;
(E) as of a specified date not more than five days prior to the date of
such letter, there have been any changes in the aggregate level of membership
interests, consolidated capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, upon earn-outs of
performance shares and upon conversions of convertible securities, in each
case which were outstanding on the date of the latest financial statements
included in the Offering Circular or any increase in the consolidated long-
term debt of the Company, its subsidiaries and Capital, or in the capital
stock or long-term debt of Capital, or any decreases in consolidated net
current assets, members' equity or stockholders' equity or other items
specified by the Purchasers, or any increases in any items specified by the
Purchasers, in each case as compared with amounts shown in the latest balance
sheet included in the Offering Circular except in each case for changes,
increases or decreases which the Offering Circular discloses have occurred or
may occur or which are described in such letter; and
(F) for the period from the date of the latest financial statements
included in the Offering Circular to the specified date referred to in Clause
(E) there were, except as specified therein, any decreases in consolidated
net revenues or operating profit (loss) or the total or per share amounts of
consolidated net income (loss) or other items specified by the Purchasers, or
any increases in any items specified by the Purchasers, in each case as
compared with the comparable period of the preceding year and with any other
period of corresponding length specified by the Purchasers, except in each
case for decreases or increases which the Offering Circular discloses have
occurred or may occur or which are described in such letter; and
(v) In addition to the examination referred to in their report(s) included
in the Offering Circular and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and
(iv) above, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Purchasers, which are derived from the general
accounting records of the Company, its subsidiaries and Capital, which appear
in the Offering Circular, and have compared certain of such amounts,
percentages and financial information with the accounting records of the
Company, its subsidiaries and Capital and have found them to be in agreement.
2