Exhibit 1.1
XM SATELLITE RADIO HOLDINGS INC.
REGISTRATION
AGREEMENT
May 9, 2005
Banc of America Securities LLC
9 West 57th Street
New York, NY 10019
Ladies/Gentlemen:
American Honda Motor Co., Inc., a
California corporation (“ AHM ”), and Bank of
America, N.A. (“ BOA ”), an affiliate of Banc of
America Securities LLC (“ BAS ”), have entered
into a forward sale agreement and pledge agreement (the forward
sale agreement, together with the pledge agreement, hereinafter
referred to as the “ Forward Sale Agreement ”),
dated the date hereof, relating to the forward sale of a portion of
the 10% Senior Secured Discount Convertible Notes due 2009 (the
“ Notes ”) of XM Satellite Radio Holdings Inc.,
a Delaware corporation (the “ Company ”), and XM
Satellite Radio Inc., a Delaware corporation and wholly owned
subsidiary of the Company (together with the Company, the “
Issuers ”), issued pursuant to the Note Purchase
Agreement, dated as of December 21, 2002 (as amended and restated
as of June 16, 2003, the “ Note Purchase Agreement
”). Subject to the terms and conditions herein and therein,
under the Forward Sale Agreement, AHM has agreed to deliver to BOA,
or an affiliate thereof (including BAS), Notes with a principal
amount as of December 31, 2005 and through maturity of $33,249,084
(such principal amount representing the Accreted Value as of
December 31, 2005 of Notes with an Initial Value (each as defined
in the Note Purchase Agreement) of $25,000,000), the principal
amount of which will be convertible into a total of 10,455,687
shares of Class A common stock, par value $0.01 per share (the
“ Common Stock ”), of the Company on December
31, 2005 (based on such Accreted Value divided by the conversion
price of $3.18 per share) (the “ Forward Transaction
”).
The Company proposes to file with
the Securities and Exchange Commission (the “
Commission ”) pursuant to Rule 424(b) under the
Securities Act of 1933, as amended (the “ Securities
Act ”), a prospectus supplement to the Prospectus
included in its Registration Statement (both as defined below)
relating to the offer and sale of up to 12,000,000 aggregate number
of shares of Common Stock by BAS in one or more at-the-market
offerings from time to time (the “ Shares
”).
1. Representations and Warranties
of the Company . The Company represents and warrants to, and
agrees with, BAS that:
(a) The Company has filed with the
Commission a registration statement on Form S-3 (No. 333-102966)
and amendments thereto, and related preliminary prospectuses for
the registration under the Securities Act, of the Shares which
registration statement, as so amended (including post-effective
amendments, if any), has been declared effective by the
1
Commission and a copy of which has heretofore
been delivered to BAS. The registration statement, as amended at or
after the time it became effective, including the prospectus,
financial statements, schedules and exhibits is hereinafter
referred to as the “ Registration Statement .”
If the Company has filed or is required pursuant to the terms
hereof to file a registration statement pursuant to Rule 462(b)
under the Securities Act registering additional shares of Common
Stock (a “ Rule 462(b) Registration Statement
”), then, unless otherwise specified, any reference herein to
the term “Registration Statement” shall be deemed to
include any such Rule 462(b) Registration Statement. Other than a
Rule 462(b) Registration Statement, which, if filed, becomes
effective upon filing, no other document with respect to the
Registration Statement has heretofore been filed with the
Commission. All of the Shares have been registered under the
Securities Act pursuant to the Registration Statement or, if any
Rule 462(b) Registration Statement is filed, will be duly
registered under the Securities Act with the filing of such Rule
462(b) Registration Statement. No stop order suspending the
effectiveness of either the Registration Statement or the Rule
462(b) Registration Statement, if any, has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission. The Company, if required by the rules and regulations
of the Commission under the Securities Act (the “
Securities Act Regulations ”), proposes to file the
Prospectus Supplement with the Commission pursuant to Rule 424(b)
under the Securities Act (“ Rule 424(b) ”). The
Prospectus, in the form in which it was filed with the Commission
in the Registration Statement pursuant to Rule 415 of the
Securities Act Regulations, is hereinafter referred to as the
“ Prospectus .” The Prospectus Supplement
relating to the Shares for use in connection with the offering and
sale of the Shares, in the form in which it is to be filed with the
Commission pursuant to Rule 424(b) of the Securities Act
Regulations, is hereinafter referred to as the “
Prospectus Supplement .” References to the term
“Prospectus Supplement,” unless otherwise indicated,
shall refer to the Prospectus and the Prospectus Supplement. Any
preliminary prospectus supplement relating to the Shares or
prospectus supplement subject to completion relating to the Shares
included in the Registration Statement or filed with the Commission
pursuant to Rule 424(b) under the Securities Act is hereafter
called a “ Preliminary Prospectus Supplement .”
