EXHIBIT 4.3
EXECUTION COPY
$196,000,000
AVALON CABLE LLC
AVALON CABLE OF MICHIGAN HOLDINGS, INC.
AVALON CABLE HOLDINGS FINANCE, INC.
11 7/8% Senior Discount Notes due 2008
PURCHASE AGREEMENT
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December 3, 1998
XXXXXX BROTHERS INC.
BARCLAYS CAPITAL INC.
c/x Xxxxxx Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Avalon Cable LLC, a Delaware limited liability company ("Avalon
Holdings"), Avalon Cable of Michigan Holdings, Inc., a Delaware corporation
("Michigan Holdings" and, together with Avalon Holdings, the "Companies"),
Avalon Cable Holdings Finance, Inc., a Delaware corporation ("Finance
Holdings" and, together with the Companies, the "Issuers") propose to issue and
sell to you (the "Initial Purchasers") $110,410,720 in aggregate principal
amount at issuance of their 11 7/8% Senior Discount Notes due 2008 (the "Initial
Notes") to be issued pursuant to the terms of an Indenture (the "Indenture")
among the Issuers and The Bank of New York, as trustee (the "Trustee"), relating
to the Initial Notes. Capitalized terms used but not defined herein shall have
the meanings given to such terms in the Offering Memorandum.
The Initial Notes will be offered and sold to you pursuant to
exemptions from the registration requirements under the Securities Act of 1933,
as amended (the "Securities Act"). The Issuers have prepared a preliminary
offering memorandum, dated November 24, 1998 (the "Preliminary Offering
Memorandum"), and a final offering memorandum (the "Offering Memorandum"), dated
December 3, 1998, relating to the Issuers and the Initial Notes. As described
in the Offering Memorandum, the Issuers will use the net proceeds from the
offering of the Initial Notes to: (i) refinance certain existing indebtedness;
and (ii) pay related fees and expenses (each as more fully described in the
Offering Memorandum).
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Securities Act, the
Initial Notes (and all
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securities issued in exchange therefor or in substitution thereof) shall bear
the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISION OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUERS THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a)
TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES
ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL IF THE ISSUERS SO REQUEST), (2) TO THE ISSUERS OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE,
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS
SET FORTH IN (A) ABOVE."
You have advised the Issuers that you will make offers (the "Exempt
Resales") of the Initial Notes purchased by you hereunder on the terms set forth
in the Offering Memorandum, as amended or supplemented, solely to (i) persons
whom you reasonably believe to be "qualified institutional buyers," as defined
in Rule 144A under the Securities Act ("QIBs"), and (ii) to persons other than
U.S. Persons in offshore transactions meeting the requirements of Rule 903 and
904 of Regulation S ("Regulation S") under the Securities Act (such persons
specified in clauses (i) and (ii) being referred to herein as the "Eligible
Purchasers"). As used herein, the terms "offshore transaction" and "U.S.
person" have the respective meanings given to them in Regulation S. You will
offer the Initial Notes to Eligible Purchasers initially at a price equal to
100% of the principal amount at issuance thereof. Such price may be changed at
any time without notice.
Holders (including subsequent transferees) of the Initial Notes will
have the registration rights set forth in the registration rights agreement (the
"Registration Rights
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Agreement"), to be dated December 10, 1998 (the "Closing Date"), in the form of
Exhibit A hereto, for so long as such Initial Notes constitute "Transfer
Restricted Securities" (as defined in the Registration Rights Agreement).
Pursuant to the Registration Rights Agreement, the Issuers will agree to file
with the Securities and Exchange Commission (the "Commission") under the
circumstances set forth therein, (i) a registration statement under the
Securities Act (the "Exchange Offer Registration Statement") relating to the
Issuers' 11 7/8% Senior Discount Notes due 2008 (the "New Notes" and, together
with the Initial Notes, the "Notes") to be offered in exchange for the Initial
Notes (such offer to exchange being referred to collectively as the "Exchange
Offer") and (ii) if necessary, a shelf registration statement pursuant to Rule
415 under the Securities Act (the "Shelf Registration Statement," and together
with the Exchange Offer Registration Statement, the "Registration Statements")
relating to the resale of the Initial Notes by certain holders of such Notes,
and to use their best efforts to cause such Registration Statements to be
declared effective. This Agreement, the Indenture and the Registration Rights
Agreement are hereinafter referred to collectively as the "Operative Documents."
1. Representations, Warranties and Agreements of the Issuers. Each
of the Issuers represents, warrants and agrees as follows:
(a) The Preliminary Offering Memorandum and the Offering Memorandum
have been prepared by the Issuers for use by the Initial Purchasers in
connection with the Exempt Resales. No order or decree preventing the use of
the Preliminary Offering Memorandum or the Offering Memorandum, or any order
asserting that the transactions contemplated by this Agreement are subject to
the registration requirements of the Securities Act, has been issued and no
proceeding for that purpose has commenced or is pending or, to the knowledge of
the Issuers is contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum
as of their respective dates did not, and the Offering Memorandum as of the
Closing Date will not, contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading, except that this representation and warranty does not apply to
statements in or omissions from the Preliminary Offering Memorandum and the
Offering Memorandum relating to the Initial Purchasers and made in reliance upon
and in conformity with information furnished to the Issuers in writing by or on
behalf of the Initial Purchasers expressly for use therein.
(c) The market-related and industry-related data and estimates
included in the Preliminary Offering Memorandum and the Offering Memorandum are
based on or derived from sources which the Issuers believe to be reliable and
accurate in all material respects.
(d) Each of Issuers and each of their respective subsidiaries is a
limited liability company or corporation, as the case may be, duly formed or
incorporated, as the case may be, and validly existing and in good standing
under the laws of the State of Delaware with all requisite limited liability
company or corporate, as the case may be, power and authority to own, lease and
operate its properties and to conduct its business
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as described in the Preliminary Offering Memorandum and the Offering Memorandum,
and is duly registered and qualified to conduct its business and is in good
standing in each jurisdiction or place where the nature of its properties or the
conduct of its business requires such registration or qualification, except
where the failure so to register or qualify or to be in good standing would not
have a material adverse effect on the condition (financial or other), business,
properties, or results of operations of the Issuers and their subsidiaries,
taken as a whole (a "Material Adverse Effect").
(e) Each of the Issuers has all requisite limited liability company
or corporate, as the case may be, power and authority to execute, deliver and
perform its obligations under this Agreement, the Indenture, the Notes and the
Registration Rights Agreement, as applicable.
(f) This Agreement has been duly and validly authorized, executed and
delivered by each of the Issuers and assuming due authorization, execution and
delivery by the Initial Purchasers, constitutes the valid and binding agreement
of each of the Issuers, enforceable against the Issuers in accordance with its
terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights generally
from time to time in effect and to general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law).
(g) The Registration Rights Agreement has been duly and validly
authorized by each of the Issuers and, upon its execution and delivery by each
of the Issuers and, assuming due authorization, execution and delivery by the
Initial Purchasers, will constitute the valid and binding agreement of each of
the Issuers, enforceable against the Issuers in accordance with its terms
(subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights generally
from time to time in effect and to general principals of equity, including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law).
(h) The Indenture has been duly and validly authorized by each of the
Issuers, and upon its execution and delivery by each of the Issuers and,
assuming due authorization, execution and delivery by the Trustee, will
constitute the valid and binding agreement of each of the Issuers, enforceable
against the Issuers in accordance with its terms (subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
other similar laws affecting creditors' rights generally from time to time in
effect and to general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing, regardless
of whether in a proceeding in equity or at law); no qualification of the
Indenture under the Trust Indenture Act of 1939 ("TIA") is required in
connection with the offer and sale of the Initial Notes contemplated hereby or
in connection with the Exempt Resales in accordance with the terms hereof.
