1
EXHIBIT 10.1
$193,100,000
GOLDEN SKY DBS, INC.
PURCHASE AGREEMENT
February 11, 1999
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
NATIONSBANC MONTGOMERY SECURITIES LLC
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
FLEET SECURITIES, INC.
c/o Merrill Lynch & Co.
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Golden Sky DBS, Inc., a Delaware corporation (the "Company"), confirms its
agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") 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 Merrill Lynch 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 set forth in said Schedule A of $193,100,000
aggregate principal amount at maturity of the Company's 13 1/2% Senior Discount
Notes due 2007 (the "Securities").
The Securities are to be issued pursuant to an indenture dated as of
February 19, 1999 (the "Indenture") between the Company and State Street Bank
and Trust Company of Missouri, N.A., as trustee (the "Trustee"). 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
2(b)) (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 resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers ("Subsequent
Purchasers") at any time after the date of this Agreement. The Securities are to
be offered and sold through 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 if
an exemption from the registration requirements of the 1933 Act is available
(including the exemption afforded by Rule 144A ("Rule 144A") or Regulation S
("Regulation S") of the rules and regulations promulgated under the 1933 Act by
the Securities and Exchange Commission (the "Commission")).
The holders of Securities (including the Initial Purchasers and subsequent
transferees) will be entitled to the benefits of a registration rights
agreement, to be dated as of February 19, 1999 (the "Registration Rights
Agreement"), by and among the Company and the Initial Purchasers. Pursuant to
the Registration Rights Agreement, the Company will agree to file with the
Commission under the circumstances set forth therein either (i) a registration
statement under the 1933 Act registering the Exchange Securities (as defined in
the Registration Rights Agreement) to be offered in exchange for the Securities
and to use its best efforts to cause such registration statement to be declared
effective and (ii) under certain circumstances set forth therein, to file with
the Commission a shelf registration statement pursuant to Rule 415 under the
1933 Act relating to the resale of the Securities by holders thereof or, if
applicable, relating to the resale of Private Exchange Notes (as defined in the
Registration Rights Agreement) by the Initial Purchasers pursuant to an exchange
of the Securities for Private Exchange Notes, and to use its best efforts to
cause such shelf registration statement to be declared effective.
The Company has prepared and delivered to each Initial Purchaser copies of
a preliminary offering memorandum dated February 4, 1999 (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
-2-
3
offering memorandum dated February 11, 1999 (the "Final Offering Memorandum"),
each for use by such Initial Purchaser in connection with its solicitation of
purchases of, or offering of, the Securities. "Offering Memorandum" means, with
respect to any date or time referred to in this Agreement, the most recent
offering memorandum (whether the Preliminary Offering Memorandum, 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.
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 and as
of the Closing Time referred to in Section 2(b) hereof, and agrees with each
Initial Purchaser as follows:
(i) Similar Offerings. The Company has not, directly or indirectly,
solicited any offer to buy or offered to sell, and will not, directly or
indirectly, solicit any offer to buy or offer to sell, 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 Securities to be registered under the 1933 Act.
(ii) Offering Memorandum. The Offering Memorandum does not, and at the
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, warranty and agreement shall
not apply to statements in or omissions from the Offering Memorandum made
in reliance upon and in conformity with information furnished to the
Company in writing by any Initial Purchaser through the Representative
expressly for use in the Offering Memorandum.
(iii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Offering
Memorandum are independent certified public accountants with respect to the
Company
-3-
4
and its subsidiaries within the meaning of Regulation S-X under the 1933
Act.
(iv) Financial Statements. The financial statements (other than the
pro forma financial statements) of the Company and its consolidated
subsidiaries, 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
statement of operations, stockholders' equity 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. The pro forma financial statements of the Company and its
subsidiaries and the related notes thereto included in the Offering
Memorandum present fairly the information shown therein, have been prepared
in accordance with the Commission's rules and guidelines with respect to
pro forma financial statements and have been properly compiled on the bases
described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect
to the transactions and circumstances referred to therein.
Each of the Company and its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance
that (1) transactions are executed in accordance with management's general
or specific authorizations; (2) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability; (3) access to assets is permitted only in
accordance with management's general or specific authorization; and (4) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
-4-
5
(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
or business prospects of the Company and its subsidiaries considered as one
enterprise (a "Material Adverse Effect"), whether or not arising in the
ordinary course of business, (B) there have been no transactions entered
into by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the Company
and its subsidiaries considered as one enterprise and (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.