All references in this Agreement to the Registration Statement, the
Rule 462(b) Registration Statement, the Prospectus, a Preliminary
Prospectus Supplement and the Prospectus Supplement, or any
amendments or supplements to any of the foregoing, shall be deemed
to include any copy thereof filed with the Commission pursuant to
its Electronic Data Gathering, Analysis and Retrieval
System.
(b) The Registration Statement and
the Prospectus, at the time the Registration Statement became
effective, complied in all material respects with the requirements
of the Securities Act and the Securities Act Regulations, and the
Prospectus Supplement when filed with the Commission will comply in
all material respects with the requirements of the Securities Act
and the Securities Act Regulations. The Registration Statement,
when declared effective by the Commission, did not contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus Supplement, as of
the date thereof (unless the term “Prospectus
Supplement” refers to a prospectus supplement which has been
provided to BAS by the Company for use in connection with the
offering of the Shares which differs from the Prospectus Supplement
filed with the Commission pursuant to Rule 424(b) of the Securities
Act Regulations, in which case at the time it is first provided to
BAS for such use), did not and on the applicable Delivery Date (as
defined below), will not, include any untrue statement of a
material fact or omit to state a material fact necessary to make
the statements therein, in the light of the
circumstances
2
under which they were made, not misleading;
provided , however , that the representations and
warranties in this Section (1)(b) shall not apply to statements in
or omissions from the Registration Statement or Prospectus
Supplement made in reliance upon and in conformity with information
relating to BAS furnished to the Company in writing by BAS
expressly for use in the Registration Statement or the Prospectus
Supplement. The parties acknowledge and agree that such information
provided by or on behalf of BAS consists solely of the material
included in paragraphs 1 through 8, inclusive under the caption
“Plan of Distribution” in the Prospectus Supplement.
Each Preliminary Prospectus Supplement and Prospectus Supplement
filed as part of the Registration Statement, as part of any
amendment thereto or pursuant to Rule 424 under the Securities Act
Regulations, if filed by electronic transmission pursuant to
Regulation S-T under the Securities Act, was identical to the copy
thereof delivered to BAS for use in connection with the offer and
sales of the Shares (except as may be permitted by Regulation S-T
under the Securities Act). There are no contracts or other
documents required to be described in the Prospectus Supplement or
to be filed as exhibits to the Registration Statement under the
Securities Act that have not been described or filed therein as
required, and there are no business relationships or related-party
transactions involving the Company or any of its subsidiaries or
any other person required to be described in the Prospectus
Supplement that have not been described therein as
required.
(c) Each of the Company and its
subsidiaries (i) has been duly organized and is validly existing as
a corporation in good standing under the laws of its respective
jurisdiction of incorporation, (ii) has all requisite corporate
power and authority to carry on its business as it is currently
being conducted and as described in the Prospectus Supplement and
to own, lease and operate its properties and (iii) is duly
qualified and in good standing as a foreign corporation authorized
to do business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such
qualification except, with respect to clauses (i) (as it relates to
good standing) and (iii), where the failure to be so qualified or
in good standing does not and could not reasonably be expected to
(x) individually or in the aggregate, result in a material adverse
effect on the properties, business, results of operations,
condition (financial or otherwise), affairs or prospects of the
Company and its subsidiaries, taken as a whole, (y) interfere with
or adversely affect the marketability of the Shares pursuant hereto
or (z) in any manner draw into question the validity of this
Agreement or the transactions described in the Prospectus
Supplement under the caption “Use of Proceeds” (any of
the events set forth in clauses (x), (y) or (z), a “
Material Adverse Effect ”).