(i) The Initial Notes have been duly and validly authorized by the
Issuers and when duly executed by the Issuers in accordance with the terms of
the Indenture and, assuming due authentication of the Initial Notes by the
Trustee, upon delivery to the Initial
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Purchasers against payment therefor in accordance with the terms hereof, will
have been validly issued and delivered, and will constitute valid and binding
obligations of the Issuers entitled to the benefits of the Indenture,
enforceable against the Issuers in accordance with their terms (subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally from time
to time in effect and to general principals of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law).
(j) The New Notes have been duly and validly authorized by the
Issuers and if and when duly issued and authenticated in accordance with the
terms of the Indenture and, assuming due authentication of the New Notes by the
Trustee, upon delivery in accordance with the Exchange Offer provided for in the
Registration Rights Agreement, will constitute valid and binding obligations of
the Issuers entitled to the benefits of the Indenture, enforceable against the
Issuers in accordance with their terms (subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other similar
laws affecting creditors' rights generally from time to time in effect and to
general principals of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing, regardless of whether
in a proceeding in equity or at law).
(k) All the limited liability company units of the Companies and all
the shares of Avalon Finance outstanding prior to the issuance of the Initial
Notes have been duly authorized and validly issued and are fully paid and
nonassessable, and the authorized capitalization of each of the Issuers conforms
in all material respects to the description thereof under the caption "Security
Ownership of Certain Beneficial Owners and Management" in the Offering
Memorandum.
(l) None of the Issuers nor any of their subsidiaries own capital
stock or other equity interests of any corporation or entity other than as
disclosed in the Offering Memorandum (other than a subsidiary organized for
purposes of the Mercom Acquisition and subsidiaries of Mercom). Each of the
subsidiaries is a limited liability company or corporation duly formed or
incorporated, as the case may be, and validly existing and in good standing
under the laws of the jurisdiction of its formation or incorporation, as the
case may be, with all requisite 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 registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure to so register or qualify or be in good
standing would not have a Material Adverse Effect. All the outstanding shares
of capital stock of each of the Issuers' subsidiaries have been duly authorized
and validly issued, are fully paid and nonassessable, and are wholly owned by
the Issuers directly, or indirectly through one of its other subsidiaries, free
and clear of any lien, adverse claim, security interest, equity or other
encumbrance, except as specifically described in the Offering Memorandum
(including the pledges under the Credit Facility).
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(m) There are no legal or governmental proceedings pending or, to the
knowledge of the Issuers or their subsidiaries, threatened against the Issuers
or any of their subsidiaries or to which any of their respective properties is
subject, that are not disclosed in the Offering Memorandum and which, are
reasonably likely to have a Material Adverse Effect, or to materially affect the
issuance of the Notes or the consummation of any of the other transactions
contemplated by the Operative Documents. None of the Issuers nor any of their
subsidiaries are involved in any material strike, job action or labor dispute
with any group of employees, and, to the knowledge of the Issuers or any of
their subsidiaries, no such action or dispute is threatened.
(n) Except as described in the Offering Memorandum, no material
relationship, direct or indirect, exists between or among the Issuers or any of
their subsidiaries on the one hand, and the directors, officers, stockholders,
affiliates, customers or suppliers of the Issuers or any of their subsidiaries
on the other hand.
(o) The execution, delivery and performance of this Agreement and the
other Operative Documents and the issuance of the Initial Notes and the New
Notes and the consummation of the transactions contemplated hereby and thereby
will not conflict with, or result in a breach or violation of any of the terms
or provisions of, or (including with the giving of notice or the lapse of time
or both) constitute a default under (i) any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Issuers or any of
their subsidiaries is a party or by which the Issuers or any of their
subsidiaries is bound or to which any of the properties or assets of the Issuers
or any of their subsidiaries is subject, (ii) the provisions of the charter, by-
laws or other organizational documents of the Issuers or any of their
subsidiaries or (iii) any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Issuers or any of
their subsidiaries or any of their properties or assets, except in the cases of
clause (i) or (iii), such breaches, violations or defaults that in the aggregate
would not have a Material Adverse Effect, and no consent, approval,
authorization or order of, or filing or registration with, any court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement and the other Operative Documents and the issuance
of the Initial Notes and the New Notes except as may be required by the
securities or Blue Sky laws of any state of the United States in connection with
the sale of the Initial Notes and the New Notes and except as contemplated by
the Registration Rights Agreement.
(p) The accountants, PricewaterhouseCoopers LLP, KPMG Peat Marwick
LLP and Greenfield, Altman, Xxxxx, Xxxxxx & Xxxx, P.C., who have certified
certain of the financial statements included as part of the Offering Memorandum,
are independent public accountants under Rule 101 of the Code of Professional
Conduct of the American Institute of Certified Public Accountants (the "AICPA"),
and its interpretation and rulings.
(q) The historical financial statements, together with the related
notes thereto, set forth in the Offering Memorandum comply as to form in all
material respects with the requirements of Regulation S-X under the Securities
Act applicable to registration statements on Form S-1 under the Securities Act.
Such historical financial statements fairly present in all material respects the
financial positions of the Issuers, their respective
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predecessors, as applicable, at the respective dates indicated and the results
of operations and cash flows for the respective periods indicated, in each case
in accordance with generally accepted accounting principles ("GAAP")
consistently applied throughout such periods (subject, in certain cases, to
normal year-end audit adjustments and the absence of footnote disclosure). The
pro forma financial statements contained in the Offering Memorandum have been
prepared on a basis consistent with such historical statements, except for the
pro forma adjustments specified therein, include all material adjustments to the
historical financial data required by Rule 11-02 of Regulation S-X to reflect
the completed Acquisitions, the Acquisition Transactions, the Initial Financing
and the Offering (each as defined in the Offering Memorandum), give effect to
assumptions made on a reasonable basis and present fairly in all material
respects; on a pro forma basis; the historical and proposed transactions
contemplated by the Offering Memorandum and this Agreement. The other financial
and statistical information and data included in the Offering Memorandum are, in
all material respects, accurately presented and prepared on a basis consistent
with such financial statements and the books and records of the Issuers, their
respective predecessors, as applicable.
(r) Except as disclosed in or contemplated by the Offering
Memorandum, since the date of the latest audited financial statements of each of
the Issuers, their respective predecessors, as applicable, and their respective
subsidiaries included in the Offering Memorandum, to the Issuers' knowledge,
after due inquiry, (i) none of the Issuers or any of their subsidiaries has
incurred any liability or obligation, direct or contingent, or entered into any
transaction, in each case not in the ordinary course of business, that is
material to the Issuers, taken as a whole, and their subsidiaries, (ii) there
has been no development or event involving a Material Adverse Effect or any
prospective Material Adverse Effect with respect to the Issuers, taken as a
whole, and (iii) there has been no (A) dividend or distribution of any kind
declared, paid or made by the Issuers, on any class of their capital stock or
units, as the case may be, (B) issuance of securities (other than the Initial
Notes offered hereby) or (C) material increase in short-term or long-term debt
of any of the Issuers.