(vi) Good Standing of the Company. The Company has been duly organized
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 and 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 Designated Subsidiaries. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, 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;
except as otherwise disclosed in the Offering Memorandum, all of the issued
and outstanding capital stock of each Designated Subsidiary has been duly
authorized and validly issued, is
-5-
6
fully paid and non-assessable and is owned by the Company, directly or
through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; none of the outstanding shares
of capital stock of the Designated Subsidiaries was issued in violation of
any preemptive or similar rights arising by operation of law, or under the
charter or by-laws of any Designated Subsidiary or under any agreement to
which the Company or any Designated Subsidiary is a party. The subsidiaries
of the Company other than Designated Subsidiaries, considered in the
aggregate as a single subsidiary, do not constitute a "significant
subsidiary" as defined in Rule 1-02 of Regulation S-X.
(viii) Capitalization. The authorized, issued and outstanding capital
stock of the Company is as set forth in the financial statements, including
the schedules and notes, included 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 employee benefit
plans referred to in the Offering Memorandum or pursuant to the exercise of
convertible securities or options referred to in the Offering Memorandum).
(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, at the Closing Time, will have been duly
executed and delivered by the Company and 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 other similar laws
relating to or affecting enforcement of creditors' rights generally, or by
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(xi) Authorization of the Registration Rights Agreement. The
Registration Rights Agreement has been duly authorized by the Company and,
when executed and delivered by the Company, will constitute a valid and
binding obligation of the Company, enforceable against the Company in
-6-
7
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 and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity).
(xii) Authorization of the Securities. The Securities, Exchange
Securities and Private Exchange Notes, if any, have been duly authorized
and, at the Closing Time, will have been duly executed by the Company and,
when authenticated in the manner provided for in the Indenture 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 relating to or affecting enforcement of creditors'
rights generally, or by general principles of equity (regardless of whether
enforcement 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, and the Exchange Securities and the Private Exchange Notes, if
any, when executed, authenticated, issued and delivered by the Company, in
exchange for the Securities in accordance with the terms of the
Registration Rights Agreement, will constitute valid and binding
obligations of the Company, entitled to the benefits of the Indenture and
enforceable against the Company in accordance with the terms thereof,
except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in
a proceeding at law or in equity).
(xiii) Description of the Securities, the Registration Rights
Agreement and the Indenture. The Securities, the Exchange Securities, the
Private Exchange Notes, if any,
-7-
8
the Registration Rights Agreement and the Indenture will conform in all
material respects to the respective statements relating thereto contained
in the Offering Memorandum and will be in substantially the respective
forms previously delivered to the Initial Purchasers.
(xiv) Absence of Defaults and Conflicts. Neither the Company nor any
of its subsidiaries 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 any of its subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of the
Company or any of its subsidiaries is subject (collectively, "Agreements
and Instruments"), except for such defaults that would not result in a
Material Adverse Effect; and the execution, delivery and performance 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
have been duly authorized by all necessary corporate action and 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 a 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 any of its subsidiaries pursuant to, the Agreements and Instruments,
except for such conflicts, breaches or defaults 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 any of its
subsidiaries 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 any of
its subsidiaries or any of their assets or properties. As used herein, a
"Repayment Event" means any event or condi-
-8-
9
tion 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 any of its subsidiaries.
(xv) Absence of Labor Dispute. No labor dispute with the employees of
the Company or any of its subsidiaries exists or, to the knowledge of the
Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any of its
subsidiaries' principal suppliers, manufacturers, customers or contractors,
which, in either case, may reasonably be expected to result in a Material
Adverse Effect.
(xvi) Absence of Proceedings. Except as disclosed in the Offering
Memorandum, there is no action, suit, proceeding, inquiry or investigation
before or 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 any subsidiary thereof which might reasonably be
expected to result in a Material Adverse Effect, or which might reasonably
be expected to materially and adversely affect the properties or assets of
the Company or any of its subsidiaries or the consummation of 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 any subsidiary thereof 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.
(xvii) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, 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, and neither the Company nor any of its subsidiaries
has received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or
-9-
10
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy,
singly or in the aggregate, would result in a Material Adverse Effect.
(xviii) 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 necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale of
the Securities hereunder or the consummation of the transactions
contemplated by this Agreement.
(xix) Possession of Licenses and Permits. The Company and its
subsidiaries 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
necessary to conduct the business now operated by them; the Company and its
subsidiaries 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, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when
the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company nor any of its
subsidiaries 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.
