WORLD AIRWAYS, INC.
$50,000,000
8.0% Convertible Senior Subordinated Debentures Due 2004
INITIAL PURCHASE AGREEMENT
August 21, 1997
XXXXXX XXXX LLC
XXXXXX, READ & CO. INC.
x/x Xxxxxx Xxxx LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
1. Introduction. World Airways, Inc., a Delaware
corporation (the "Company") proposes to issue and sell to you
(the "Initial Purchasers") $50,000,000 aggregate principal
amount of its 8.0% Convertible Senior Subordinated Debentures
Due 2004 (the "Firm Securities") and also proposes to issue and
sell to the Initial Purchasers, at their option, up to an
additional $7,500,000 aggregate principal amount of its 8.0%
Convertible Senior Subordinated Debentures Due 2004 (the
"Additional Securities," and together with the Firm Securities,
the "Securities"). The Securities are to be issued under an
indenture (the "Indenture") to be dated as of August 1, 1997 by
and between the Company and First Union National Bank, as
trustee (the "Trustee"). The Securities will be convertible, at
any time after the 60th day following the date of original
issuance thereof, at the holder's option into shares (the
"Conversion Shares") of the Company's common stock, par value
$0.001 per share (the "Common Stock"), at a conversion price of
$8.90 per share, subject to adjustment in certain circumstances.
The Securities will be offered and sold without being
registered under the Securities Act of 1933, as amended (the
"Act"), to certain investors that are (i) accredited investors
("Accredited Investors"), as such term is defined in clause (1),
(2), (3), (5), (6) or (7) of Rule 501 of Regulation D under the
Act ("Regulation D") (ii) qualified institutional buyers
("QIBs") as such term is defined in Rule 144A promulgated under
the Act ("Rule 144A"); or (iii) "outside the United States" and
are not "U.S. Persons", as such terms are defined in Regulation
S under the Act ("Regulation S"). The offering and resale of
the Securities as contemplated herein is hereinafter referred to
as the "Offering."
The Initial Purchasers and their respective direct and
indirect transferees of the Securities will be entitled to the
benefits of the Registration Rights Agreement, substantially in
the form attached hereto as Exhibit A (the "Registration Rights
Agreement"), pursuant to which the Company has agreed, among
other things, to file a registration statement (the
"Registration Statement") with the Securities and Exchange
Commission (the "Commission") registering the Securities and the
Conversion Shares under the Act within 90 days of the Closing
Date, as defined below.
2. Representations and Warranties. The Company
represents and warrants to and agrees with each of the Initial
Purchasers that:
(a) The preliminary offering memorandum dated August
5, 1997 (the "Preliminary Memorandum") and the final
offering memorandum dated August 21, 1997 (the "Final
Memorandum") have been prepared by the Company setting
forth or including a description of the terms of the
Securities, the terms of the Offering, a description of the
Company and any material developments relating to the
Company occurring after the date of the most recent
historical financial statements included therein. No stop
order or similar order preventing or suspending the use of
the Preliminary Memorandum or the Final Memorandum has been
issued; no proceedings for that purpose are pending, or, to
the knowledge of the Company, contemplated by any
securities or other governmental authority in any
jurisdiction (including, without limitation, the Securities
and Exchange Commission (the "Commission")); no order
asserting that any of the transactions contemplated by this
Agreement, Preliminary Memorandum or the Final Memorandum
are subject to the registration requirements of the Act has
been issued; and no securities or other governmental
authority (including, without limitation, the Commission)
has requested any additional information to be included in
the Preliminary Memorandum or Final Memorandum or
otherwise. Copies of the Preliminary Memorandum and the
Final Memorandum have been delivered to the Initial
Purchasers. The Company will not distribute any
Preliminary Memorandum or Final Memorandum or any other
offering document or prepare any amendment or supplement to
the Preliminary Offering Memorandum or the Final Offering
Memorandum to which the Initial Purchasers shall reasonably
object in writing after being furnished with a copy
thereof. Each of the Preliminary Memorandum as of the date
thereof and the Final Memorandum as of the date thereof and
at all time subsequent thereto up to the Closing Date (as
defined in Section 3 below) and the Option Closing Date (as
defined in Section 10 below) (A) contained or will contain
all statements required to be stated therein in accordance
with, and complied or will comply in all material respects
with the requirements of, Rule144A and (B) did not or will
not include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading. The foregoing
provisions of this section 2(a) shall not apply to
statements or omissions made in reliance upon and in
conformity with information furnished to the Company in
writing by the Initial Purchasers expressly for use in the
Preliminary Memorandum or the Final Memorandum. Any
reference herein to the Preliminary Memorandum or the Final
Memorandum shall be deemed to include all amendments and
supplements thereto and any documents filed under the
Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Commission (the "Rules and
Regulations") thereunder (collectively, the "Exchange Act")
which are incorporated by reference therein. As used
herein, the term "Incorporated Documents" means the
documents which at the time are incorporated by reference
in the Preliminary Memorandum, the Final Memorandum or any
amendment or supplement thereto.
(b) The Incorporated Documents heretofore filed were
filed in a timely manner and, when they were filed (or, if
any amendment with respect to any such document was filed,
when such amendment was filed), conformed in all material
respects to the requirements of the Exchange Act and did
not contain an untrue statement of a material fact or omit
to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; and any further Incorporated
Documents will, when so filed, be filed in a timely manner
and conform in all material respects to the requirements of
the Exchange Act and will not contain an untrue statement
of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) The Company (A) is a duly incorporated and
validly existing corporation in good standing under the
laws of its jurisdiction of incorporation, with full power
and authority (corporate and other) to own or lease its
properties and to conduct its business as described in the
Final Memorandum (or, if the Final Memorandum is not in
existence, the Preliminary Memorandum) and (B) is duly
qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the conduct of
its business requires such qualification (except for those
jurisdictions in which the failure so to qualify has not
had and will not have a Material Adverse Effect (as
hereinafter defined)). The Company has no subsidiaries.
"Material Adverse Effect" means, when used in connection
with the Company, any development, change or effect that is
materially adverse to the business, properties, assets, net
worth, condition (financial or other), results of
operations or prospects of the Company.
(d) The Company has the duly authorized and validly
outstanding capitalization set forth under the caption
"Capitalization" in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Preliminary
Memorandum) and will have the adjusted capitalization set
forth therein on the Closing Date and the Option Closing
Date, based on the assumptions set forth therein. The
securities of the Company conform to the descriptions
thereof contained in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Preliminary
Memorandum). The outstanding shares of Common Stock have
been duly authorized and validly issued by the Company and
are fully paid and nonassessable. Except as created hereby
or referred to in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Preliminary
Memorandum), there are no outstanding options, warrants,
rights or other arrangements requiring the Company at any
time to issue any capital stock. No holders of outstanding
shares of capital stock of the Company are entitled as such
to any preemptive or other rights to subscribe for any of
the Securities or Conversion Shares and neither the filing
of the Registration Statement nor the Offering gives rise
to any rights, other than those which have been waived or
satisfied and those contained in the Registration Rights
Agreement, dated as of October 30, 1993, between the
Company and MHS (the "MHS Registration Rights"), for or
relating to, the registration of any securities of the
Company. The Company has full legal right, power and
authority to issue the Securities and perform its
obligations thereunder. The Securities have been duly
authorized; on the Closing Date or the Option Closing Date
(as the case may be), after payment therefor in accordance
with the terms of this Agreement and when the Securities
have been executed and delivered by the Company and
authenticated by the Trustee in accordance with the
provisions of the Indenture, (i) the Securities will have
been duly and validly executed, authenticated, issued and
delivered, will not have been issued in violation of or
subject to any preemptive or other similar right and will
(A) constitute valid and legally binding obligations of the
Company enforceable against the Company in accordance with
their terms and entitled to the benefits provided in the
Indenture and the Registration Rights Agreement, subject,
as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general
principles of equity, and (B) be convertible into the
Conversion Shares in accordance with the terms of the
Indenture, and (ii) good and marketable title to the
Securities will pass to the Initial Purchasers on the
Closing Date or the Option Closing Date (as the case may
be) free and clear of any lien, encumbrance, security
interest, claim or other restriction whatsoever. The
Conversion Shares have been duly and validly authorized and
reserved for issuance upon conversion of the Securities
and, when issued and delivered upon such conversion, will
be duly and validly issued and outstanding, fully paid and
nonassessable and will not have been issued in violation of
or subject to any preemptive or other similar rights. The
Company has received, subject to notice of issuance,
approval to have the Debentures designated as PORTAL
securities in accordance with the rules and regulations
adopted by the National Association of Securities Dealers,
Inc. (the "NASD") relating to Private Offering, Resale and
Trading through Automated Linkages ("PORTAL") Market. The
Company knows of no reason or set of facts which is likely
to adversely affect such approval or the approvals referred
to below in Section 5.