(s) The Issuers and each of their subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization, (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain accountability
for assets, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(t) Each of the Issuers and each of their subsidiaries has good and
marketable title to all property (real and personal) described in the Offering
Memorandum as being owned by them, free and clear of all liens, claims, security
interests or other encumbrances except such as are described in the Offering
Memorandum, and all the material property described in the Offering Memorandum
as being held under lease by the Issuers and their subsidiaries is held by them
under valid, subsisting and enforceable leases, with only such exceptions as
would not in the aggregate, have a Material Adverse
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Effect. In addition, except as described in the Offering Memorandum, the
consummation of the transactions contemplated by this Agreement will not give
rise to any third party rights of first refusal under any material agreement as
to which the Issuers and any of their subsidiaries or any of their property or
assets may be subject.
(u) Each of the Issuers and each of their subsidiaries owns or
possesses all patents, trademarks, trademark registrations, service marks,
service mark registrations, trade names, copyrights, licenses, inventions, trade
secrets and related rights described in the Offering Memorandum as being owned
by any of them or necessary for the conduct of their respective businesses, and
none of the Issuers nor any of their subsidiaries are aware of any claim to the
contrary or any challenge by any other person to the rights of the Issuers or
any of their subsidiaries with respect to such rights that would in the
aggregate have a Material Adverse Effect.
(v) Each of the Issuers and each of their subsidiaries has such
permits, licenses, franchises, certificates, consents, orders and other
approvals or authorizations of any governmental or regulatory authority
("Permits"), as are necessary under applicable law to own their respective
properties and to conduct their respective businesses in the manner described in
the Offering Memorandum, except to the extent that the failure to have such
Permits would not have a Material Adverse Effect. Each of the Issuers and each
of their subsidiaries has fulfilled and performed, in all material respects, all
their respective obligations with respect to the Permits, and no event has
occurred which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other material impairment of the rights
of the holders of any Permit, subject in each case to such qualification as may
be set forth in the Offering Memorandum and except to the extent that any such
revocation or termination would not have a Material Adverse Effect.
(w) None of the Issuers nor any of their subsidiaries nor any
director, officer, agent, employee or other person associated with or acting on
behalf of the Issuers or any of their subsidiaries, have used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(x) None of the Issuers nor any of their subsidiaries are currently
or will be, upon sale of the Initial Notes in accordance herewith and the
application of the net proceeds therefrom as described in the Offering
Memorandum under the caption "Use of Proceeds," an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(y) None of the Issuers nor any affiliate (as defined in Rule 501(b)
of Regulation D ("Regulation D") under the Securities Act) of any of the Issuers
has directly, or through any agent (provided that no representation is made as
to the Initial Purchasers or any person acting on their behalf), (i) sold,
offered for sale, solicited offers to buy or otherwise negotiated in respect of,
any security (as defined in the Securities Act) which is or would be integrated
with the offering and sale of the Notes in a manner that would
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require the registration of the Initial Notes under the Securities Act or (ii)
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D, including, but not limited to, advertisements,
articles, notices or other communications published in any newspaper, magazine,
or similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising) in connection with the offering of the Initial Notes. No securities
of the same class as the Initial Notes have been issued and sold by the Issuers
within the six-month period immediately prior to the date hereof.
(z) Except as permitted by the Securities Act, the Issuers have not
distributed and, prior to the later to occur of the Closing Date and completion
of the distribution of the Initial Notes, will not distribute any offering
material in connection with the offering and sale of the Initial Notes other
than the Preliminary Offering Memorandum and Offering Memorandum.
(aa) When the Initial Notes are issued and delivered pursuant to this
Agreement, such Initial Notes will not be of the same class (within the meaning
of Rule 144A under the Securities Act) as securities of the Issuers that are
listed on a national securities exchange registered under Section 6 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or that are
quoted in a United States automated inter-dealer quotation system.
(bb) Assuming (i) that your representations and warranties in Section
2 are true, (ii) compliance by you with your covenants set forth in Section 2
and (iii) that each of the Eligible Purchasers is either (A) an entity that you
reasonably believe to be a QIB or (B) a person who is not a "U.S. person" and
who acquires the Initial Notes outside the United States in an "offshore
transaction" (within the meaning of Regulation S), the purchase of the Initial
Notes by you pursuant hereto and the resale of the Initial Notes pursuant to the
Exempt Resales is exempt from the registration requirements of the Securities
Act.
(cc) Each of the Issuers and each of their subsidiaries is in
compliance in all material respects with all presently applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Issuers would have any liability; the Issuers
have not incurred and do not except to incur liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any "pension plan" or
(ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the "Code");
each "pension plan" for which the Issuers would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification; and the statements set
forth in the Offering Memorandum under the caption "Notice to Investors" do not
include any untrue statements of material facts and do not omit any material
facts necessary in order to make such statements, in light of the circumstances
under which they were made, not misleading.
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(dd) The execution and delivery of this Agreement, the other
Operative Documents and the sale of the Initial Notes to be purchased by the
Eligible Purchasers will not involve any prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Code. The representation
made by the Issuers in the preceding sentence is made in reliance upon and
subject to the accuracy of, and compliance with, the representations and
covenants made or deemed made by the Eligible Purchasers as set forth in the
Offering Memorandum under the section entitled "Notice to Investors."
(ee) Except as described in the Offering Memorandum (including the
registration rights agreement for the Senior Subordinated Notes), there are no
contracts, agreements or understandings between the Issuers or any of their
subsidiaries and any person granting such person the right to require the
Issuers or any of their subsidiaries to file a registration statement under the
Securities Act with respect to any securities of the Issuers and their
subsidiaries owned or to be owned by such person or to require the Issuers or
any of their subsidiaries to include such securities in the securities
registered pursuant to the Registration Statements or in any securities being
registered pursuant to any other registration statement filed by the Issuers or
any of their subsidiaries under the Securities Act.
(ff) Each of the Issuers and each of their subsidiaries carries, or
are covered by, insurance in such amounts and covering such risks as is
reasonably adequate for the conduct of their businesses and the value of their
properties and as is customary for companies engaged in similar businesses in
similar industries.
(gg) Each of the Issuers and each of their subsidiaries has filed all
material federal, state and local income and franchise tax returns required to
be filed through the date hereof and has paid all taxes due thereon, and no tax
deficiency has been determined adversely to the Issuers or any of their
subsidiaries nor do the Issuers or any of their subsidiaries have any knowledge
of any tax deficiency which, if determined adversely to the Issuers, would have
a Material Adverse Effect.
(hh) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, hazardous
wastes or hazardous substances by the Issuers or any of their subsidiaries (or,
to the knowledge of the Issuers, any of their predecessors in interest) at, upon
or from any of the property now or previously owned or leased by the Issuers or
any of their subsidiaries in violation of any applicable law, ordinance, rule,
regulation, order, judgement, decree or permit or which would require remedial
action under any applicable law, ordinance, rule, regulation, order, judgement,
decree or permit, except for any violation or remedial action which would not
have, or could not be reasonably likely to have, singularly or in the aggregate,
a Material Adverse Effect; there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such property
or into the environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances due to or caused
by the Issuers or any of their subsidiaries or with respect to which the Issuers
or any of their subsidiaries have knowledge, except for any such spill,
discharge, leak, emission, injection, escape, dumping or release which would not
have or would not be reasonably likely to have, singularly or in the aggregate,
a Material Adverse Effect; and the terms "hazardous wastes," "toxic wastes,"
"hazardous
11
substances" and "medical wastes" shall have the meanings specified in any
applicable local, state, federal and foreign laws or regulations with respect to
environmental protection.