(xx) Title to Property. The Company and its subsidiaries have good and
marketable title to all real property owned by the Company and its
subsidiaries 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
-10-
11
by the Company or any of its subsidiaries; and all of the leases and
subleases material to the business of the Company and its subsidiaries,
considered as one enterprise, and under which the Company or any of its
subsidiaries holds properties described in the Offering Memorandum, are in
full force and effect, and neither the Company nor any of its subsidiaries
has any notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any of its subsidiaries
under any of the leases or subleases mentioned above, or affecting or
questioning the rights of such the Company or any subsidiary thereof to the
continued possession of the leased or subleased premises under any such
lease or sublease.
(xxi) Tax Returns. The Company and its subsidiaries have filed all
material federal, state, local and foreign tax returns that are required to
be filed or have duly requested extensions thereof, except as would not,
singly or in the aggregate, have a Material Adverse Effect and have paid
all taxes reflected as due on such returns and any related assessments,
fines or penalties, except for any such tax, assessment, fine or penalty
that is being contested in good faith and by appropriate proceedings and
except as would not, singly or in the aggregate, have a Material Adverse
Effect; and adequate charges, accruals and reserves have been provided for
in the financial statements referred to in Section 1(a)(v) above in respect
of all federal, state, local and foreign taxes for all periods as to which
the tax liability of the Company or any of its subsidiaries has not been
finally determined or remains open to examination by applicable taxing
authorities.
(xxii) 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
any of its subsidiaries 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
-11-
12
chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials
(collectively, "Environmental Laws"), (B) the Company and its subsidiaries
have all permits, authorizations and approvals required under any
applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or 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 any of its
subsidiaries and (D) there are no events or circumstances that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of its
subsidiaries relating to Hazardous Materials or Environmental Laws.
(xxiii) Investment Company Act. The Company is not, 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, an "investment company" or an entity "controlled"
by an "investment company" as such terms are defined in the Investment
Company Act of 1940, as amended (the "1940 Act").
(xxiv) Rule 144A Eligibility. The Securities are eligible for resale
pursuant to Rule 144A and will not be, at the Closing Time, of the same
class as securities listed on a national securities exchange registered
under Section 6 of the 1934 Act, or quoted in a U.S. automated interdealer
quotation system.
(xxv) No General Solicitation. None of the Company, its affiliates, as
such term is defined in Rule 501(b) under the 1933 Act ("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 Securities, in any form
of general solicitation or general advertising within the meaning of Rule
502(c) under the 1933 Act.
-12-
13
(xxvi) 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 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").
(xxvii)No Directed Selling Efforts. With respect to those Securities
sold in reliance on Regulation S, (A) none of the Company, its Affiliates
or any person acting on its or their behalf (other than the Initial
Purchasers, as to whom the Company makes no representation) has engaged or
will engage in any directed selling efforts within the meaning of
Regulation S and (B) each of the Company and its Affiliates and any person
acting on its or their behalf (other than the Initial Purchasers, as to
whom the Company makes no representation) has complied and will comply with
the offering restrictions requirement of Regulation S.
(xxviii) Solvency. Neither the Company nor any of its subsidiaries
intend to, nor do any of them believe that they will, incur debts beyond
their ability to pay such debts as they mature. As of the date hereof, the
fair market value of the assets of the Company and its subsidiaries
exceeds, and at the Closing Time the fair market value of the assets of the
Company and its subsidiaries will exceed, the amounts that will be required
to be paid on or in respect of their existing debts and other liabilities
when and as they become absolute and mature. The assets of the Company and
its subsidiaries do not constitute unreasonably small capital to carry on
their respective businesses as conducted or proposed to be conducted.
(xxix) Receipt of Consents. The Company has received all the consents,
waivers and approvals from the lenders under the Credit Facility necessary
to issue the Notes and consummate the transactions contemplated by this
Agreement.
(xxx) No Stabilization or Manipulation. Neither the Company nor any of
its officers, directors or controlling persons has taken, directly or
indirectly, any action de-
-13-
14
signed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale
of the Securities.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Representative or to counsel
for the Initial Purchasers shall be deemed a representation and warranty by the
Company to each Initial Purchaser as to the matters covered thereby.
SECTION 2. Sale and Delivery to Initial Purchasers; Closing.