(e) The Securities are in the form contemplated by
the Indenture and the Securities and the Conversion Shares,
when issued and, with respect to the Securities,
authenticated by the Trustee in accordance with the
Indenture, will conform to the respective descriptions
thereof set forth in the Final Memorandum. None of the
Company's issuance of the Securities or the Conversion
Shares or its performance thereunder conflicts with or will
conflict with or results or will result in any breach or
violation of any of the terms or provisions of or
constitutes or will constitute a default under, or causes
or will cause (or permits or will permit) the maturation or
acceleration of any liability or obligation or the
termination of any right under, or result in the creation
or imposition of any lien, charge, or encumbrance upon, any
property or assets of the Company pursuant to the terms of
(i) the certificate of incorporation or by-laws of the
Company, (ii) any indenture, mortgage, deed of trust,
voting trust agreement, stockholders' agreement, note
agreement or other agreement or instrument to which the
Company is a party or by which it may be bound or to which
any of its assets, property or business (including shares
of the Common Stock) is or may be subject or (iii) any
statute, judgment, decree, order, rule or regulation
applicable to the Company of any government, arbitrator,
court, regulatory body or administrative agency or other
governmental agency or body, domestic or foreign, having
jurisdiction over the Company or any of its activities or
properties.
(f) The financial statements and the related notes
and schedules thereto included in the Final Memorandum (or,
if the Final Memorandum is not in existence, the most
recent Preliminary Memorandum) fairly present the financial
condition, results of operations, stockholders' equity and
cash flows of the Company at the dates and for the periods
specified therein. Such financial statements and the
related notes and schedules thereto have been prepared in
accordance with generally accepted accounting principles
consistently applied throughout the periods involved
(except as otherwise noted therein) and such financial
statements as are audited have been examined by KPMG Peat
Marwick LLP, who are independent public accountants within
the meaning of the Act and the Rules and Regulations, as
indicated in their reports filed therewith. The selected
financial information and operating data set forth under
the captions "Summary Financial and Operating Data" and
"Selected Financial and Operating Data" in the Final
Memorandum (or, if the Final Memorandum is not in
existence, the Preliminary Memorandum) have been prepared
on a basis consistent with the financial statements of the
Company.
(g) The Company has filed all necessary federal,
state and local income, franchise and other material tax
returns and has paid all taxes shown as due thereunder, and
the Company has no knowledge of any tax deficiency which
might be assessed against the Company which, if so
assessed, may have a Material Adverse Effect.
(h) The Company maintains insurance of the types and
in amounts which it reasonably believes to be adequate for
its business in such amounts and with such deductibles as
is customary for companies in the same or similar business,
all of which insurance is in full force and effect.
(i) Except as disclosed in the Final Memorandum (or,
if the Final Memorandum is not in existence, the most
recent Preliminary Memorandum), there is no pending action,
suit, proceeding or investigation or, to the Company's best
knowledge, threatened action, suit, proceeding or
investigation before or by any court, regulatory body or
administrative agency or any other governmental agency or
body, domestic or foreign, which (i) questions the validity
of the capital stock of the Company or this Agreement or of
any action taken or to be taken by the Company pursuant to
or in connection with this Agreement or (ii) may have a
Material Adverse Effect.
(j) The Company has full legal right, power and
authority to enter into this Agreement, the Indenture, the
Share Repurchase Agreement (which is referred to as the
"Agreement" in the most recent Preliminary Memorandum and
the obligations of the Company under which being subject to
the approval of its Board of Directors), and the
Registration Rights Agreement and to consummate the
transactions provided for herein and therein and perform
its obligations thereunder. Each of this Agreement and the
Registration Rights Agreement has been or at the Closing
Date will have been duly authorized, executed and delivered
by the Company and assuming each is a binding agreement of
the other party or parties thereto, constitutes a legal,
valid and binding agreement of the Company enforceable
against the Company in accordance with its terms (except as
such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
laws of general application relating to or affecting the
enforcement of creditors' rights and the application of
equitable principles relating to the availability of
remedies and except as rights to indemnity or contribution
may be limited by federal or state securities laws and the
public policy underlying such laws), and, subject to the
approval of the Company's Board of Directors in the case of
the Share Repurchase Agreement, none of the Company's
execution or delivery of this Agreement, the Indenture, the
Share Repurchase Agreement or the Registration Rights
Agreement, its performance hereunder or thereunder, its
consummation of the transactions contemplated herein or
therein, its application of the net proceeds of the
Offering in the manner set forth under the caption "Use of
Proceeds" or the conduct of its business as described in
the Final Memorandum (or, if the Final Memorandum is not in
existence, the most recent Preliminary Memorandum),
conflicts or will conflict with or results or will result
in any breach or violation of any of the terms or
provisions of, or constitutes or will constitute a default
under, causes or will cause (or permits or will permit) the
maturation or acceleration of any liability or obligation
or the termination of any right under, or result in the
creation or imposition of any lien, charge, or encumbrance
upon, any property or assets of the Company pursuant to the
terms of (i) the certificate of incorporation or by-laws of
the Company, (ii) any indenture, mortgage, deed of trust,
voting trust agreement, stockholders' agreement, note
agreement or other agreement or instrument to which the
Company is a party or by which it may be bound or to which
any of its assets, property or business (including shares
of the Common Stock) is or may be subject (other than the
MHS Registration Rights), or (iii) any statute, judgment,
decree, order, rule or regulation applicable to the Company
of any government, arbitrator, court, regulatory body or
administrative agency or other governmental agency or body,
domestic or foreign, having jurisdiction over the Company
or any of its activities or properties. The descriptions
of the Securities, the Indenture, the Share Repurchase
Agreement and Registration Rights Agreement set forth in
the Final Memorandum (or, if the Final Memorandum is not in
existence, the most recent Preliminary Memorandum) are
accurate and fairly describe such agreements in all
material respects. The form of the Indenture meets the
requirements for qualification under the Trust Indenture
Act of 1939 (the "TIA").
(k) All material leases, contracts and agreements to
which the Company is a party or by which it is or may be
bound or to which any of its assets, properties or
businesses (including shares of the Common Stock) is or may
be subject have been duly and validly authorized, executed
and delivered by the Company and constitute the legal,
valid and binding agreements of the Company enforceable
against it in accordance with their respective terms with
only such exceptions as would not have a Material Adverse
Effect (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other
similar laws relating to enforcement of creditors' rights
generally, and general equitable principles relating to the
availability of remedies, and except as rights to indemnity
or contribution may be limited by federal or state
securities laws and the public policy underlying such laws)
and, to the knowledge of the Company, are valid and
enforceable against the other party or parties thereto.
The descriptions of such leases, contracts and agreements
set forth in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Preliminary
Memorandum) are accurate and fairly describe such
agreements in all material respects.