(ii) None of the Issuers or any of their affiliates or any person
acting on their behalf has engaged or will engage during the applicable
restricted period in any directed selling efforts within the meaning of Rule
902(b) of Regulation S with respect to the Notes, and the Issuers and their
affiliates and all persons acting on their behalf (provided that no
representation is made as to the Initial Purchasers or any person acting on
their behalf) have complied with and will comply with the offering restriction
requirements of Regulation S in connection with the offering of the Notes
outside the United States.
(jj) The sale of the Initial Notes pursuant to Regulation S are
"offshore transactions" and are not part of a plan or scheme to evade the
registration provisions of the Securities Act.
(kk) None of the Issuers nor any of their subsidiaries has taken or
may take, directly or indirectly, any action designed to cause or result in, or
which has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Notes to facilitate the sale
or resale of the Notes (provided that no representation is made as to the
Initial Purchasers or any person acting on their behalf).
(ll) On and immediately after the Closing Date, each of the Companies
(after giving effect to the issuance of the Notes and to the other transactions
related thereto as described in the Offering Memorandum) will be Solvent. As
used in this paragraph, the term "Solvent" means, with respect to a particular
date, that on such date (i) the present fair market value (or present fair
saleable value) of the assets of each of the Companies is not less than the
total amount required to pay the probable liabilities of each of the Companies
on its total existing debts and liabilities (including contingent liabilities)
as they become absolute and matured, (ii) each of the Companies is able to
realize upon its assets and pay its debts and other liabilities, contingent
obligations and commitments as they mature and become due in the normal course
of business, (iii) assuming the sale of the Notes as contemplated by this
Agreement and the Offering Memorandum, neither of the Companies is incurring
debts or liabilities beyond its ability to pay as such debts and liabilities
mature and (iv) neither of the Companies is engaged in any business or
transaction, or is about to engage in any business or transaction, for which its
property would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which the Companies
are engaged. In computing the amount of such contingent liabilities at any
time, it is intended that such liabilities will be computed at the amount that,
in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
2. Representations, Warranties and Agreements of the Initial
Purchasers. The Initial Purchasers represent, warrant and agree that:
12
(a) The Initial Purchasers are QIBs with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Notes.
(b) The Initial Purchasers (i) are not acquiring the Initial Notes
with a view to any distribution thereof or with any present intention of
offering or selling any of the Initial Notes in a transaction that would violate
the Securities Act or the securities laws of any State of the United States or
any other applicable jurisdiction; (ii) in connection with the Exempt Resales,
will solicit offers to buy the Notes only from and will offer to sell the Notes
only to, the Eligible Purchasers in accordance with this Agreement and on the
terms contemplated by the Offering Memorandum; and (iii) will not offer or sell
the Notes pursuant to, nor have they offered or sold the Notes by, or otherwise
engaged in, any form of general solicitation or general advertising (within the
meaning of Regulation D; including, but not limited to, advertisements,
articles, notices or other communications published in any newspaper, magazine
or similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising).
(c) The Initial Purchasers, shall not, except as otherwise permitted
by this Agreement, offer, sell or deliver the Initial Notes (i) as part of their
distribution at any time or (ii) otherwise until 40 days after the later of the
commencement of the Exempt Resales and the original issue date of the Initial
Notes, within the United States to, or for the account or benefit of, U.S.
Persons, and that they will send to each distributor, dealer, or other person
receiving a selling concession or similar fee to which they sell the Initial
Notes in reliance on Regulation S during the 40-day distribution compliance
period a confirmation or other notice setting forth the restrictions on offers
and sales of the Initial Notes within the United States or to, or for the
account or benefit of, U.S. Persons.
(d) The Initial Purchasers understand that the Issuers and, for
purposes of the opinions to be delivered to you pursuant to Section 7 hereof,
counsel to the Issuers and counsel to the Initial Purchasers, will rely upon the
accuracy and truth of the representations and agreements in this Section 2 and
you hereby consent to such reliance.
The terms used in this Section 2 that have meanings assigned to them
in Regulation S are used herein as so defined.
The Initial Purchasers further agree that, in connection with the
Exempt Resales, they will solicit offers to buy the Initial Notes only from, and
will offer to sell the Initial Notes only to, the Eligible Purchasers in Exempt
Resales.
3. Purchase of the Notes by the Initial Purchasers. On the basis of
the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Issuers agree to sell $110,410,720 in
aggregate principal amount at issuance of Initial Notes to the Initial
Purchasers and the Initial Purchasers, severally and not jointly, will purchase
the aggregate principal amount at issuance of Initial Notes set forth next to
such Initial Purchaser's name on Schedule I hereto at an aggregate purchase
price equal to 96.75% of the principal amount at issuance thereof (the "Purchase
Price").
13
The Issuers shall not be obligated to deliver any of the Initial Notes
to be delivered, except upon payment of all the Initial Notes to be purchased on
such Closing Date as provided herein.
4. Delivery and Payment of the Notes.
(a) Delivery to the Initial Purchasers of and payment for the Initial
Notes shall be made at 9:30 a.m., New York City time, on the Closing Date at the
offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, or such other place or time as you and the Issuers shall designate.
(b) One or more Initial Notes in definitive form, registered in the
name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), or such
other names as the Initial Purchasers may request upon at least one business
day's notice to the Issuers, having an aggregate principal amount at maturity
corresponding to the aggregate principal amount of Initial Notes (collectively,
the "Global Notes"), shall be delivered by the Issuers to the Initial
Purchasers, against payment by the Initial Purchasers of the purchase price
thereof by wire transfer of immediately available funds as the Issuers may
direct by written notice delivered to you one business day prior to the Closing
Date. The Global Notes in definitive form shall be made available to you for
inspection on the business day immediately preceding the Closing Date.
5. Further Agreements of the Issuers. Each of the Issuers agrees:
(a) To advise you promptly and, if requested by you, to confirm such
advice in writing, of (i) the issuance by any state securities commission of any
stop order suspending the qualification or exemption from qualification of any
Notes for offering or sale in any jurisdiction, or the initiation of any
proceeding for such purpose by the Commission or any state securities commission
or other regulatory authority, and (ii) the happening of any event that makes
any statement of a material fact made in the Offering Memorandum untrue or that
requires the making of any additions to or changes in the Offering Memorandum in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Issuers shall use their best efforts to
prevent the issuance of any stop order or order suspending the qualification or
exemption of the Notes under any state securities or Blue Sky laws and, if at
any time any state securities commission shall issue any stop order suspending
the qualification or exemption of the Notes under any state securities or Blue
Sky laws, the Issuers shall use every reasonable effort to obtain the withdrawal
or lifting of such order at the earliest possible time.
(b) To furnish to you, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any amendments
or supplements thereto, as you may reasonably request. The Issuers have
authorized you to use the Preliminary Offering Memorandum to make offers of the
Initial Notes. The Issuers consent to the use of the Offering Memorandum, and
any amendments and supplements thereto required pursuant to this Agreement, by
you in connection with the Exempt Resales that are in compliance with this
Agreement.
14
(c) Not to amend or supplement the Offering Memorandum prior to the
Closing Date or during the period referred to in the next sentence unless you
shall previously have been advised of, and shall not have reasonably objected
to, such amendment or supplement within a reasonable time, but in any event not
longer than five days after being furnished a copy of such amendment or
supplement. If, in connection with any Exempt Resales or market making
transactions after the date of this Agreement, any event shall occur that, in
the judgement of the Issuers or in the judgement of counsel to you, makes any
statement of a material fact in the Offering Memorandum untrue or that requires
the making of any additions to or changes in the Offering Memorandum in order to
make the statements in the Offering Memorandum, in light of the circumstances at
the time that the Offering Memorandum is delivered to prospective Eligible
Purchasers, not misleading, or if it is necessary to amend or supplement the
Offering Memorandum to comply with any applicable laws, the Issuers shall
promptly notify you of such event and prepare an appropriate amendment or
supplement to the Offering Memorandum so that (i) the statements in the Offering
Memorandum as amended or supplemented will, in light of the circumstances at the
time that the Offering Memorandum is delivered to prospective Eligible
Purchasers, not be misleading and (ii) the Offering Memorandum will comply with
applicable law.