(a) Securities. On the basis of the representations and warranties 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 aggregate principal amount at
maturity of Securities set forth in Schedule A opposite the name of such Initial
Purchaser, plus any additional principal amount of Securities that such Initial
Purchaser may become obligated to purchase pursuant to the provisions of Section
11 hereof.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the office of Cahill Gordon &
Reindel, 80 Pine Street, New York, New York 10005, or at such other place as
shall be agreed upon by the Representative and the Company, at 9:00 A.M. on the
fifth business day after the date hereof (unless postponed in accordance with
the provisions of Section 11), or 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").
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
certificates for 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
Securities which it has
-14-
15
agreed to purchase. Merrill Lynch, individually and not as representative of the
Initial Purchasers, may (but shall not be obligated to) make payment of the
purchase price for the Securities to be purchased by any Initial Purchaser whose
funds have not been received by, the Closing Time, but such payment shall not
relieve such Initial Purchaser from its obligations hereunder. The certificates
representing the Securities shall be registered in the name of Cede & Co.
pursuant to the DTC Agreement and shall be made available for examination and
packaging by the Initial Purchasers in The City of New York not later than 10:00
A.M. on the last business day prior to the Closing Time.
(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" within the meaning of Rule 144A under the 1933
Act (a "Qualified Institutional Buyer").
(d) Denominations; Registration. Certificates for the Securities shall be
in such denominations ($1,000 or integral multiples thereof) and registered in
such names as the Representative may request in writing at least one full
business day before the Closing Time.
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 each Initial Purchaser, without charge, such number of copies of the
Preliminary Offering Memorandum, the Final Offering Memorandum and any
amendments and supplements thereto and documents incorporated by reference
therein as such Initial Purchaser 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 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
in writing from the Initial Purchasers to the Company, any material changes in
or affecting the earnings, business affairs or business prospects of the Company
and its subsidiaries that (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 dur-
-15-
16
ing such time any event shall occur as a result of which it is necessary, in the
reasonable opinion of the Company, its counsel, the Initial Purchasers or
counsel for the Initial Purchasers, to amend or supplement the Final Offering
Memorandum in order that the Final 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 Final Offering
Memorandum by preparing and furnishing to each Initial Purchaser an amendment or
amendments of, or a supplement or supplements to, the Final 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 Final 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) Amendment 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 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) Qualification of Securities for Offer and Sale. The Company will use
its best efforts, in cooperation with the Initial Purchasers, to qualify the
Securities for offering and sale under the applicable securities laws of such
jurisdictions as the Representative may designate and will maintain such
qualifications in effect as long as required for the sale 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 business in any jurisdiction in
which it is not otherwise so subject.
(e) DTC. The Company will 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.
-16-
17
(f) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Offering
Memorandum under "Use of Proceeds."
(g) Restriction on Sale of Securities. During a period of 180 days from the
date of the Offering Memorandum, the Company will not, without the prior written
consent of Merrill Lynch, directly or indirectly, issue, sell, offer or agree to
sell, grant any option for the sale of, or otherwise dispose of, any other debt
securities of the Company or securities of the Company that are convertible
into, or exchangeable for, the Securities or such other debt securities.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the performance
of its obligations under this Agreement, including (i) the preparation and
printing of the Offering Memorandum (including financial statements and any
schedules or exhibits and any document incorporated therein by reference) and of
each amendment or supplement thereto, (ii) the preparation, issuance and
delivery of the certificates for the Securities to the Initial Purchasers,
including any charges of DTC in connection therewith, (iii) the fees and
disbursements of the Company's counsel, accountants and other advisors, (iv) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) 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, any supplement
thereto and any Legal Investment Survey, (v) 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, (vi) any fees payable in
connection with the rating of the Securities and (vii) any fees payable to the
review by the National Association of Securities Dealers, Inc. (the "NASD") in
connection with the initial and continued designation of the Securities as
PORTAL securities under the PORTAL Market Rules pursuant to NASD Rule 5322 (it
being understood that, except as provided in Sections 4(a)(v) and 4(b), the
Initial Purchasers shall pay their own costs and expenses in connection with the
transactions contemplated hereby).
(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
-17-
18
shall reimburse the Initial Purchasers for all of their documented out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
Initial Purchasers.