(l) Subsequent to the most recent respective dates as
of which information is given in the Final Memorandum (or,
if the Final Memorandum is not in existence, the
Preliminary Memorandum) and except as expressly
contemplated therein, the Company has not incurred, other
than in the ordinary course of its business, any material
liabilities or obligations, direct or contingent, purchased
any of its outstanding capital stock, paid or declared any
dividends or other distributions on its capital stock or
entered into any material transactions not in the ordinary
course of business, and there has been no material change
in capital stock or debt or any material adverse change in
the business, properties, assets, net worth, condition
(financial or other), or results of operations or prospects
of the Company. The Company (and the manner in which it
conducts its business) is not in breach or violation of, or
in default under, any term or provision of (i) its
certificate of incorporation or bylaws, (ii) any indenture,
mortgage, deed of trust, voting trust agreement,
stockholders' agreement, note agreement or other material
agreement or instrument to which it is a party or by which
it is or may be bound or to which any of its property is or
may be subject, or any indebtedness, the effect of which
breach or default singly or in the aggregate may have a
Material Adverse Effect (provided that on and after the
Closing Date the Company may not request a borrowing of a
revolving credit advance under the Credit Agreement dated
December 7, 1993, between BNY Financial Corporation and the
Company (as amended through October 1996, the "Credit
Agreement") unless a waiver of an event of default under
the Credit Agreement is first obtained) or (iii) any
statute, judgment, decree, order, rule or regulation
applicable to the Company or of any arbitrator, court,
regulatory body, administrative agency or any other
governmental agency or body, domestic or foreign, having
jurisdiction over the Company or any of its activities or
properties and the effect of which breach or default singly
or in the aggregate may have a Material Adverse Effect.
(m) No labor disturbance by the employees of the
Company exists or is imminent which may have a Material
Adverse Effect.
(n) Since its inception, the Company has not incurred
any material liability arising under or as a result of the
application of the provisions of the Act.
(o) No consent, approval, authorization or order of
or filing with any court, regulatory body, administrative
agency or any other governmental agency or body, domestic
or foreign, is required for the performance of this
Agreement or the consummation of the transactions
contemplated hereby, except such as may be required under
state securities or Blue Sky laws in connection with the
Initial Purchasers' purchase and distribution of the
Securities.
(p) Other than the MHS Registration Rights, there are
no contracts, agreements or understandings between the
Company and any person granting such person the right to
require the Company to file a registration statement under
the Act with respect to any securities of the Company owned
or to be owned by such person or to require the Company to
include such securities under the Registration Statement
that have not been waived with respect to the Registration
Statement.
(q) Neither the Company nor any of its officers,
directors or affiliates (within the meaning of the Rules
and Regulations) has taken, directly or indirectly, any
action designed to stabilize or manipulate the price of any
security of the Company, or which has constituted or which
might in the future reasonably be expected to cause or
result in stabilization or manipulation of the price of any
security of the Company, to facilitate the sale or resale
of the Securities or otherwise.
(r) The Company has good and marketable title to, or
valid and enforceable leasehold interests in, all
properties and assets owned or leased by it, free and clear
of all liens, encumbrances, security interests, claims,
restrictions, equities, claims and defects, except (A) such
as are described in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Preliminary
Memorandum), or such as do not materially adversely affect
the value of any of such properties or assets taken as a
whole and do not materially interfere with the use made and
proposed to be made of any of such properties or assets,
and (B) liens for taxes not yet due and payable as to which
appropriate reserves have been established and reflected in
the financial statements included in the Final Memorandum
(or, if the Final Memorandum is not in existence, the most
recent Preliminary Memorandum). The Company owns or leases
all such properties as are necessary to its operations as
now conducted, and as proposed to be conducted as set forth
in the Final Memorandum (or, if the Final Memorandum is not
in existence, the most recent Preliminary Memorandum); and
the properties and business of the Company conform in all
material respects to the descriptions thereof contained in
the Final Memorandum (or, if the Final Memorandum is not in
existence, the most recent Preliminary Memorandum). All
the material leases and subleases of the Company, and under
which the Company holds properties or assets as lessee or
sublessee, constitute valid leasehold interests of the
Company free and clear of any lien, encumbrance, security
interest, restriction, equity, claim or defect, are in full
force and effect, and the Company is in not default in
respect of any of the material terms or provisions of any
such material leases or subleases, and the Company does not
have notice of any claim which has been asserted by anyone
adverse to the Company's rights as lessee or sublessee
under either the material lease or sublease, or affecting
or questioning the Company's right to the continued
possession of the leased or subleased premises under any
such material lease or sublease, which may have a Material
Adverse Effect.
(s) The Company has not violated any applicable
environmental, safety, health or similar law applicable to
the business of the Company, nor any federal or state law
relating to discrimination in the hiring, promotion, or pay
of employees, nor any applicable federal or state wages and
hours law, nor any provisions of ERISA or the rules and
regulations promulgated thereunder, the consequences of
which violation may have a Material Adverse Effect.
(t) The Company holds all franchises, licenses,
permits, approvals, certificates and other authorizations
from federal, state and other governmental or regulatory
authorities necessary to the ownership, leasing and
operation of its properties or required for the present
conduct of its business, and such franchises, licenses,
permits, approvals, certificates and other governmental
authorizations are in full force and effect and the Company
is in compliance therewith in all material respects except
where the failure so to obtain, maintain or comply with
would not have a Material Adverse Effect.
(u) No securities of the Company are of the same
class (within the meaning of Rule 144A) as the Securities
and 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. The Company has
not issued any securities of the same class as the
Securities within the six-month period immediately prior to
the date hereof.
(v) Neither the consummation of the transactions
contemplated by this Agreement nor the sale, issuance,
execution or delivery of the Securities will violate
Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
(w) None of the Company or any of its affiliates
(within the meaning of the Rules and Regulations) has
directly, or through any agent, (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect
of, any "security" (as defined in the Act) which is or
could be integrated with the sale of the Securities in a
manner that would require the registration of the
Securities under the Act or (ii) engaged in any form of
general solicitation or general advertising (as those terms
are used in Regulation D under the Act) in connection with
the offering of the Securities or in any manner involving a
public offering within the meaning of Section 4(2) of the
Act. Assuming the accuracy of the representations and
warranties of the Initial Purchasers in Section 8 hereof,
it is not necessary in connection with the offer, sale and
delivery of the Securities to the Initial Purchasers in the
manner contemplated by this Agreement to register any of
the Securities under the Act or to qualify the Indenture
under the TIA.
(x) The Final Memorandum (or if the Final Memorandum
is not in existence, the most recent Preliminary
Memorandum) contains all the information specified in Rule
144A.
(y) The Company is a reporting issuer within the
meaning of Regulation S.
3. Purchase, Sale and Delivery of the Securities. On the
basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to sell to each
Initial Purchaser and each Initial Purchaser, severally and not
jointly, agrees to purchase from the Company, at a purchase
price of 97% of the principal amount thereof, the aggregate
principal amount of Firm Securities set forth opposite the name
of such Initial Purchaser in Schedule I hereto.
Delivery of, and payment of the purchase price for, the
Firm Securities shall be made against payment of the purchase
price, in accordance with the next paragraph, at the offices of
Xxxxxx Xxxx LLC at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or
such other location as shall be agreed upon by the Company and
the Initial Purchasers. Such delivery and payment shall be made
at 10:00 A.M., New York City time, on August 26, 1997 or at such
other time and date as shall be agreed upon by the Initial
Purchasers and the Company. The time and date of such delivery
and payment are herein called the "Closing Date."
One or more of the Securities in definitive form,
registered in the name of Cede & Co., as nominee of The
Depository Trust Company ("DTC"), having an aggregate principal
amount corresponding to (i) the aggregate amount of the
Securities sold pursuant to resales to QIBs (collectively, the
"Rule 144A Global Security") and (ii) the aggregate principal
amount of the Securities sold pursuant to Regulation S (the
"Regulation S Global Security"), and Securities in definitive
form in the aggregate principal amount of the Securities sold
pursuant to resales to Accredited Investors (the "Accredited
Investor Securities"), registered in the respective names of
such Accredited Investors, shall be delivered by the Company to
the Initial Purchasers (or as the Initial Purchasers direct),
against payment by the Initial Purchasers of the purchase price
therefor, by wire transfer of immediately available funds to the
Company's account, provided that the Company shall give at least
two business days' prior written notice to the Initial
Purchasers of the information required to effect such wire
transfers. The Rule 144A Global Security, the Regulation S
Global Security and Accredited Investor Securities shall be made
available to the Initial Purchasers for inspection not later
than 9:30 A.M. on the business day immediately preceding the
Closing Date.