(d) To cooperate with you and your counsel in connection with the
qualification of the Initial Notes for offer and sale by you and by dealers
under the state securities or Blue Sky laws of such jurisdictions as you may
request (provided, however, that none of the Issuers shall be obligated to
register or qualify as a foreign corporation in any jurisdiction in which it is
not now so registered or qualified or to take any action that would subject it
to general consent to service of process or taxation in any jurisdiction in
which it is not now so subject). The Issuers shall continue such qualification
in effect so long as required by law for distribution of the Initial Notes and
shall file such consents to service of process or other documents as may be
necessary in order to effect such qualification.
(e) Prior to the Closing Date, to furnish to you, any internal
financial statements of the Companies that have been prepared by or furnished to
the Issuers for any period subsequent to the period covered by the financial
statements appearing in the Offering Memorandum.
(f) To use its reasonable best efforts to do and perform all things
required to be done and performed under this Agreement by it prior to or after
the Closing Date and to satisfy all conditions precedent on its part to the
delivery of the Initial Notes.
(g) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Securities Act) that
would be integrated with the sale of the Initial Notes in a manner that would
require the registration under the Securities Act of the sale to you or the
Eligible Purchasers of the Initial Notes; provided no statement is made as to
actions by the Initial Purchasers or persons acting on their behalf.
(h) For a period of 120 days from the date of the Offering Memorandum,
not to, directly or indirectly, sell, contract to sell, grant any option to
purchase, issue any
15
instrument convertible into or exchangeable for, or otherwise transfer or
dispose of, any debt securities of the Issuers or any of their subsidiaries
having a maturity of more than one year from the date of issue of such
securities, except (i) for the Senior Subordinated Notes including the notes
issued in the exchange offer related to such Senior Subordinated Notes, (ii) for
the New Notes in connection with the Exchange Offer or (iii) with the prior
consent of Xxxxxx Brothers Inc.
(i) For the period that is two years after the Closing Date or for so
long as necessary to comply with Rule 144A in connection with resales by
registered holders or beneficial owners of Initial Notes, whichever is longer,
to make available to such registered holder or beneficial owner of Initial Notes
in connection with any sale thereof and any prospective purchaser of such
Initial Notes from such registered holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Securities Act (or any successor provision
thereto).
(j) To comply with the agreements in the Registration Rights
Agreement, and all agreements set forth in the representation letters of the
Issuers' to DTC relating to the approval of the Notes by DTC for "book-entry"
transfer.
(k) To use its best efforts to effect the inclusion of the Notes in
the National Association of Securities Dealers, Inc. Automated Quotation System
- PORTAL ("PORTAL").
(l) To apply the net proceeds from the sale of the Initial Notes
being sold by the Issuers as set forth in the Offering Memorandum under the
caption "Use of Proceeds."
6. Expenses. Each of the Issuers agrees, jointly and severally,
that, whether or not the transactions contemplated by this Agreement are
consummated or this Agreement becomes effective or is terminated, to pay all
costs, expenses, fees and taxes incident to and in connection with: (i) the
preparation, printing, filing and distribution of the Preliminary Offering
Memorandum and the Offering Memorandum (including, without limitation, financial
statements) and all amendments and supplements thereto (but not, however, legal
fees and expenses of your counsel incurred in connection therewith), (ii) the
preparation, printing (including, without limitation, word processing and
duplication costs) and delivery of this Agreement, the Indenture and any Blue
Sky Memoranda, (iii) the issuance and delivery by the Issuers of the Notes, (iv)
the qualification of the Notes for offer and sale under the securities or Blue
Sky laws of the several states (including, without limitation, the reasonable
fees and disbursements of your counsel relating to such registration or
qualification in an amount not to exceed $10,000), (v) furnishing such copies of
the Preliminary Offering Memorandum and the Offering Memorandum, and all
amendments and supplements thereto, as may be reasonably requested by the
Initial Purchasers for use in connection with the initial Exempt Resales, (vi)
the preparation of certificates for the Notes including, without limitation,
printing and engraving, (vii) the fees, disbursements and expenses of the
Issuers' counsel and accountants, (viii) all expenses and listing fees in
connection with the application for quotation of the Initial Notes in PORTAL,
(ix) all fees and expenses (including fees and expenses of counsel) of the
Issuers in connection with the approval of the Notes by DTC for "book-entry"
transfer
16
and (x) the performance by the Issuers of their other obligations under this
Agreement to the extent not provided for above.
7. Conditions of Initial Purchasers' Obligations. The obligations
of the Initial Purchasers hereunder are subject to the accuracy, when made and
again on the Closing Date (as if made again on and as of such date), of the
representations and warranties of the Issuers contained herein, to the
performance by the Issuers of their obligations hereunder and to each of the
following additional terms and conditions:
(a) The consummation of the Senior Subordinated Note Offering (as
defined in the Offering Memorandum) shall have occurred.
(b) The Offering Memorandum shall have been printed and copies made
available to you not later than 6:00 p.m., New York City time, on the day
following the date of this Agreement, or at such later date and time as you may
approve in writing.
(c) The Initial Purchasers shall not have discovered and disclosed to
the Issuers on or prior to such Closing Date that the Offering Memorandum or the
most recent amendment or supplement thereto contains an untrue statement of a
fact which, in the opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the
Initial Purchasers, is material or omits to state a fact which, in the opinion
of such counsel, is material and is necessary to make the statements, in light
of the circumstances under which they were made, not misleading.
(d) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the other Operative
Documents, the Offering Memorandum and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Initial Purchasers, and
the Issuers shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such matters.
(e) Xxxxxxxx & Xxxxx shall have furnished to the Initial Purchasers,
its written opinion, as counsel to the Issuers, addressed to the Initial
Purchasers and dated as of the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers and its counsel, to the effect that:
(i) Each of the Issuers is a limited liability company or
corporation, as the case may be, duly formed or incorporated, as the case may
be. Each of the Issuers is validly existing and in good standing under the laws
of the state of its formation or incorporation, as the case may be.
(ii) Each of the Issuers has all requisite limited liability
company or corporate, as the case may be, power to own and lease its respective
properties and to conduct its respective business as described in the Offering
Memorandum. Each of the Issuers has all requisite limited liability company or
corporate, as the case may be, power and authority to execute, deliver and
perform their respective
17
obligations under this Agreement, the Indenture and the Registration Rights
Agreement, and to authorize, issue and sell the Notes as contemplated by this
Agreement.
(iii) This Agreement has been duly authorized, executed and
delivered by each of the Issuers.
(iv) The Indenture has been duly authorized, executed and
delivered by each of the Issuers and constitutes a valid and binding obligation
of each of the Issuers, enforceable against the Issuers in accordance with its
terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights generally
from time to time in effect and to general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law).
(v) The Registration Rights Agreement has been duly authorized,
executed and delivered by each of the Issuers and constitutes a valid and
binding obligation of each of the Issuers, enforceable against the Issuers in
accordance with its terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether in a
proceeding in equity or at law and provided that such counsel shall not express
an opinion as to the validity of the indemnification or contribution provisions
of such Registration Rights Agreement).