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) Opinion of Counsel for Company. At the Closing Time, the Representative
shall have received the favorable opinion, dated as of the Closing Time, of
Reboul, MacMurray, Hewitt, Maynard & Kristol, counsel for the Company, in form
and substance satisfactory to counsel for the Initial Purchasers, together with
signed or reproduced copies of such letter for each of the other Initial
Purchasers to the effect set forth in Exhibit A hereto and to such further
effect as counsel to the Initial Purchasers may reasonably request.
(b) Opinion of Regulatory Counsel for Company. At the Closing Time, the
Representative shall have received the favorable opinion, dated as of the
Closing Time, of Fleischman and Walsh, L.L.P., regulatory counsel for the
Company, in form and substance satisfactory to counsel for the Initial
Purchasers, to the effect set forth in Exhibit B hereto and to such further
effect as counsel to the Initial Purchasers may reasonably request.
(c) Opinion of Counsel for Initial Purchasers. At the Closing Time, the
Representative shall have received the favorable opinion, dated as of the
Closing Time, of Cahill Gordon & Reindel, counsel for the Initial Purchasers,
with respect to the matters set forth in (vii), (viii), (x) (solely as to the
information in the Offering Memorandum under "Description of the Notes") and
(xiv) of Exhibit A hereto. 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, 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.
-18-
19
(d) 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 Offering Memorandum, 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 Vice
President of the Company and of the chief financial 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, in all material respects, with the same
force and effect as though expressly made at and as of the Closing Time (except
the representations and warranties in Section 1 qualified as to materiality
shall be 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, in all
material respects, with all agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to the Closing Time.
(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representative shall have received from each of KPMG LLP, Eide
Bailly LLP, Loucks & Glassley pllp, Bolinger, Segars, Gilbert, & Moss, L.L.P.,
Moss Adams LLP, Curtis Blakely & Co., P.C., CHMS, P.C., Anderson and Company,
Olsen Thielen & Co., LTD. and Summers McNea & Company, P.C. a letter dated such
date, in form and substance satisfactory to the Representative, 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 in the Offering Memorandum.
(f) Bring-down Comfort Letter. At the Closing Time, the Representative
shall have received from KPMG 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 (e) 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.
(g) Maintenance of Rating. At the Closing Time, and since the date of this
Agreement, there shall not have occurred a downgrading in the rating assigned to
any of the Company's or its subsidiaries' other debt securities by any
nationally rec-
-19-
20
ognized securities rating agency, and no such securities rating agency shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's or its subsidiaries'
other debt securities.
(h) PORTAL. At the Closing Time, the Securities shall have been designated
for trading on PORTAL.
(i) First Amendment to the Amended and Restated Credit Agreement. At the
Closing Time, the Company shall have entered into the First Amendment to the
Amended and Restated Credit Agreement, which shall be substantially in the form
previously delivered to the Initial Purchasers and counsel for the Initial
Purchasers.
(j) Stockholder Approval. At the Closing Time, the Company shall have
received all stockholder approvals necessary to issue the Notes and consummate
the transactions contemplated by this Agreement.
(k) Additional Documents. At the Closing Time, counsel for the Initial
Purchasers shall have been furnished with such documents 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
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 Representative and counsel
for the Initial Purchasers.
(l) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representative by notice to the Company at
any time at or prior to the Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 7 and 8 shall survive any such termination and remain in
full force and effect.
-20-
21
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 Only to Institutional Accredited Investors or
Non-U.S. Persons. Offers and sales of the Securities will be made only by
the Initial Purchasers or Affiliates thereof qualified to do so in the
jurisdictions in which such offers or sales are made. Each such offer or
sale shall only be made (A) to persons whom the offeror or seller
reasonably believes to be qualified institutional buyers (as defined in
Rule 144A under the 1933 Act and (B) non-U.S. persons outside the United
States to whom the offeror or seller reasonably believes offers and sales
of the Securities may be made in reliance upon Regulation S under the 1933
Act.
(ii) No General Solicitation. The Securities will be offered by
approaching prospective Subsequent Purchasers on an individual basis. No
general solicitation or general advertising (within the meaning of Rule
502(c) under the 1933 Act) will be used in the United States in connection
with the offering of the Securities.
(iii) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
Subsequent Purchaser of a Security acting as a fiduciary for one or more
third parties, in connection with an offer and sale to such purchaser
pursuant to clause (a) above, each third party shall, in the judgment of
the applicable Initial Purchaser, be a Qualified Institutional Buyer or a
non-U.S. person outside the United States.