4. The Offering. The Initial Purchasers propose to
consummate the Offering at the price, interest rate and upon the
terms set forth in the Final Memorandum, as soon as practicable
after this Agreement is entered into and as in the judgment of
the Initial Purchasers is advisable.
5. Covenants of the Company.
The Company covenants and agrees with each of the
Initial Purchasers that:
(a) The Company consents to the use of the Final
Memorandum and the Preliminary Memorandum by the Initial
Purchasers in connection with the Offering or resale of the
Securities. The Company will not amend or supplement the
Preliminary Memorandum or the Final Memorandum without
advising the Initial Purchasers, furnishing them a copy of
a reasonable period of time prior to such amendment or
supplement and obtaining the consent of the Initial
Purchasers. The Company will promptly, upon the
reasonable request of the Initial Purchasers or counsel for
the Initial Purchasers, make any amendments or supplements
to the Preliminary Memorandum or the Final Memorandum that
may be necessary or advisable in connection with the resale
of the Securities by the Initial Purchasers. If, at any
time prior to the completion of the distribution by the
Initial Purchasers of the Securities, any event occurs or
information becomes known as a result of which the Final
Memorandum as then amended or supplemented would include
any untrue statement of a material fact, or omit to state a
material fact necessary to make the statements therein, in
the light of the circumstances under which they were made,
not misleading, or if for any other reason it is necessary
at any time to amend or supplement the Final Memorandum to
comply with applicable law, the Company will promptly
notify the Initial Purchasers and will prepare, at the
expense of the Company, an amendment or supplement to the
Final Memorandum reasonably satisfactory to counsel for the
Initial Purchasers, that corrects such statement or
omission or effects such compliance.
(b) The Company will (i) use its best efforts to
arrange for the qualification of the Securities for offer
and sale under the state securities or blue sky laws of
such jurisdictions as the Initial Purchasers may designate,
(ii) continue such qualifications in effect for as long as
may be necessary to complete the distribution of the
Securities, and (iii) make such applications, file such
documents and furnish such information as may be required
for the purposes set forth in clauses (i) and (ii);
provided, however, that the Company shall not be required
to qualify as a foreign corporation or file a general or
unlimited consent to service of process in any such
jurisdiction. The Company, at or prior to the purchase of
the Securities by the Initial Purchasers on the Closing
Date, will obtain the approval of the NASD to have the
Conversion Shares quoted on the Nasdaq National Stock
Market ("Nasdaq") and designated for trading on the PORTAL
Market; the Company will also arrange to have the
Securities and Conversion Shares eligible for clearance and
settlement through The Depository Trust Company ("DTC").
(c) The Company will maintain a Transfer Agent
and, if necessary under the jurisdiction of incorporation
of the Company, a Registrar (which may be the same entity
as the Transfer Agent) for its Common Stock.
(d) The Company will furnish, without charge, to
the Initial Purchasers or on the Initial Purchasers' order,
at such place as the Initial Purchasers may designate,
copies of the Preliminary Memorandum and the Final
Memorandum, and all amendments and supplements thereto, in
each case as soon as available and in such quantities as
the Initial Purchasers may reasonably request.
(e) None of the Company nor any of its officers
or directors, nor affiliates of any of them (within the
meaning of the Rules and Regulations) will (i) take,
directly or indirectly, any action designed to, or which
might in the future reasonably be expected to cause or
result in, stabilization or manipulation of the price of
any securities of the Company, (ii) sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of
any "security" (as defined in the Act) which could be
integrated with the sale of the Securities in a manner
which would require the registration under the Act of the
Securities or (iii) engage in any form of general
solicitation or general advertising (as those terms are
used in Regulation D under the Act) in connection with the
Offering or in any manner involving a public offering
within the meaning of Section 4(2).
(f) The Company will apply the net proceeds of
the offering received by it in the manner set forth under
the caption "Use of Proceeds" in the Final Memorandum.
(g) The Company will not, directly or
indirectly, without the prior written consent of the
Initial Purchasers, issue, offer, sell, grant any option to
purchase or otherwise dispose (or announce any issuance,
offer, sale, grant of any option to purchase or other
disposition) of any shares of Common Stock or any
securities convertible into, or exchangeable or exercisable
for, shares of Common Stock for a period of 120 days after
the date hereof, except pursuant to this Agreement except
as contemplated by the Final Memorandum.
(h) For so long as any of the Securities remain
outstanding, the Company will (i) furnish to the Initial
Purchasers copies of all reports and other communications
(financial or otherwise) furnished by the Company to the
Trustee or to the holders of the Securities and, as soon as
available, copies of any reports or financial statements
furnished to or filed by the Company with the Commission or
any national securities exchange on which any class of
securities of the Company may be listed and (ii) make
available at its expense, upon request, to any holder of
such Securities and any prospective purchasers thereof the
information specified in Rule 144A(d)(4) under the Act,
unless the Company is then subject to Section 13 or 15(d)
of the Exchange Act.
(i) Prior to the Closing Date, the Company will
furnish to the Initial Purchasers, as soon as they have
been prepared, a copy of any unaudited interim financial
statements of the Company for any period subsequent to the
period covered by the most recent financial statements
appearing in the Final Memorandum.
6. Expenses.
(a) Regardless of whether the transactions
contemplated in this Agreement are consummated, and regardless
of whether for any reason this Agreement is terminated, the
Company will pay, and hereby agrees to indemnify each Initial
Purchaser against, all fees and expenses incident to the
performance of the obligations of the Company under this
Agreement, including, but not limited to, (i) fees and expenses
of accountants and counsel for the Company, (ii) all costs and
expenses incurred in connection with the preparation,
duplication, printing, filing, delivery and shipping of copies
of the Preliminary Memorandum and the Final Memorandum
(including postage costs related to the delivery by the Initial
Purchasers of any Preliminary Memorandum or Final Memorandum),
this Agreement, the Indenture, the Securities and all other
documents in connection with the transactions contemplated
herein, including the cost of all copies thereof, (iii) fees and
expenses relating to qualification of the Securities and the
Conversion Shares under state securities or blue sky laws,
including the cost of preparing and mailing the preliminary and
final blue sky memoranda and filing fees and disbursements and
fees of counsel and other related expenses, if any, in
connection therewith, (iv) filing fees of the NASD relating to
the Securities, (v) any fees and expenses in connection with the
designation of the Securities and the Conversion Shares on the
PORTAL Market, the eligibility of the Securities for clearance
through DTC and the quotation of the Conversion Shares on
Nasdaq, (vi) costs and expenses incident to the preparation,
issuance and delivery to the Initial Purchasers of any
certificates evidencing the Securities, including transfer
agent's and registrar's fees and any applicable transfer taxes
incurred in connection therewith, (vii) costs and expenses
incident to any meetings with prospective purchasers of the
Securities (other than as shall have been specifically approved
by the Initial Purchasers to be paid for by the Initial
Purchasers), (viii) costs and expenses of advertising relating
to the Offering (other than as shall have been specifically
approved by the Initial Purchasers to be paid for by the Initial
Purchasers) and (ix) fees and expenses of the Trustee including
fees and expenses of counsel.
(b) If the purchase of the Securities as herein
contemplated is not consummated for any reason other than (i)
the Initial Purchasers' default under this Agreement, or (ii)
the termination of this Agreement pursuant to any of clauses
(ii) to (v) (A) inclusive of Section 12(b), the Company shall
reimburse the Initial Purchasers for their out-of-pocket
expenses (including reasonable counsel fees and disbursements)
in connection with any investigation made by them, and any
preparation made by them in respect of marketing of the
Securities or in contemplation of the performance by them of
their obligations hereunder.