(d) All of the outstanding shares of
capital stock of the Company, including the Shares offered pursuant
to the Prospectus Supplement, have been duly authorized, validly
issued, and are fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights. The Shares, when
issued and delivered upon conversion of the Notes pursuant to the
Note Purchase Agreement, will be duly authorized and validly
issued, fully paid and nonassessable, and will not have been issued
in violation of or subject to any preemptive or similar rights. At
March 31, 2005, the Company had the capitalization as set forth in
the Prospectus Supplement under the caption
“Capitalization” (subject in each case to the
assumptions set forth above such caption).
(e) Except as disclosed in the
Prospectus Supplement, all of the outstanding capital stock of, or
other ownership interests in, the Company’s subsidiaries is
owned
3
by the Company, free and clear of any security
interest, claim, lien, limitation on voting rights or encumbrance;
and all such securities have been duly authorized, validly issued,
and are fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights.
(f) Except as disclosed in the
Prospectus Supplement there are not currently, and will not be as a
result of the Forward Transaction, any outstanding subscriptions,
rights, warrants, calls, commitments of sale or options to acquire
or instruments convertible into or exchangeable for, any capital
stock or other equity interest of the Company or any of its
subsidiaries (other than options issued pursuant to the
Company’s 1998 Shares Award Plan and Employee Stock Purchase
Plan or ordinary course option grants consistent with the
Company’s past practices).
(g) The Common Stock (including the
Shares), is registered pursuant to Section 12(g) of the Securities
Exchange Act of 1934, as amended (the “ Exchange Act
”), and is listed for quotation on the Nasdaq National Market
System (“ Nasdaq ”), and the Company has taken
no action designed to, or likely to have the effect of, terminating
the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from Nasdaq, nor has the Company
received any notification that the Commission or Nasdaq is
contemplating terminating such registration or listing.
(h) The Company has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement, the Acknowledgment and Agreement,
dated the date hereof, among the Issuers, AHM and BOA (the “
Acknowledgement and Agreement ”), and to consummate
the transactions contemplated hereby and thereby.
(i) The statistical and
market-related data included in the Prospectus Supplement are based
on or are derived from sources that the Company believes to be
reliable and accurate in all material respects.
(j) This Agreement and the
Acknowledgment and Agreement have been duly and validly authorized,
executed and delivered by the Company and are the legal, valid and
binding agreement of the Company, enforceable against the Company
in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting the rights of creditors generally and
subject to general principles of equity, and except insofar as
indemnification and contribution provisions may be limited by
applicable law or equitable principles.
(k) Neither the Company nor any of
its subsidiaries is, nor after giving effect to the Forward
Transaction will be, (i) in violation of its certificate of
incorporation or bylaws, (ii) in default in the performance of any
bond, debenture, note, indenture, mortgage, deed of trust or other
agreement or instrument to which it is a party or by which it is
bound or to which any of its properties is subject or (iii) in
violation of any local, state or federal law, statute, ordinance,
rule, regulation, requirement, judgment or court decree (including,
without limitation, the Communications Act of 1934 (the “
Communications Act ”) and the rules and regulations of
the Federal Communications Commission (the “ FCC
”), and environmental laws, statutes, ordinances, rules
regulations, judgments or court decrees) applicable to the Company
or any of its subsidiaries or any of their assets or properties
(whether owned or leased) other than, in the case
4
of clauses (ii) and (iii), any default or
violation that (A) could not reasonably be expected to have a
Material Adverse Effect or (B) which is disclosed in the Prospectus
Supplement. There exists no condition that, with notice, the
passage of time or otherwise, would constitute a default under any
such document or instrument, except as disclosed in the Prospectus
or Prospectus Supplement.