(iv) Subsequent Purchaser Notification. Each Initial Purchaser will
take reasonable steps to inform, and cause each of its U.S. Affiliates to
take reasonable steps to inform, persons acquiring Securities from such
Initial Purchaser or affiliate, as the case may be, in the United States
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 ex-
-21-
22
cept (1) to the Company, (2) outside the United States in accordance with
Rule 904 of Regulation S, or (3) inside the United States in accordance
with (x) Rule 144A to a person whom the seller reasonably believes is a
Qualified Institutional Buyer that is purchasing such Securities for its
own account or for the account of a Qualified Institutional Buyer to whom
notice is given that the offer, sale or transfer is being made in reliance
on Rule 144A or (y) the exemption from registration under the 1933 Act
provided by Rule 144, if available.
(v) Minimum Principal Amount. No sale of the Securities to any one
Subsequent Purchaser will be for less than U.S. $100,000 principal amount
at maturity 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.
$100,000 principal amount at maturity of the Securities.
(vi) Restrictions on Transfer. The transfer restrictions and the other
provisions set forth in Section Two of the Indenture, 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 Subsequent Purchasers 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 resale or transfer of any Security.
(vii) Delivery of Offering Memorandum. Each Initial Purchaser will
deliver to each purchaser of the Securities from such Initial Purchaser, in
connection with its original distribution of the Securities, a copy of the
Offering Memorandum, as amended and supplemented at the date of such
delivery.
(b) Covenants of the Company. The Company covenants with each Initial
Purchaser as follows:
(i) Due Diligence. In connection with the original distribution of the
Securities, the Company agrees that, prior to any offer or resale of the
Securities by the Initial Purchasers, the Initial Purchasers and counsel
for the Initial Purchasers shall have the right to make rea-
-22-
23
sonable inquiries into the business of the Company and its subsidiaries.
The Company also agrees to provide answers to each prospective Subsequent
Purchaser of Securities who so requests concerning the Company and its
subsidiaries (to the extent that such information is available or can be
acquired and made available to prospective Subsequent Purchasers without
unreasonable effort or expense and to the extent the provision thereof is
not prohibited by applicable law) and the terms and conditions of the
offering of the Securities, as provided in the Offering Memorandum.
(ii) Integration. The Company agrees that it will not and will cause
its Affiliates not to make any offer or sale of securities of the Company
of any class if, as a result of the doctrine of "integration" referred to
in Rule 502 under the 1933 Act, such offer or sale would render invalid
(for the purpose of (i) the sale of the Securities by the Company to the
Initial Purchasers, (ii) the resale of the Securities by the Initial
Purchasers to Subsequent Purchasers or (iii) 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 OR BY REGULATION S thereunder or otherwise.
(iii) 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 (such information, whether made
available to holders or prospective purchasers or furnished to the
Commission, is herein referred to as "Additional Information").
(iv) Restriction on Repurchases. 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 acting as a securities
broker on behalf of and for the account of customers in the ordinary course
of business in unsolicited broker's transactions) unless, immediately upon
any such purchase, the Company or any Af-
-23-
24
filiate shall submit such Securities to the Trustee for cancellation.
SECTION 7. Indemnification.
(a) Indemnification of Initial Purchasers. The Company agrees to indemnify
and hold harmless each Initial Purchaser and each person, if any, who controls
any Initial Purchaser within the meaning of Section 15 of the 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 Merrill Lynch), 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 Merrill Lynch expressly for
use in the Offering Memorandum (or any
-24-
25
amendment thereto); and provided, further, that the Company will not be
liable to any Initial Purchaser hereunder with respect to any such loss,
liability, claim, damage or expense that resulted from the fact that such
Initial Purchaser sold Securities to a person to whom such Initial
Purchaser failed to send or give, at or prior to the Closing Time, a copy
of the Final Offering Memorandum, as then amended or supplemented, if the
Company has previously furnished copies thereof (sufficiently in advance of
the Closing Time to allow for distribution by the Closing Time) to the
Initial Purchasers and the loss, liability, claim, damage or expense of
such Initial Purchaser resulted from an untrue statement or omission or
alleged untrue statement or omission of a material fact contained in or
omitted from the Preliminary Offering that was corrected in the Final
Offering Memorandum or, if applicable, amended or supplemented prior to the
Closing Time.
(b) Indemnification of Company, Directors and Officers. Each Initial
Purchaser severally agrees to indemnify and hold harmless the Company, its
directors, its officers 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 in reliance upon and in conformity
with written information furnished to the Company by such Initial Purchaser
through Merrill Lynch expressly for use in the Offering Memorandum.