7. Conditions of the Initial Purchasers' Obligations.
The obligation of each Initial Purchaser to purchase and pay for
the Securities set forth opposite the name of such Initial
Purchaser in Schedule I is subject to the continuing accuracy of
the representations and warranties of the Company herein as of
the date hereof and as of the Closing Date as if they had been
made on and as of the Closing Date; the accuracy on and as of
the Closing Date of the statements of officers of the Company
made pursuant to the provisions hereof; the performance by the
Company on and as of the Closing Date of its covenants and
agreements hereunder; and the following additional conditions:
(a) No stop order or similar order preventing or
suspending the use of the Preliminary Memorandum or the Final
Memorandum shall have been issued and no proceedings for that
purpose shall have been instituted or threatened or, to the
knowledge of the Company or the Initial Purchasers, shall be
contemplated by any securities or other governmental authority
in any jurisdiction (including, without limitation, the
Commission); no order asserting that any of the transactions
contemplated by this Agreement, Preliminary Memorandum or the
Final Memorandum are subject to the registration requirements of
the Act shall have been issued; and no securities or other
governmental authority (including, without limitation, the
Commission) shall have requested any additional information to
be included in the Preliminary Memorandum or Final Memorandum or
otherwise
(b) The Initial Purchasers shall not have advised the
Company that the Final Memorandum contains an untrue statement
of fact which, in the Initial Purchasers' opinion, is material,
or omits to state a fact which, in the Initial Purchasers'
opinion, is material and is required to be stated therein or is
necessary to make the statements therein in light of the
circumstances under which they were made not misleading.
(c) On or prior to the Closing Date, the Initial
Purchasers shall have received from counsel to the Initial
Purchasers, such opinion or opinions with respect to the
issuance and sale of the Firm Securities, the Preliminary
Memorandum and the Final Memorandum and such other related
matters as the Initial Purchasers reasonably may request and
such counsel shall have received such documents and other
information as they request to enable them to pass upon such
matters.
(d) On the Closing Date the Initial Purchasers shall
have received the opinion, dated the Closing Date, of Hunton &
Xxxxxxxx, counsel to the Company ("Company Counsel"), to the
effect set forth below:
(i) The Company is a duly incorporated and
validly existing corporation in good standing under the
laws of its jurisdiction of incorporation with full power
and authority (corporate and other) to own or lease its
properties and to conduct its business as described in the
Final Memorandum;
(ii) The Company has the duly authorized and
validly outstanding capitalization set forth under the
caption "Capitalization" in the Final Memorandum and will
have the adjusted capitalization set forth therein on the
Closing Date and on the Option Closing Date (as the case
may be), based on the assumptions set forth therein, except
as otherwise contemplated in the Final Memorandum. The
securities of the Company conform to the descriptions
thereof contained in the Final Memorandum. The outstanding
shares of Common Stock have been duly authorized and
validly issued by the Company and are fully paid and
nonassessable. Except as created hereby or referred to in
the Final Memorandum, there are no outstanding options,
warrants, rights or other arrangements requiring the
Company at any time to issue any capital stock. No holders
of outstanding shares of capital stock of the Company are
entitled as such to any preemptive or other rights to
subscribe for any of the Securities or Conversion Shares
and neither the filing of the Registration Statement nor
the Offering gives rise to any rights, other than those
which have been waived or satisfied and the MHS
Registration Rights, for or relating to, the registration
of any securities of the Company. The Company has full
legal right, power and authority to issue the Securities
and perform its obligations thereunder. The Securities
have been duly authorized; on the Closing Date or the
Option Closing Date (as the case may be), after payment
therefor in accordance with the terms of this Agreement and
when the Securities have been executed and delivered by the
Company and authenticated by the Trustee in accordance with
the provisions of the Indenture, (a) the Securities will
have been duly and validly executed, authenticated, issued
and delivered, will not have been issued in violation of or
subject to any preemptive or other similar right and will
(x) constitute valid and legally binding obligations of the
Company enforceable against the Company in accordance with
their terms and entitled to the benefits provided in the
Indenture and the Registration Rights Agreement, subject,
as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general
principles of equity, and (y) be convertible into the
Conversion Shares in accordance with the terms of the
Indenture, and (b) good and marketable title to the
Securities will pass to the Initial Purchasers on the
Closing Date or the Option Closing Date (as the case may
be) free and clear of any lien, encumbrance, security
interest, claim or other restriction whatsoever, provided
that the Initial Purchasers purchase the Securities in good
faith and without notice of any adverse claims. The
Conversion Shares have been duly and validly authorized and
reserved for issuance upon conversion of the Securities
and, when issued and delivered upon such conversion, will
be duly and validly issued and outstanding, fully paid and
nonassessable and will not have been issued in violation of
or subject to any preemptive or other similar rights.
(iii) The Company has full legal right, power
and authority to enter into this Agreement, the Indenture,
the Share Repurchase Agreement (the obligations of the Company under which being
subject to the approval of its Board of Directors), the Registration Rights
Agreement and each Security and to consummate the transactions provided for
herein and therein and perform its obligations hereunder and thereunder; each of
this Agreement, the Indenture, the Registration Rights Agreement and each
Security has been duly authorized, executed and delivered by the Company; and
each of this Agreement, the Indenture, the Share Repurchase Agreement, the
Registration Rights Agreement and each Security assuming due authorization,
execution and delivery by each other party or parties hereto or thereto, and in
the case of the Securities, authentication by the Trustee in accordance with the
Indenture, is or will be upon issuance a valid and binding agreement of the
Company, enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws now
or hereafter in effect relating to or affecting creditors' rights generally or
by general principles of equity relating to the availability of remedies and
except as rights to indemnity and contribution may be limited by federal or
state securities laws or the public policy underlying such laws, and the
Securities are entitled to the benefits of the Indenture. None of the Company's
execution or delivery of this Agreement, the Indenture, the Registration Rights
Agreement and each Security, its performance hereof or thereof, its consummation
of the transactions contemplated herein or therein or its application of the net
proceeds of the Offering in the manner set forth under the caption "Use of
Proceeds", conflicts or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon, any property or assets of the Company pursuant to the terms of
(A) the certificate of incorporation or by-laws of the Company; (B) the terms of
any indenture, mortgage, deed of trust, voting trust agreement, stockholder's
agreement, note agreement or other agreement or instrument known to such counsel
after reasonable investigation to which the Company is a party or by which it is
or may be bound or to which any of its assets, properties or business may be
subject; or (C) any statute, rule or regulation of any regulatory body or
administrative agency or other governmental agency or body, domestic or foreign,
having jurisdiction over the Company or any of its activities or properties; or
any judgment, decree or order, known to such counsel after reasonable
investigation, of any government, arbitrator, court, regulatory body or
administrative agency or other governmental agency or body, domestic or foreign,
having such jurisdiction; and no consent, approval, authorization or order of
any court, regulatory body or administrative
agency or other governmental agency or body, domestic or foreign, has been or is
required for the Company's performance of this Agreement, the Indenture, the
Registration Rights Agreement or the Securities or the consummation of the
transactions contemplated hereby or thereby, except such as have been obtained
under state securities or blue sky laws in connection with the purchase and
subsequent resale or placement distribution by the Initial Purchasers of the
Securities;
(iv) The Indenture is in a form to be qualified under the TIA and
the Securities are in a form contemplated by the Indenture;
(v) The Securities delivered on such Closing Date are convertible
into the shares of Common Stock of the Company in accordance with the terms of
the Indenture; the Conversion Shares have been duly authorized and reserved for
issuance upon such conversion and, when issued upon such conversion, will be
validly issued, fully paid and nonassessable;
(vi) The descriptions of the Indenture, the Share Repurchase
Agreement and the Registration Rights Agreement set forth in the Final
Memorandum are accurate and fairly describe such agreements in all material
respects;
(vii) The descriptions of the Securities and the Conversion
Shares in the Final Memorandum, when such securities are issued and, with
respect to the Securities, authenticated by the Trustee in accordance with the
Indenture, are accurate and fairly describe such securities in all material
respects;
(viii) To the best of such counsel's knowledge, the conduct of
the business of the Company is not in violation of any federal, state or local
statute, administrative regulation or other law, which violation is likely to
have a Material Adverse Effect; and the Company has obtained all licenses,
permits, franchises, certificates and other authorizations from state, federal
and other regulatory authorities as are necessary or required for the ownership,
leasing and operation of its properties and the conduct of its business as
presently conducted and as contemplated in the Final Memorandum;
(ix) No registration under the Act of the Securities is required
in connection with the sale of the Securities to the Initial Purchasers as
contemplated by this Agreement and the Final Memorandum or in connection with
the initial resale of the Securities by the Initial Purchasers in accordance
with Section 8 of this Agreement, and prior to the effectiveness of the
Registration Statement, the indenture is not required to be qualified
under the TIA, in each case assuming (i) (A) that the purchasers who buy such
Securities in the initial resale thereof are QIBs or Accredited Investors or (B)
that the offer or sale of the Securities is made in an offshore transaction as
defined in Regulation S, (ii) the accuracy of the Initial Purchasers'
representations in Section 8 and those of the Company contained in this
Agreement regarding the absence of a general solicitation in connection with the
sale of such Securities to the Initial Purchasers and the initial resale thereof
and (iii) the due performance by the Initial Purchasers of the agreements set
forth in Section 8 hereof;
(x) No securities of the Company are of the same class (within
the meaning of Rule 144A) as the Securities and 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;
(xi) Neither the consummation of the transactions contemplated by
this Agreement nor the sale, issuance, execution or delivery of the Securities
will violate Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System; and
(xii) No stop order or similar order preventing or suspending the
use of the Final Memorandum has been issued; no proceedings for that purpose are
pending, or, to the knowledge of such counsel, contemplated by any securities or
other governmental authority in any jurisdiction (including, without limitation,
the Commission); no order asserting that any of the transactions contemplated by
the Initial Purchase Agreement or the Final Memorandum are subject to the
registration requirements of the Act has been issued; and no securities or other
governmental authority (including, without limitation, the Commission) has
requested any additional information to be included in the Final Memorandum or
otherwise.