(l) Assuming that BOA and its
affiliates do not directly or indirectly own or hold any debt or
equity interest in, or have any rights with respect to, the Company
or XM Satellite Radio Inc. except as set forth in the Forward Sale
Agreement and the Note Purchase Agreement, then no consent,
approval, authorization or order of the FCC is required to be
obtained under the Communications Laws for the consummation of the
transactions contemplated under the Forward Sale Agreement or the
conversion by BOA of the Notes pledged in connection therewith or
to be received upon settlement thereof as long as such conversion
does not result in the direct or indirect ownership or control by
BOA and its affiliates of more than 49.9% of the voting securities
of the Company or XM Satellite Radio Inc.
(m) None of (i) the execution,
delivery or performance by the Company of this Agreement and the
Acknowledgment and Agreement, (ii) the sale of the Shares and (iii)
the consummation by the Company of the transactions contemplated
hereby and thereby and in the Prospectus Supplement violate,
conflict with or constitute a breach of any of the terms or
provisions of, or a default under (or an event that with notice or
the lapse of time, or both, would constitute a default), or require
consent under, or result in the imposition of a lien on any
properties of the Company or any of its subsidiaries, or an
acceleration of any indebtedness of the Company or any of its
subsidiaries pursuant to, (A) the certificate of incorporation or
bylaws of the Company or any of its subsidiaries, (B) any bond,
debenture, note, indenture, mortgage, deed of trust, contract or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or its subsidiaries
or their properties is or may be bound, (C) any statute, rule or
regulation applicable to the Company or any of its subsidiaries or
any of their assets or properties or (D) any judgment, order or
decree of any court or governmental agency or authority having
jurisdiction over the Company or any of its subsidiaries or any of
their assets or properties, other than, in the case of clause (B)
above, (x) any default or violation that (1) could not reasonably
be expected to have a Material Adverse Effect or (2) which is
disclosed in the Prospectus Supplement or (y) any
“piggyback” registration rights held by investors that
will have been waived on or prior to the applicable Delivery Date.
No consent, approval, authorization or order of, or filing,
registration, qualification, license or permit of or with, (i) any
court or governmental agency, body or administrative agency or (ii)
any other person is required for (A) the execution, delivery and
performance by the Company of this Agreement and the Acknowledgment
and Agreement or (B) the sale of the Shares and the transactions
contemplated hereby and thereby, except such as have been obtained
and made under the Securities Act and state securities or Blue Sky
laws and regulations or such as may be required by the National
Association of Securities Dealers, Inc. (the “ NASD
”).
(n) There is (i) no action, suit or
proceeding before or by any court, arbitrator or governmental
agency, body or official, domestic or foreign, now pending or, to
the best knowledge of the Company or any of its subsidiaries,
threatened or contemplated to which the Company or any of its
subsidiaries is a party or to which the business or property of the
Company or any of its subsidiaries is subject, (ii) no statute,
rule, regulation or order that has been
5
enacted, adopted or issued by any governmental
agency or that has been proposed by any governmental body or (iii)
no injunction, restraining order or order of any nature by a
federal or state court or foreign court of competent jurisdiction
to which the Company or any of its subsidiaries is or may be
subject or to which the business, assets, or property of the
Company or any of its subsidiaries are or may be subject, that, in
the case of clauses (i), (ii) and (iii) above, (A) is required to
be disclosed in the Prospectus Supplement and that is not so
disclosed or (B) except as has been disclosed in the Prospectus
Supplement could reasonably be expected to, individually or in the
aggregate, result in a Material Adverse Effect.