(vi) The Initial Notes have been duly authorized, executed and
delivered by each of the Issuers and, when paid for by the Initial Purchasers in
accordance with the terms of this Agreement (assuming the due authorization,
execution and delivery of the Indenture by the Trustee and due authentication
and delivery of the Notes by the Trustee in accordance with the Indenture), will
constitute Notes under the terms of the Indenture, will constitute the valid and
binding obligations of each of the Issuers entitled to the benefits of the
Indenture, and will be enforceable against each of the Issuers in accordance
with their terms. (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing, regardless of whether in a proceeding in equity or
at law. The New Notes have been duly authorized by the Issuers and when duly
executed and delivered and authenticated by the Issuers pursuant to the terms of
the Indenture and the Registration Rights Agreement (assuming the due
authorization, execution and delivery of the Indenture by the Trustee and due
authentication, execution and delivery of the New Notes by the Trustee in
accordance with the Indenture), will constitute New Notes under the terms of the
Indenture, will constitute the valid and binding obligations of each of the
Issuers entitled to the benefits of the Indenture, and will be enforceable
against each of the Issuers in accordance with their terms (subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally from time
to time in effect and to general principles of equity, including,
18
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law).
(vii) All the limited liability company units or shares
of capital stock, as the case may be, of the Issuers outstanding prior to the
issuance of the Initial Notes have been duly authorized and validly issued and,
in the case of capital stock, are fully paid and nonassessable.
(viii) The Issuers' execution, delivery and performance of their
respective obligations under this Agreement, the Indenture and the Registration
Rights Agreement and the Issuers' sale of the Initial Notes to the Initial
Purchasers in accordance with this Agreement and performance of their respective
obligations under each do not (i) violate Avalon Holding's Certificate of
Formation or Limited Liability Company Agreement or Michigan Holdings' or
Finance Holding's Certificate of Incorporation or by-laws or (ii) constitute a
violation by the Issuers of any applicable provision of any law, statute or
regulation (except that no opinion is expressed as to compliance with any
disclosure requirement or any prohibition against fraud or misrepresentation or
as to whether performance of the indemnification or contribution provisions in
this Agreement would be permitted or any FCC or franchise law) or any order or
decree known to such counsel of any court or government agency or (iii) breach,
or result in a default under, any existing obligation of the Issuers under any
of the agreements listed on Schedule II to such opinion (and which the Issuers
have represented lists all material agreements and instruments to which the
Issuers and their subsidiaries or by which the Issuers and their subsidiaries
are bound or by which their property or assets are subject provided that no
opinion is expressed as to compliance with any financial test or cross-default
provision in any such agreement).
(ix) The Issuers' were not required to obtain any consent,
approval, authorization or order of or registration or filing with, any court,
regulatory body, administrative agency or other governmental agency for the
issuance, delivery and sale of the Initial Notes under this Agreement or the
performance by the Issuers of the Registration Rights Agreement except for an
order of the Commission declaring the registration statements, to be filed
pursuant to the Registration Rights Agreement, effective or any filings required
under Blue Sky laws.
(x) Subject to compliance by the Initial Purchasers with the
procedures set forth in this Agreement, it is not necessary in connection with
the sale of the Initial Notes to the Initial Purchasers in accordance with this
Agreement or in connection with the resale of the Notes in the Exempt Resales
contemplated by this Agreement to register the Notes under the Securities Act or
to qualify the Indenture under the TIA.
(xi) When the Initial Notes are issued and delivered pursuant to
this Agreement, such Initial Notes will not be of the same class (within the
meaning of Rule 144A under the Securities Act) as securities of the Issuers that
are listed on a national securities exchange registered under Section 6 of the
Exchange Act or that are quoted in a United States automated inter-dealer
quotation system.
19
(xii) The information in the Offering Memorandum under the
heading "Description of the Senior Subordinated Notes" and "Certain United
States Federal Income Tax Consequences" to the extent that it summarizes laws,
governmental rules or regulations or documents is correct is all material
respects.
In addition, such counsel shall also state that such counsel has
participated in conferences with officers of the Issuers and with the
independent public accountants for the Issuers concerning the preparation of the
Offering Memorandum and, although such counsel has made certain inquiries and
investigations in connection with the preparation of the Offering Memorandum, it
is not passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Offering Memorandum,
but that, on the basis of the foregoing such counsel's work in connection with
this matter, relying as to questions of fact material to such opinion upon the
opinions and statements of officers of the Issuers, nothing has come to such
counsel's attention to cause such counsel to believe that the Offering
Memorandum, as of its date or as of the Closing Date, included or includes an
untrue statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that such counsel need
express no belief or opinion with respect to the financial statements, notes and
schedules and other financial and statistical data included therein or omitted
therefrom).
The opinion of such counsel may be limited to the laws of the state of
New York, the General Corporation Law and Limited Liability Company Act of the
State of Delaware, and the federal laws of the United States.
(f) Xxxxxxxxx & Xxxxx shall have furnished to the Initial Purchasers,
its written opinion, as special counsel to the Issuers, addressed to the Initial
Purchasers and dated as of the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers and its counsel, to the effect that:
(i) The issuance and sale of the Notes and the consummation by
the Issuers of all of the transactions contemplated by the Purchase Agreement
will not result in a violation of the Communications Act of 1934, as amended by
the Telecommunications Act of 1996 (the "Communications Act"), or any order,
rule or regulation of the Federal Communications Commission (the "FCC"), as
pertaining to the operations of the Issuers.
(ii) No consent, approval, authorization, order, registration or
qualification of or with the FCC is required under the Communications Act or the
rules and regulations of the FCC for the issuance and sale of the Notes or the
consummation by the Issuers of the transactions contemplated by this Agreement.
(iii) To the best of its knowledge after due inquiry, the Issuers
have the right to use or manage all of the FCC licenses including grants of
special temporary authorities listed in Schedule I to such opinion (the "FCC
Licenses"), except as any impairment in the right to use such FCC Licenses,
taken in the aggregate, would not materially or adversely affect: (a) the
condition (financial or other), business, prospects,
20
properties, net worth or results of operations of the Issuers and their
subsidiaries, taken as a whole, or (b) the ability of the Issuers to perform
their obligations under this Agreement. To the best of its knowledge based on
information provided by the Issuers, its employees, agents, other attorneys or
advisors, the FCC Licenses are in full force and effect and such counsel are not
aware of any other FCC licenses required by the Issuers or their subsidiaries to
conduct their businesses as now operated.
(iv) Except as described in the Offering Memorandum, to the best
of its knowledge based on information provided by the Issuers, its employees,
agents, other attorneys or advisors, such counsel do not know of any material
proceedings threatened, pending or contemplated before the FCC against or
involving the FCC Licenses of the Issuers or their subsidiaries.
(v) To the best of its knowledge after due inquiry, subject to
the qualification in (iv) above, no event has occurred that permits, or with
notice or lapse of time or both would permit the revocation or termination of
any of the FCC Licenses or that might result in any other material impairment of
the rights of the Issuers or their subsidiaries to use the FCC Licenses.
(vi) As of the date of the Offering Memorandum, the statements
made in the Offering Memorandum under the captions "Risk Factors--Non-Exclusive
Franchises; Non-Renewal or Termination of Franchises," "Risk Factors--Regulation
of the Cable Television Industry; Pending Legislation," "Business--Franchises,"
"Business-- Competition" and "Regulation," insofar as such statements purport to
constitute summaries of relevant federal communications laws or related legal
and governmental proceedings, constitute accurate summaries of the terms of such
laws and proceedings in all material respects as they relate to the business of
the Issuers.