In addition, such counsel shall state that in the course of the
preparation of the Preliminary Memorandum and Final Memorandum, such counsel has
participated in conferences with officers and directors of the Company and with
the Company's independent public accountants, at which conferences such counsel
made inquiries of such officers, directors and accountants and discussed the
contents of the Preliminary Memorandum and Final Memorandum and (without taking
any further action to verify independently the statements made in the
Preliminary Memorandum and Final Memorandum and, except as stated in the
foregoing opinion, without assuming responsibility for the accuracy,
completeness or fairness of such statements) nothing has come to such counsel's
attention that causes such counsel
to believe that the Final Memorandum as of the date thereof or as of the
Closing Date contained or contains any untrue statement of a material fact
or omitted or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading (it being
understood that such counsel need not express any opinion with respect to
the financial statements, schedules and other financial data included in
the Preliminary Memorandum and Final Memorandum).
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials and, as to matters involving the
application of laws as to specified regulatory matters (to the extent
satisfactory in form and scope to counsel for the Initial Purchasers) such
counsel may rely upon or substitute the opinion of special regulatory counsel
reasonably satisfactory to the Initial Purchasers. The foregoing opinion shall
also state that the Initial Purchasers are justified in relying upon such
opinion, and copies of such opinions shall be delivered to the Initial
Purchasers and counsel for the Initial Purchasers.
(e) On or prior to the Closing Date, counsel to the Initial Purchasers
shall have been furnished such documents, certificates and opinions as they may
reasonably require in order to evidence the accuracy, completeness or
satisfaction of any of the representations or warranties of the Company, or
conditions herein contained.
(f) At the time that this Agreement is executed by the Company the
Initial Purchasers shall have received from KPMG Peat Marwick LLP a letter as of
the date this Agreement is executed by the Company in form and substance
satisfactory to you (the "Original Letter"), and on the Closing Date the Initial
Purchasers shall have received from such firm a letter dated the Closing Date
stating that, as of a specified date not earlier than five (5) days prior to the
Closing Date, nothing has come to the attention of such firm to suggest that the
statements made in the Original Letter are not true and correct.
(g) On the Closing Date, the Initial Purchasers shall have received a
certificate, dated the Closing Date, of the principal executive officer and the
principal financial or accounting officer of the Company to the effect that each
of such persons has carefully examined the Preliminary Memorandum and the Final
Memorandum and this Agreement, and that:
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date,
and the Company has complied with all agreements and covenants and
satisfied all conditions contained in this Agreement on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) No stop order or similar order preventing or suspending the
use of the Final Memorandum has been issued; no proceedings for that
purpose are pending, or, to the knowledge of the Company, contemplated by
any securities or other governmental authority in any jurisdiction
(including, without limitation, the Commission); no order asserting that
any of the transactions contemplated by the Initial Purchase Agreement or
the Final Memorandum are subject to the registration requirements of the
Act has been issued; and no securities or other governmental authority
(including, without limitation, the Commission) has requested any
additional information to be included in the Final Memorandum or otherwise;
(iii) The Preliminary Memorandum as of the date thereof and the
Final Memorandum did not and do not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; and
(iv) Subsequent to the respective dates as of which information
is given in the Final Memorandum up to and including the Closing Date,
other than as contemplated by the Final Memorandum, the Company has not
incurred, other than in the ordinary course of its business, any material
liabilities or obligations, direct or contingent; the Company has not
purchased any of its outstanding capital stock or paid or declared any
dividends or other distributions on its capital stock; the Company has not
entered into any transactions not in the ordinary course of business; and
there has not been any change in the capital stock or consolidated long-
term debt or any increase in the consolidated short-term borrowings (other
than any increase in short-term borrowings in the ordinary course of
business) of the Company or any material adverse change to the business
properties, assets, net worth, condition (financial or other), results of
operations or prospects of the Company; the Company has not sustained any
material loss or damage to its property or assets, whether or not insured;
there is no litigation which is pending or threatened against the Company.
(h) Subsequent to the respective dates as of which information is
given in the Final Memorandum up to and including the Closing Date there has not
been (i) any change or decrease specified in the letter or letters referred to
in paragraph (e) of this Section 7 or (ii) any change, or any development
involving a prospective change, in the business or properties of the Company
which change or decrease in the case of clause (i) or change or development in
the case of clause (ii) makes it impractical or inadvisable in the Initial
Purchasers' judgment to proceed with the Offering or the delivery of the
Securities
as contemplated by the Final Memorandum.
(i) No order suspending the sale of the Securities in any jurisdiction
designated by you pursuant to Section 5(a)(iii)(A) hereof has been issued on or
prior to the Closing Date and no proceedings for that purpose have been
instituted or, to your knowledge or that of the Company, have been or are
contemplated.
(j) The Initial Purchasers shall have received from WorldCorp., Inc.
and each person who is an executive officer or director of the Company, with the
exception of Dato Wan Xxxxx Xxxxxxx and Xxx Xxxxx Yew, an agreement to the
effect that, except as contemplated by the Final Memorandum, such person will
not, directly or indirectly, without the prior written consent of the Initial
Purchasers, offer, sell, grant any option to purchase or otherwise dispose (or
announce any offer, sale, grant of an option to purchase or other disposition)
of any shares of Common Stock or any securities convertible into, or
exchangeable or exercisable for, shares of Common Stock for a period of 120 days
after the date of this Agreement.
(k) The Company shall have furnished the Initial Purchasers with such
further opinions, letters, certificates or documents as you or counsel for the
Initial Purchasers may reasonably request. All opinions, certificates, letters
and documents to be furnished by the Company will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchasers and to counsel for the Initial Purchasers. The Company shall
furnish the Initial Purchasers with conformed copies of such opinions,
certificates, letters and documents in such quantities as you reasonably
request. The certificates delivered under this Section 7 shall constitute
representations, warranties and agreements of the Company, as to all matters set
forth therein as fully and effectively as if such matters had been set forth in
Section 2 of this Agreement.