(o) No action has been taken and no
statute, rule, regulation or order has been enacted, adopted or
issued by any governmental agency that prevents or suspends the use
of the Prospectus Supplement; no injunction, restraining order or
order of any kind by a federal or state court of competent
jurisdiction has been issued that prevents or suspends the sale of
the Shares in any jurisdiction referred to in Section 1(c) hereof
or that could adversely affect the consummation of the transactions
contemplated by this Agreement or the Prospectus Supplement; and
every request of any securities authority or agency of any
jurisdiction for additional information has been complied with in
all material respects.
(p) There is (i) no significant
unfair labor practice complaint pending against the Company or any
of its subsidiaries nor, to the best knowledge of the Company,
threatened against any of them, before the National Labor Relations
Board, any state or local labor relations board or any foreign
labor relations board, and no significant grievance or significant
arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Company or any of
its subsidiaries nor, to the best knowledge of the Company,
threatened against any of them, (ii) no significant strike, labor
dispute, slowdown or stoppage pending against the Company or any of
its subsidiaries nor, to the best knowledge of the Company,
threatened against the Company or any of its subsidiaries and (iii)
to the best knowledge of the Company, no union representation
question existing with respect to the employees of the Company or
any of its subsidiaries that, in the case of clauses (i), (ii) or
(iii) above, could reasonably be expected to result in a Material
Adverse Effect. To the best knowledge of the Company, no collective
bargaining organizing activities are taking place with respect to
the Company or any of its subsidiaries. None of the Company or any
of its subsidiaries has violated (A) any federal, state or local
law or foreign law relating to discrimination in hiring, promotion
or pay of employees, (B) any applicable wage or hour laws or (C)
any provision of the Employee Retirement Income Security Act of
1974, as amended, and the regulations and published interpretations
thereunder (collectively, “ ERISA ”), which in
the case of clause (A), (B) or (C) above could reasonably be
expected to result in a Material Adverse Effect.
(q) None of the Company or any of
its subsidiaries has violated any environmental, safety or similar
law or regulation applicable to it or its business or property
relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants
or contaminants (“ Environmental Laws ”), lacks
any permit, license or other approval required of it under
applicable Environmental Laws or is violating any term or condition
of such permit, license or approval, which could reasonably be
expected to, either individually or in the aggregate, have a
Material Adverse Effect.
6
(r) Each of the Company and its
subsidiaries has (i) good and marketable title to all of the
properties and assets described in the Prospectus Supplement as
owned by it, free and clear of all liens, charges, encumbrances and
restrictions, except such as are described in the Prospectus
Supplement or as would not have a Material Adverse Effect, (ii)
peaceful and undisturbed possession of its properties under all
material leases to which it is a party as lessee, (iii) all
licenses, certificates, permits, authorizations, approvals,
franchises and other rights from, and has made all declarations and
filings with, all federal, state and local authorities, all
self-regulatory authorities and all courts and other tribunals
(each an “ Authorization ”) necessary to engage
in the business conducted by it in the manner described in the
Prospectus Supplement, except as described in the Prospectus
Supplement or where failure to hold such Authorizations would not,
individually or in the aggregate, have a Material Adverse Effect
and (iv) no reason to believe that any governmental body or agency
is considering limiting, suspending or revoking any such
Authorization. Except where the failure to be in full force and
effect would not have a Material Adverse Effect, all such
Authorizations are valid and in full force and effect, and each of
the Company and its subsidiaries is in compliance in all material
respects with the terms and conditions of all such Authorizations
and with the rules and regulations of the regulatory authorities
having jurisdiction with respect thereto. All material leases to
which the Company or any of its subsidiaries is a party are valid
and binding, and no default by the Company or any subsidiary has
occurred and is continuing thereunder and, to the best knowledge of
the Company and its subsidiaries, no material defaults by the
landlord are existing under any such lease that could reasonably be
expected to result in a Material Adverse Effect.