The opinion of such counsel may be limited to the Communications Act,
and the rules, regulations and published opinions of the FCC relating thereto,
as pertaining to the operations of the Issuers.
(g) The Initial Purchasers shall have received from Xxxxxxx Xxxxxxx &
Xxxxxxxx, counsel for the Initial Purchasers, such opinion or opinions, dated as
of the Closing Date, with respect to the issuance and sale of the Initial Notes,
the Offering Memorandum and other related matters as the Initial Purchasers may
reasonably require, and the Issuers shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to pass
upon such matters.
(h) The Issuers and the Trustee shall have entered into the Indenture
and the Initial Purchasers shall have received counterparts, conformed as
executed, thereof.
(i) The Issuers and the Initial Purchasers shall have entered into
the Registration Rights Agreement and the Initial Purchasers shall have received
counterparts, conformed as executed, thereof.
(j) With respect to the letter of PricewaterhouseCoopers LLP, KPMG
Peat Marwick LLP and Greenfield, Xxxxxx, Xxxxx, Xxxxxx & Xxxx, P.C. delivered to
the Initial
21
Purchasers concurrently with the execution of this Agreement (the "initial
letter"), the Issuers shall have furnished to the Initial Purchasers a letter
(as used in this paragraph, the "bring-down letter") of such accountant,
addressed to the Initial Purchasers and dated as of the Closing Date (i)
confirming that it is an independent public accountant under the guidelines of
the American Institute of Certified Public Accountant, (ii) stating, as of the
date of the bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Offering Memorandum, as of a date not more than two
days prior to the date of the bring-down letter), the conclusions and findings
of such firm with respect to the financial information and other matters covered
by the initial letter and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
(k) Each of the Issuers shall have furnished to the Initial
Purchasers a certificate, dated as of the Closing Date, of its Chief Executive
Officer or President and its Vice President--Finance stating that:
(i) The representations and warranties of the Issuers in
Section 1 are true and correct as of such Closing Date and after giving effect
to the consummation of the transactions contemplated by this Agreement; the
Issuers have complied in all material respects with all their agreements
contained herein, and the condition set forth in Section 7(l) has been
fulfilled; and
(ii) They have carefully examined the Preliminary Offering
Memorandum and the Offering Memorandum and, in their opinion (i) as of their
respective dates and as of the Closing Date, the Preliminary Offering Memorandum
and the Offering Memorandum did not include any untrue statement of a material
fact and did not omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (ii) since the date of the Offering
Memorandum, no event has occurred which should have been set forth in a
supplement or amendment to the Offering Memorandum.
(l) None of the Issuers nor any of their subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Offering Memorandum (i) any loss or interference with their business from
fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Offering Memorandum or (ii)
any change in the capital stock or units, as the case may be, or long-term debt
of the Issuers or any of their subsidiaries or any change, or any development
involving a prospective change, that would have a Material Adverse Effect,
otherwise than as set forth or contemplated in the Offering Memorandum, the
effect of which, in any such case described in clause (i) or (ii), is, in the
judgment of the Initial Purchasers, so material and adverse as to make it
impracticable or inadvisable to proceed with the payment for and delivery of the
Initial Notes being delivered on such Closing Date on the terms and in the
manner contemplated in the Offering Memorandum.
(m) Xxxxxxx Xxxxxxx & Xxxxxxxx shall have been furnished with such
other documents and opinions, in addition to those set forth above, as they may
reasonably
22
require for the purpose of enabling them to review or pass upon the matters
referred to in this Agreement and in order to evidence the accuracy,
completeness or satisfaction in all material respects of any of the
representations, warranties or conditions herein contained.
(n) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Issuers' debt
securities by any "nationally recognized statistical rating organization," as
that term is defined by the Commission for purposes of Rule 436(g)(2) under the
Securities Act and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative implications, its
rating of any of the Issuers' debt securities.
(o) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Issuers on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of
the Initial Purchasers, impracticable or inadvisable to proceed with the public
offering or delivery of the Notes being delivered on such Closing Date on the
terms and in the manner contemplated in the Offering Memorandum.
(p) The Initial Notes shall have been approved by the National
Association of Securities Dealers, Inc. for trading in the PORTAL market.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel of the Initial Purchasers.
8. Indemnification and Contribution.
(a) Each of the Issuers hereby jointly and severally agrees to
indemnify and hold harmless the Initial Purchasers, their officers and employees
and each person, if any, who controls the Initial Purchasers within the meaning
of the Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, but not limited
to, any loss, claim, damage, liability or action relating to purchases and sales
of Notes), to which the Initial Purchasers, officer, employee or controlling
person may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Offering Memorandum or the Offering Memorandum (in
each case as amended or
23
supplemented) and (ii) the omission or alleged omission to state in any
Preliminary Offering Memorandum or the Offering Memorandum (in each case as
amended or supplemented) any material fact required to be stated therein or
necessary to make the statements therein not misleading; and shall reimburse the
Initial Purchasers and each such officer, employee or controlling person
promptly upon demand with reasonable documentation for any legal or other
expenses reasonably incurred by the Initial Purchasers, officer, employee or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Issuers shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission in the Preliminary Offering
Memorandum, if such untrue statement or alleged untrue statement or omission or
alleged omission is corrected in all material respects in the Offering
Memorandum or an amendment or supplement to the Offering Memorandum, as
applicable, and the Initial Purchasers thereafter fails to deliver such Offering
Memorandum as so amended or supplemented, as applicable, prior to or
concurrently with the sale of the Initial Notes to the person asserting such
loss, claim, damage, liability or expense after the Issuers had furnished such
Initial Purchaser with a sufficient number of copies of the same; provided,
further, that the Issuers shall 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 Preliminary Offering Memorandum or the Offering
Memorandum (in each case as amended or supplemented) in reliance upon and in
conformity with written information provided by the Initial Purchasers
specifically for inclusion therein. The foregoing indemnity agreement is in
addition to any liability which the Issuers and their subsidiaries may otherwise
have to the Initial Purchasers or to any officer, employee or controlling person
of the Initial Purchasers.
(b) The Initial Purchasers shall indemnify and hold harmless the
Issuers, their respective directors, managers, officers, employees or agents,
and each person, if any, who controls the Issuers within the meaning of the
Securities Act, from and against any loss, claim, damage, liability, expense or
any action in respect thereof, to which the Issuers or any such director,
officer or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability, expense or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Offering Memorandum or
the Offering Memorandum (in each case as amended or supplemented) or (ii) the
omission or alleged omission to state in any Preliminary Offering Memorandum or
the Offering Memorandum (in each case as amended or supplemented) any material
fact required to be stated therein or necessary to make the statements therein
not misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information concerning the Initial
Purchasers furnished to the Issuers by or on behalf of the Initial Purchasers
specifically for inclusion therein, and shall reimburse the Issuers and any such
director, manager, officer, employee, agent or controlling person for any legal
or other expenses reasonably incurred by the Issuers or any such director,
manager, officer, employee, agent or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability, expense or action as
24
such expenses are incurred. The foregoing indemnity agreement is in addition to
any liability which any Initial Purchasers may otherwise have to the Issuers or
any such director, manager, officer, employee, agent or controlling person.