8. Offering of Securities; Restrictions on Transfer. Each of the Initial
Purchasers represents and warrants (as to itself only) that it is a QIB. Each of
the Initial Purchasers agrees with the Company (as to itself only) that (i) it
has not and will not solicit offers for, or offer or sell, the Securities by any
form of general solicitation or general advertising (as those terms are used in
Regulation D under the Act) or in any manner involving a public offering within
the meaning of Section 4(2); and (ii) it has and will solicit offers for the
Securities only from, and will offer the Securities only to (A) in the case of
offers inside the United States, (x) persons whom the Initial Purchasers
reasonably believe to be QIBs or, if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to the Initial Purchasers that each such
account is a QIB, to whom
notice has been given that such sale or delivery is being made in reliance on
Rule 144A, and, in each case, in transactions under Rule 144A or (y) a limited
number of other institutional investors reasonably believed by the Initial
Purchasers to be Accredited Investors that, prior to their purchase of the
Securities, deliver to the Initial Purchasers a letter containing the
representations and agreements set forth in Annex A to the Final Memorandum and
(B) in the case of offers outside the United States, to persons other than U.S.
persons ("foreign purchasers," which term shall include dealers or other
professional fiduciaries in the United States acting on a discretionary basis
for foreign beneficial owners other than an state or trust); provided, however,
that, in the case of this clause (B), in purchasing such Securities such persons
are deemed to have represented and agreed as provided under the caption "Notice
to Investors" contained in the Final Memorandum.
9. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Initial
Purchaser and each person, if any, who controls such Initial Purchaser within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, against
any and all losses, claims, damages or liabilities, joint or several (and
actions in respect thereof), to which such Initial Purchaser or such controlling
person may become subject, under the Act or other federal or state statutory law
or regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Preliminary Memorandum or the Final Memorandum, or any amendment or supplement
thereto, or any blue sky application or other document executed by the Company
specifically for the purpose of qualifying, or based upon written information
furnished by the Company filed in any state or other jurisdiction in order to
qualify, any or all of the Securities under the securities or blue sky laws
thereof (any such application, document or information being hereinafter called
a "Blue Sky Application"), or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements not misleading and will reimburse, as
incurred, such Initial Purchaser or such controlling persons for any legal or
other expenses incurred by such Initial Purchaser or such controlling persons in
connection with investigating, defending or appearing as a third party witness
in connection with any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage, liability or action arises out of or is based upon
any untrue statement or alleged untrue statement or omission or alleged omission
made in any of such documents in reliance upon and in conformity with
information furnished in writing to the Company by such Initial Purchaser
expressly for use therein, and provided, further, that
such indemnity with respect to any Preliminary Memorandum shall not inure to the
benefit of any Initial Purchaser (or to the benefit of any person controlling
such Initial Purchaser) from whom the person asserting any such loss, claim,
damage, liability or action purchased Securities which are the subject thereof
to the extent that any such loss, claim, damage, liability or action (i) results
from the fact that such Initial Purchaser failed to send or give a copy of the
Final Memorandum to such person at or prior to the confirmation of the sale of
such Securities to such person and (ii) arises out of or is based upon an untrue
statement or omission of a material fact contained in such Preliminary
Memorandum that was corrected in the Final Memorandum (as amended and
supplemented), unless such failure resulted from non-compliance by the Company
with Section 5(a)(viii) hereof.
The indemnity agreement in this paragraph (a) shall be in addition to
any liability which the Company may otherwise have.
(b) Each of the Initial Purchasers agrees severally, but not jointly,
to indemnify and hold harmless the Company, each of its directors and each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act against any and all losses, claims,
damages or liabilities (and actions in respect thereof) to which the Company
director, officer, or controlling person may become subject, under the Act or
other federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Preliminary Memorandum or the Final Memorandum, or in any
Blue Sky Application, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements 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 reliance upon and in conformity with
information furnished in writing by that Initial Purchaser to the Company
expressly for use therein; and will reimburse, as incurred, all legal or other
expenses reasonably incurred by the Company director, officer, controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action. The Company acknowledges that the statements with
respect to the Offering set forth in paragraphs 3, 4, 5, 6, 9, 13 and 14 under
the heading "Plan of Distribution" and the stabilization legend in the
Preliminary Memorandum and the Final Memorandum have been furnished by the
Initial Purchasers to the Company expressly for use therein and constitute the
only information furnished in writing by the Initial Purchasers for inclusion in
the Preliminary Memorandum and the Final Memorandum. The indemnity agreement
contained in this subsection (b) shall be in addition to any liability which
the Initial Purchasers may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
9 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against one or more indemnifying parties
under this Section 9, notify such indemnifying party or parties 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 subsection (a) or (b) of this Section 9 or to the extent
that the indemnifying party was not adversely affected by such omission. In case
any such action is brought against an indemnified party and it notifies an
indemnifying party or parties of the commencement thereof, the indemnifying
party or parties against which a claim is to be made will be entitled to
participate therein and, to the extent that it or they may wish, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party;
provided however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party has
reasonably concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defenses and otherwise
to participate in the defense of such action on behalf of such indemnified party
or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not be
liable to such indemnified party under this Section 9 for any legal or other
expenses (other than the reasonable costs of investigation) subsequently
incurred by such indemnified party in connection with the defense thereof unless
(i) the indemnified party has employed such counsel in connection with the
assumption of such different or additional legal defenses in accordance with the
proviso to the immediately preceding sentence, (ii) the indemnifying party has
not employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action, or (iii) the indemnifying party has authorized in
writing the employment of counsel for the indemnified party at the expense of
the indemnifying party.
(d) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) above in respect of any losses, claims, damages, expenses
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) (i) in such
proportion as is appropriate to reflect the relative benefits received by each
of the contributing party or parties, on the one hand, and the party or parties
to be indemnified, on the other hand, from the Offering or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of each of the
contributing party or parties, on the one hand, and the party or parties to be
indemnified, on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. In any case where the Company is the
contributing party and the Initial Purchasers are the indemnified party, the
relative benefits received by the Company and the Initial Purchasers, on the
other, shall be deemed to be in the same proportion as the total net proceeds
from the Offering (before deducting expenses) bear to the total discounts
received by the Initial Purchasers hereunder. 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 Company or by the Initial
Purchasers, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. 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 paragraph (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
paragraph (d), the Initial Purchasers shall not be required to contribute any
amount in excess of the underwriting discount applicable to the Securities
purchased by the Initial Purchasers hereunder. The Initial Purchasers'
obligations to contribute pursuant to this paragraph (d) are several in
proportion to their respective obligations to purchase Securities, and not
joint. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of this
paragraph (d), (i) each person, if any, who controls an Initial Purchaser within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act shall
have the same rights to contribution as such Initial Purchaser and (ii) each
director of the Company, and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
shall have the same rights to contribution as the Company, subject in each case
to this paragraph (d). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect to which a claim for contribution may be made against another
party or parties under this paragraph (d),
notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any other obligation (x) it or
they may have hereunder or otherwise than under this paragraph (d) or (y) to the
extent that such party or parties were not adversely affected by such omission.
The contribution agreement set forth above shall be in addition to any
liabilities which any indemnifying party may otherwise have.
10. Right to Increase Offering. At anytime during a period of 30 days from
the date of the Final Memorandum, the Initial Purchasers, by no less than two
business days' prior notice to the Company may designate a closing (which may be
concurrent with, and part of, the closing on the Closing Date with respect to
the Firm Securities or may be a second closing held on a date subsequent to the
Closing Date, in either case such date shall be referred to herein as the
"Option Closing Date") at which the Initial Purchasers may purchase all or less
than all of the Additional Securities in accordance with the provisions of this
Section 9 at the purchase price per share to be paid for the Firm Securities. In
no event shall the Option Closing Date be later than 10 business days after
written notice of election to purchase Additional Securities is given.
The Company agrees to sell to the Initial Purchasers on the Option
Closing Date the principal amount of Additional Securities specified in such
notice and the Initial Purchasers agree severally and not jointly, to purchase
such Additional Securities on the Option Closing Date. Such Additional
Securities shall be allocated between Initial Purchasers in the same proportion
as the principal amount of Firm Securities set forth opposite the name of such
Initial Purchaser in Schedule I bears to the total principal amount of Firm
Securities.