(s) Each of the Company and its
subsidiaries owns, possesses or has the right to employ all
patents, patent rights, licenses (including all FCC, state, local
or other regulatory licenses), inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, software, systems or
procedures), trademarks, service marks and trade names, inventions,
computer programs, technical data and information (collectively,
the “ Intellectual Property ”) presently
employed by it in connection with the businesses now operated by it
or that are proposed to be operated by it or its subsidiaries free
and clear of and without violating any right, claimed right,
charge, encumbrance, pledge, security interest, restriction or lien
of any kind of any other person and none of the Company or any of
its subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any of the
foregoing, except as (1) disclosed in the Prospectus Supplement or
(2) as could not reasonably be expected to have a Material Adverse
Effect. To the best knowledge of the Company, the use of the
Intellectual Property in connection with the business and
operations of the Company and its subsidiaries does not infringe on
the rights of any person, except as disclosed in the Prospectus
Supplement or as could not reasonably be expected to have a
Material Adverse Effect.
(t) None of the Company or any of
its subsidiaries or, to the best knowledge of the Company, any of
their respective officers, directors, partners, employees, agents
or affiliates or any other person acting on behalf of the Company
or any of its subsidiaries has, directly or indirectly, given or
agreed to give any money, gift or similar benefit (other than legal
price concessions to customers in the ordinary course of business)
to any customer, supplier, employee or agent of a customer or
supplier, official or employee of any governmental agency (domestic
or foreign), instrumentality of any government (domestic or
foreign) or any political party or candidate for office (domestic
or foreign) or other person who was, is or may be in a
7
position to help or hinder the business of the
Company or any of its subsidiaries (or assist the Company or any of
its subsidiaries in connection with any actual or proposed
transaction), which (i) might subject the Company or any of its
subsidiaries, or any other individual or entity, to any damage or
penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign), (ii) if not given in the past,
might have had a Material Adverse Effect or (iii) if not continued
in the future, might have a Material Adverse Effect.
(u) All material tax returns
required to be filed by the Company and each of its subsidiaries in
all jurisdictions have been so filed. All taxes, including
withholding taxes, penalties and interest, assessments, fees and
other charges due or claimed to be due from such entities or that
are due and payable have been paid, other than those being
contested in good faith and for which adequate reserves have been
provided or those currently payable without penalty or interest. To
the knowledge of the Company, there are no material proposed
additional tax assessments against the Company, the assets or
property of the Company or any of its subsidiaries. The Company has
made adequate charges, accruals and reserves in the applicable
financial statements included in the Prospectus Supplement in
respect of all federal, state and foreign income and franchise
taxes for all periods as to which the tax liability of the Company
or any of its consolidated subsidiaries has not been finally
determined.
(v) None of the Company or any of
its subsidiaries is (i) an “investment company” or a
company “controlled” by an “investment
company” within the meaning of the Investment Company Act of
1940, as amended (the “ Investment Company Act
”) or (ii) a “holding company” or a
“subsidiary company” or an “affiliate” of a
holding company within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(w) Except as disclosed in the
Prospectus Supplement, there are no holders of securities of the
Company or any of its subsidiaries who, by reason of the execution
by the Company of this Agreement to which it is a party or the
consummation by the Company or any of its subsidiaries of the
transactions contemplated hereby or in the Prospectus Supplement,
have the right to request or demand that the Company or any of its
subsidiaries register under the Securities Act or analogous foreign
laws and regulations securities held by them, other than such that
will have been duly waived on or prior to the applicable Delivery
Date.
(x) Each of the Company and its
subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles 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 the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences
thereto.
(y) Except as disclosed in the
Prospectus Supplement, each of the Company and its subsidiaries
maintains insurance covering its properties, operations, personnel
and businesses. Such insurance insures against such losses and
risks as are adequate in accordance with customary industry
practice to protect the Company and its subsidiaries and their
respective businesses. None of the Company or any of its
subsidiaries has received notice from
8
any insurer or agent of such insurer that
substantial capital improvements or other expenditures will have to
be made in order to continue such insurance. All such insurance is
outstanding and duly in force on the date hereof, subject only to
changes made in the ordinary course of business, consistent with
past practice, which do not, singly or in the aggregate, materially
alter the coverage thereunder or the risks covered thereby. The
Company has no reason to believe that it or any subsidiary will not
be able (a) to renew its existing insurance coverage as and when
such policies expire or (b) to obtain comparable coverage from
similar institutions as may be necessary or appropriate to conduct
its business as now conducted or as presently contemplated and at a
cost that would not result in a Material Adverse Effect.