(c) Promptly after receipt by an indemnified party under this Section
8 of the notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided, however, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall have notified the indemnifying party thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, that the indemnified party shall have the right to employ separate
counsel to represent jointly the indemnified party and the Initial Purchasers
and their respective officers, managers, employees, agents and controlling
persons who may be subject to liability arising out of any claim in respect of
which indemnity may be sought by the Initial Purchasers against the indemnifying
party under this Section 8 if, in the reasonable judgment of the indemnified
party it is advisable for the indemnified party and the Initial Purchasers,
officers, managers, employees, agents and controlling persons to be jointly
represented by separate counsel, and in that event the fees and expenses of such
separate counsel shall be paid by the indemnifying party only if (i) the
indemnifying party has agreed to pay such fees or expenses, (ii) the
indemnifying party has failed to assume the defense of such claim or (iii) in
the reasonable judgment of any such person, based upon written advice of its
counsel, a conflict of interest may exist between such person and the
indemnifying party with respect to such claims and the representation of both
would be inappropriate (in which case, if the person notifies the indemnifying
party in writing that such person elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such claim on behalf of such person). In no
event shall the indemnifying parties be liable for the fees and expenses of more
than one counsel (in addition to local counsel). Each indemnified party, as a
condition of the indemnity agreements contained in Section 8, shall use its best
efforts to cooperate with the indemnifying party in the defense of any such
action or claim. No indemnifying party shall (i) without the prior written
consent of the indemnified parties (which consent shall not be unreasonably
withheld), settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified
25
party from all liability arising out of such claim, action, suit or proceeding,
or (ii) be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with the consent of the indemnifying party or if there be a final
judgment of the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Issuers on the one hand and the Initial Purchasers on the other
from the offering of the Initial Notes 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 the Issuers on the one hand and the Initial
Purchasers on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Issuers on the one hand and the Initial Purchasers on the other
with respect to such offerings shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Initial Notes purchased under
this Agreement (before deducting expenses) received by the Issuers on the one
hand, and the total discounts and commissions received by the Initial Purchasers
with respect to the Initial Notes purchased under this Agreement, on the other
hand, bear to the total gross proceeds from the offering of the Initial Notes
under this Agreement, in each case as set forth in the table on the cover page
of the Offering Memorandum. The relative fault shall be determined by reference
to whether the 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 Issuers or the Initial Purchasers, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Issuers and the Initial Purchasers agree that it
would not be just and equitable if contributions pursuant to this Section 8(d)
were to be determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section shall be deemed to include, for purposes of
this Section 8(d), 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 Section 8(d), the Initial
Purchasers shall not be required to contribute any amount in excess of the
amount by which the total price at which the Initial Notes purchased by it were
resold to Eligible Purchasers exceeds the amount of any damages which the
Initial Purchasers has otherwise paid or become liable to pay by reason of any
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 Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
26
(e) The Initial Purchasers confirm and the Issuers acknowledge that
the last paragraph on the cover page, the stabilization legend on page iii, and
the second, third, fifth, sixth, ninth, tenth, eleventh and twelfth paragraphs
of the section entitled "Plan of Distribution" constitute the only information
concerning the Initial Purchasers furnished in writing to the Issuers by or on
behalf of the Initial Purchasers specifically for inclusion in the Preliminary
Offering Memorandum or the Offering Memorandum.
9. Termination. The obligations of the Initial Purchasers hereunder
may be terminated by Xxxxxx Brothers Inc. by notice given to any of the Issuers
prior to delivery of and payment for the Initial Notes if, prior to that time,
any of the events described in Sections 7(l), 7(n) or 7(o) shall have occurred
or if the Initial Purchasers shall decline to purchase the Initial Notes for any
reason permitted under this Agreement.
10. Reimbursement of Initial Purchasers' Expenses. If the Issuers
shall fail to tender the Initial Notes for delivery to the Initial Purchasers by
reason of any failure, refusal or inability on the part of the Issuers to
perform any agreement on their part to be performed, or because any other
condition of the Initial Purchasers' obligations hereunder required to be
fulfilled by the Issuers is not fulfilled, the Issuers will reimburse the
Initial Purchasers for all reasonable and documented out-of-pocket expenses
(including the fees and disbursements of their counsel) incurred by the Initial
Purchasers in connection with this Agreement and the proposed purchase of the
Initial Notes, and upon demand the Issuers shall pay the full amount thereof to
Xxxxxx Brothers Inc.
11. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) If to the Initial Purchasers, shall be delivered or sent by mail,
telex or facsimile transmission to Xxxxxx Brothers Inc., Three World Financial
Center, New York, New York 10285, Attention: Syndicate Department (Fax: 212-526-
6588), with a copy to Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxx X. Xxxxx, Esq. (Fax: 000-000-0000); and
(b) If to Issuers shall be delivered or sent by mail, telex or
facsimile transmission to Avalon Cable LLC, 000 Xxxx 00xx Xxxxxx, Xxxxx XX-X,
Xxx Xxxx, Xxx Xxxx, 00000, Attention: President (Fax 000-000-0000), with a copy
to Xxxxxxxx & Xxxxx, 000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000,
Attention: Xxxx Sugar Factor, Esq. (Fax 000-000-0000).
Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof. The Issuers shall be entitled to act and rely
upon any request, consent, notice or agreement given or made on behalf of the
Initial Purchasers. Any notice of a change of address or facsimile transmission
number must be given by the Issuers or by the Initial Purchasers, as the case
may be, in writing, at least three days in advance of such change.
12. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers and their
successors. This
27
Agreement and the terms and provisions hereof are for the sole benefit of only
the Issuers and the Initial Purchasers, except that the representations,
warranties, indemnities and agreements of the Issuers contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, entitled to indemnification and contribution thereunder.
Nothing in this Agreement shall supersede the provisions of the
engagement letter among ABRY Partners, Inc., Spartacus Holdings Co., Spartacus
Acquisition Co. and Xxxxxx Brothers Inc. dated as of June 3, 1998.
13. Survival. The respective indemnities, representations, warranties
and agreements of the Initial Purchasers and the Issuers contained in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Initial Notes and
shall remain in full force and effect, regardless of any investigation made by
on behalf of any of them or any person controlling any of them.
14. Definition of the Terms "Business Day." For purposes of this
Agreement "business day" means any day on which the New York Stock Exchange,
Inc. is open for trading.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of New York.
16. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
17. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
[signature page follows]
28
If the foregoing correctly sets forth the agreement between the Initial
Purchasers and the Issuers, please indicate your acceptance in the space
provided for the purpose below.
Very truly yours,
AVALON CABLE LLC
By: /s/ Xxx X. Xxxxxxxx
----------------------------------
Name: Xxx X. Xxxxxxxx
Title: Vice President & Assistant
Secretary
AVALON CABLE OF MICHIGAN HOLDINGS, INC.
By: /s/ Xxx X. Xxxxxxxx
----------------------------------
Name: Xxx X. Xxxxxxxx
Title: Vice President & Assistant
Secretary
AVALON CABLE HOLDINGS FINANCE, INC.
By: /s/ Xxx X. Xxxxxxxx
----------------------------------
Name: Xxx X. Xxxxxxxx
Title: Vice President & Assistant
Secretary
Accepted:
XXXXXX BROTHERS INC.,
on behalf of the Initial Purchasers
By: /s/ Xxxxxx X. XxXxxxxx
--------------------------------
Name: Xxxxxx X. XxXxxxxx
Title: Managing Director
SCHEDULE 1
Initial Purchaser Principal Amount at Maturity of Notes
----------------- -------------------------------------
Xxxxxx Brothers Inc. $166,600,000
Barclays Capital Inc. 29,400,000
------------
Total $196,000,000
============