No Additional Securities shall be sold or delivered unless the Firm
Securities previously have been, or simultaneously are, sold and delivered. The
right to purchase the Additional Securities or any portion thereof may be
surrendered and terminated at any time upon notice by you to the Company.
Except to the extent modified by this Section 10, all provisions of
this Agreement relating to the transactions contemplated to occur on the Closing
Date for the sale of the Firm Securities shall apply, mutatis mutandis, to the
Option Closing Date for the sale of the Additional Securities.
11. Representations, etc. to Survive Delivery. The respective
representations, warranties, agreements, covenants, indemnities and statements
of, and on behalf of, the Company and its officers, and the Initial Purchasers,
respectively, set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on
behalf of the Initial Purchasers, and will survive delivery of and payment for
the Securities. Any successors to the Initial Purchasers shall be entitled to
the indemnity, contribution and reimbursement agreements contained in this
Agreement.
12. Effective Date and Termination.
(a) This Agreement shall become effective upon execution and delivery
by the parties hereto.
(b) This Agreement (except for the provisions of Sections 6 and 9
hereof) may be terminated by the Initial Purchasers by notice to the Company in
the event that the Company has failed to comply in any respect with any of the
provisions of this Agreement required on its part to be performed at or prior to
the Closing Date or the Option Closing Date, or if any of the representations or
warranties of the Company is not accurate in any respect or if the covenants,
agreements or conditions of, or applicable to, the Company herein contained have
not been complied with in any respect or satisfied within the time specified on
the Closing Date or the Option Closing Date, respectively, or if prior to the
Closing Date or the Option Closing Date:
(i) the Company shall have sustained a loss by strike, fire,
flood, accident or other calamity of such a character as to interfere
materially with the conduct of the business and operations of the Company
and its Subsidiaries taken as a whole regardless of whether or not such
loss was insured;
(ii) trading in the Common Stock shall have been suspended by the
Commission or Nasdaq or trading in securities generally on the New York or
Luxembourg Stock Exchange or on Nasdaq shall have been suspended or a
material limitation on such trading shall have been imposed or minimum or
maximum prices shall have been established on any such exchange or market
system;
(iii) a banking moratorium shall have been declared by New York
or United States authorities;
(iv) there shall have been an outbreak or escalation of
hostilities between the United States and any foreign power or an outbreak
or escalation of any other insurrection or armed conflict involving the
United States; or
(v) there shall have been a material adverse change in (A)
general economic, political or financial conditions or (B) the present or
prospective business or condition (financial or other) of the Company that,
in each case, in the Initial Purchasers' judgment makes it impracticable or
inadvisable to make or consummate the
public offering, sale or delivery of the Securities on the terms and in the
manner contemplated in the Memorandum.
(c) Termination of this Agreement under this Section 12 or Section 13
after the Firm Securities have been purchased by the Initial Purchasers
hereunder shall be applicable only to the Additional Securities. Termination of
this Agreement shall be without liability of any party to any other party other
than as provided in Sections 6 and 9 hereof.
13. Substitution of Initial Purchasers. If one of the Initial Purchasers
shall fail or refuse (otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 7 or 12 hereof) to
purchase and pay for (a) in the case of the Closing Date, the principal amount
of Firm Securities agreed to be purchased by such Initial Purchaser upon tender
to you of such Firm Securities in accordance with the terms hereof or (b) in the
case of the Option Closing Date, the principal amount of Additional Securities
agreed to be purchased by such Initial Purchaser upon tender to you of such
Additional Securities in accordance with the terms hereof, and the principal
amount of such Securities shall not exceed 10% of the Firm Securities or
Additional Securities required to be purchased on the Closing Date or the Option
Closing Date, as the case may be, then, the non-defaulting Initial Purchasers
shall purchase and pay for (in addition to the number of such Securities which
it has severally agreed to purchase hereunder) that proportion of the principal
amount of Securities which the defaulting Initial Purchaser or Initial
Purchasers shall have so failed or refused to purchase on such Closing Date or
Option Closing Date, as the case may be. In such case, you shall have the right
to postpone the Closing Date or the Option Closing Date, as the case may be, to
a date not exceeding seven full business days after the date originally fixed as
such Closing Date or the Option Closing Date, as the case may be, pursuant to
the terms hereof in order that any necessary changes in the Final Memorandum or
any other documents or arrangements may be made.
If one or more of the Initial Purchasers shall fail or refuse (otherwise
than for a reason sufficient to justify the termination of this Agreement under
the provisions of Section 7 or 12 hereof) to purchase and pay for (a) in the
case of the Closing Date, the principal amount of Firm Securities agreed to be
purchased by such Initial Purchaser upon tender to you of such Firm Securities
in accordance with the terms hereof or (b) in the case of the Option Closing
Date, the principal amount of Additional Securities agreed to be purchased by
such Initial Purchaser upon tender to you of such Additional Securities in
accordance with the terms hereof, and the principal amount of such Securities
shall exceed 10% of the Firm Securities or Additional Securities required to be
purchased by all the Initial Purchasers on the Closing Date or the Option
Closing Date, as the case may be, then (unless within 48 hours after
such default arrangements to your satisfaction shall have been made for the
purchase of the defaulted Securities by an Initial Purchaser or other investor)
and subject to the provisions of Section 12(b) hereof, this Agreement will
terminate without liability on the part of any non-defaulting Initial Purchaser
or on the part of the Company except as otherwise provided in Sections 6 and 9
hereof. As used in this Agreement, the term "Initial Purchaser" includes any
person substituted for a Initial Purchaser under this paragraph. Nothing in this
Section 13, and no action taken hereunder, shall relieve any defaulting Initial
Purchaser from liability in respect of any default of such Initial Purchaser
under this Agreement.
14. Notices. All communications hereunder shall be in writing and if sent
to the Initial Purchasers shall be mailed or delivered or telegraphed and
confirmed by letter or telecopied and confirmed by letter to x/x Xxxxxx Xxxx LLC
at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Syndicate Department
or, if sent to the Company, shall be mailed or delivered or telegraphed and
confirmed to the Company at 00000 Xxxx Xxxxxx Xxxx, xxxxx 000, Xxxxxxx, Xxxxxxxx
00000, Attention Xxxx X. Xxxxx.
15. Successors. This Agreement shall inure to the benefit of and be
binding upon the Company and each Initial Purchaser and the Company's, and each
Initial Purchaser's respective successors and legal Initial Purchasers, and
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any provisions herein contained, this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person, except that the representations, warranties, indemnities and
contribution agreements of the Company contained in this Agreement shall also be
for the benefit of any person or persons, if any, who control any Initial
Purchaser within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and except that the Initial Purchasers' indemnity and contribution
agreements shall also be for the benefit of the directors of the Company and any
person or persons, if any, who control the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act. No purchaser of Securities from
the Initial Purchasers will be deemed a successor because of such purchase.
16. Applicable Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the choice of law or conflict of law principles thereof. Each party
hereto consents to the jurisdiction of each court in which any action is
commenced seeking indemnity or contribution pursuant to Section 8 above and
agrees to accept, either directly or through an agent, service of process of
each such court.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
If the foregoing correctly sets forth our understanding, please indicate
the Initial Purchasers' acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
WORLD AIRWAYS, INC.
By:
-----------------------------
Name: Xxxx Xxxxx
Title: Chief Financial Officer
Accepted as of the date first
above written:
XXXXXX XXXX LLC
XXXXXX, READ & CO. INC.
By: Xxxxxx Xxxx LLC
By:
----------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Managing Director
SCHEDULE I
INITIAL PURCHASERS
Initial Purchase Agreement dated August 21, 1997
Principal Amount of Firm
Name Securities to be Purchased
Xxxxxx Xxxx LLC $ 30,000,000
Xxxxxx, Read & Co. Inc. $ 20,000,000
Total $ 50,000,000