(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 Merrill Lynch, 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 indemnify-
-25-
26
ing 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
-26-
27
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the 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 Se-
-27-
28
curities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Initial Purchaser has
otherwise been required to pay by reason of 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 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such Initial
Purchaser, and each director of the Company, each officer of 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 shall have the same rights to
contribution as the Company. The Initial Purchasers' respective obligations to
contribute pursuant to this Section 8 are several in proportion to the principal
amount of Securities set forth opposite their respective names in Schedule A
hereto and not joint.
SECTION 9. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any Initial Purchaser or controlling person, or by or on behalf
of the Company, and shall survive delivery of the Securities to the Initial
Purchasers.
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 Offering Memorandum,
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, any outbreak of
hostilities or escalation thereof or other calamity or
-28-
29
crisis or any change or development involving a prospective change in national
or international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Representative,
impracticable 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 limited by the Commission or, if trading generally on the American
Stock Exchange or the New York Stock Exchange or in the National Market System
has been suspended or 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 National
Association of Securities Dealers, Inc. or any other governmental authority 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
and 8 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, but not the
obligation, 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 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 this Agreement shall terminate without liability on the part of any
non-defaulting Initial Purchaser.
No action pursuant to this Section shall relieve any defaulting Initial
Purchaser from liability in respect of its default.
-29-
30
In the event of any such default that 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 arrangement.
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 the Representative at North Tower, World
Financial Center, New York, New York 10281-1201, attention of Evan Ladouceur;
notices to the Company shall be directed to it at 605 West 47th Street, Suite
300, Kansas City, Missouri 64112, attention of John Hager.
SECTION 13. Parties. This Agreement shall each 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 AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES
OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings. The Section headings herein and the Table
of Contents are for convenience only, and shall not affect the construction
hereof.
-30-
31
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,
GOLDEN SKY DBS, INC.
By: /s/ JOHN R. HAGER
---------------------------------------
Name: John R. Hager
Title: Chief Financial Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
NATIONSBANC MONTGOMERY SECURITIES LLC
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
FLEET SECURITIES, INC.
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: /s/ JOSEPH B. SHEEHAN
----------------------------------------
Name: Joseph B. Sheehan
Title: Director
32
SCHEDULE A
Principal
Amount at
Maturity of
Name of Initial Purchaser Securities
- ------------------------- -----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................... $106,205,000
NationsBanc Montgomery Securities LLC............... 48,275,000
Donaldson, Lufkin & Jenrette
Securities Corporation.......................... 28,965,000
Fleet Securities, Inc............................... 9,655,000
-----------
Total............................................... $193,100,000
===========
Sch A-1
33
SCHEDULE B
GOLDEN SKY DBS, INC.
$193,100,000 Senior Discount Notes due 2007
1. The initial public offering price of the Securities shall be 51.8% of
the principal amount thereof at maturity, plus accretion, if any, from the date
of issuance.
2. The purchase price to be paid by the Initial Purchasers for the
Securities shall be 50.1% of the principal amount thereof at maturity.
3. Cash interest will not accrue on the Securities prior to March 1, 2004.
Thereafter, cash interest on the securities will accrue at a rate of 13 1/2% per
annum and will be payable March 1 and September 1 of each year commencing
September 1, 2004.
4. The Securities will mature on March 1, 2007.
Sch B-1
34
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 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.
(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 or pursuant to reservations, agreements, employee
benefit plans or the exercise of convertible securities or options referred to
in the Offering Memorandum); the shares of issued and outstanding capital stock
of the Company have been duly authorized and validly issued and are fully paid
and nonassessable; and none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar rights of any
security holder of the Company.
(v) Each Designated Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, 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
A-1
35
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
capital stock of each Designated Subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and, to the best of our knowledge and
information, except as disclosed in the Offering Memorandum, is owned by the
Company, directly or through subsidiaries, 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 Registration Rights Agreement has been duly authorized by the
Company and, when executed and delivered by the Company, 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 enforcement is
considered in a proceeding in equity or at law).
(viii) 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 other similar laws relating to or affecting enforcement of
creditors' rights generally, or by general principles of equity (regardless of
whether enforcement 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 and
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 delivered against payment of the purchase price therefor, and the Exchange
Securities and the Private Exchange Notes (other than with respect to the
delivery in book-entry form), if any, when executed, authenticated and delivered
in exchange for the Securities in accordance with the terms of the
A-2
36
Registration Rights Agreement, will be entitled to the benefits of the Indenture
and 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, reorganization, moratorium
(including, without limitation, all laws relating to fraudulent transfers), or
other similar laws relating to or affecting enforcement of creditor's rights
generally, or by general principles of equity (regardless of whether enforcement
is considered in a proceeding in equity or at law), and will be entitled to the
benefits of the Indenture.
(x) The Securities, the Exchange Securities, the Private Exchange Notes,
the Registration Rights Agreement and the Indenture conform in all material
respects to the descriptions thereof contained in the Offering Memorandum.
(xi) There is not pending or, to the best of their knowledge, threatened
any action, suit, proceeding, inquiry or investigation, to which the Company or
any subsidiary is a party, or to which the property of the Company or any
subsidiary thereof is subject, before or brought by any court or governmental
agency or body, which might reasonably be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially and
adversely affect the properties or assets thereof or the consummation of the
transactions contemplated in the Purchase Agreement or the performance by the
Company of its obligations thereunder or the transactions contemplated by the
Offering Memorandum.
(xii) The information in the Offering Memorandum under "Offering Memorandum
Summary -- The Offering," "Business--Litigation," "Description of the Notes,"
"Exchange Offer and Registration Rights" and "Certain Federal Income Tax
Considerations," to the extent that it constitutes matters of law, summaries of
legal matters, or legal proceedings, or legal conclusions, has been reviewed by
them and is correct in all material respects.
(xiii) All descriptions in the Offering Memorandum of contracts and other
documents to which the Company or any of its subsidiaries are a party are
accurate in all material respects; and to the best of our knowledge, there are
no franchises, contracts, indentures, mortgages, loan agreements, notes, leases
or other instruments that would be required to be described in the Offering
Memorandum that are not described or referred to in the Offering Memorandum
other than those described or referred to therein.
A-3
37
(xiv) Neither the Company nor any of its subsidiaries is in violation of
its charter or by-laws and, to the best of our knowledge, no default by the
Company or any of its subsidiaries (other than as described in the Offering
Memorandum) exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Offering Memorandum.
(xv) No authorization, approval, consent or order of any court or
governmental authority or agency, other than such as may be required under the
applicable securities laws of the various jurisdictions in which the Securities
will be offered or sold, as to which no opinion is required in connection with
the due authorization, execution and delivery of the Purchase Agreement or the
due execution, delivery or performance of the Indenture by the Company, or for
the offering, issuance, sale or delivery of the Securities to the Initial
Purchasers or the resale by the Initial Purchasers in accordance with the
Purchase Agreement.
(xvi) 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
Trust Indenture Act.
(xvii) The execution, delivery and performance of the Purchase Agreement,
the DTC Agreement, the Indenture and the Securities and the consummation of the
transactions contemplated in the Purchase Agreement and in 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 and the Securities 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 l(a)(iii) of the Purchase
Agreement) under or result in the creation or imposition of any lien, charge or
encumbrance (other than those created pursuant to the Company's Amended and
Restated Credit Agreement) 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,
including agreements governing the rights of stockholders of the Company,
A-4
38
known to us, to which the Company or any of its subsidiaries is a party or by
which it or any of them may be bound, or to which any of the property or assets
of the Company or any subsidiary thereof is subject (except for such conflicts,
breaches or defaults 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 charter or by-laws of the Company or any of its subsidiaries,
or any applicable law, statute, rule, regulation, judgment, order, writ or
decree, known to us, of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties, assets or operations.
(xviii) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the 1940
Act.
Nothing has come to our attention that would lead us to believe that the
Offering Memorandum (except for financial statements and schedules and other
financial data included or incorporated by reference therein as to which we make
no statement), contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Offering Memorandum or any
amendment or supplement thereto (except for financial statements and schedules
and other financial data included therein, as to which such counsel need 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 the Closing Time,
included or includes 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).
A-5
39
Exhibit B
FORM OF OPINION OF COMPANY'S REGULATORY
COUNSEL TO BE DELIVERED PURSUANT TO SECTION 5(b)
(i) The statements in the Offering Memorandum under the captions "Risk
Factors-Regulation; PrimeTime 24 Litigation" and "Business-Regulation," insofar
as such statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly summarize the matters referred to
therein and, to our knowledge, such statements, as of the date of the Offering
Memorandum and the date hereof, contain no untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein not
misleading.
B-1