(z) None of the Company or any of
its subsidiaries has (i) taken, directly or indirectly, any action
designed to, or that might reasonably be expected to, cause or
result in stabilization or manipulation of the price of any
security of the Company or any of its subsidiaries to facilitate
the sale or resale of the Shares or (ii) since the date of the
Preliminary Prospectus Supplement, (A) sold, bid for, purchased or
paid any person any compensation for soliciting purchases of, the
Shares or (B) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the
Company or any of its subsidiaries.
(aa) The Company and its
subsidiaries and any “employee benefit plan” (as
defined under ERISA) established or maintained by the Company, its
subsidiaries or their ERISA Affiliates (as defined below) are in
compliance in all material respects with ERISA. “ ERISA
Affiliates ” means, with respect to the Company or a
subsidiary, any member of any group of organizations described in
Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations
thereunder (the “ Code ”) of which the Company
or such subsidiary is a member. No “reportable event”
(as defined under ERISA) has occurred or is reasonably expected to
occur with respect to any “employee benefit plan”
established or maintained by the Company, its subsidiaries or any
of their ERISA Affiliates. No “employee benefit plan”
established or maintained by the Company, its subsidiaries or any
of their ERISA Affiliates, if such “employee benefit
plan” were terminated, would have any “amount of
unfunded benefit liabilities” (as defined under ERISA).
Neither the Company, its subsidiaries nor any of their ERISA
Affiliates has incurred or reasonably expects to incur any
liability under (i) Title IV of ERISA with respect to termination
of, or withdrawal from, any “employee benefit plan” or
(ii) Sections 412, 4971, 4975 or 4980B of the Code. Each
“employee benefit plan” established or maintained by
the Company, its subsidiaries or any of their ERISA Affiliates that
is intended to be qualified under Section 401(a) of the Code is so
qualified and nothing has occurred, whether by action or failure to
act, which would cause the loss of such qualification.
(bb) Subsequent to the date as of
which information is given in the Prospectus Supplement, except as
set forth in the Prospectus Supplement, (i) none of the Company or
any of its subsidiaries has incurred any liabilities or
obligations, direct or contingent, that are material, individually
or in the aggregate, to the Company and its subsidiaries taken as a
whole, nor entered into any transaction not in the ordinary course
of business, (ii) none of the Company or any of its subsidiaries
has incurred any liabilities or obligations, direct or contingent,
that will be material to the Company and its subsidiaries taken as
a whole, (iii) there has not been, singly or in the aggregate, any
change or development that could reasonably be expected to result
in a Material Adverse Effect, (iv) except for the dividends
consisting of shares of Class A
9
Common Stock paid to the holders of the
Company’s Series B convertible redeemable preferred stock on
May 1, 2005, there has been no dividend or distribution of any kind
declared, paid or made by the Company or any of its subsidiaries on
any class of its capital stock, (v) there has been no change in
accounting methods or practices (including any change in
depreciation or amortization policies or rates) by the Company or
any of its subsidiaries, (vi) there has been no revaluation by the
Company or any of its subsidiaries of any of their assets, (vii)
there has been no material increase in the salary or other
compensation payable or to become payable by the Company or any of
its subsidiaries to any of their officers, directors, employees or
advisors, nor any declaration, payment or commitment or obligation
of any kind for the payment by the Company or any of its
subsidiaries of a bonus or other additional salary or compensation
to any such person, (viii) there has been no amendment or
termination of any material contract, agreement or license to which
the Company or any subsidiary is a party or by which it is bound,
(ix) there has been no waiver or release of any material right or
claim of the Company or any subsidiary, including any write-off or
other compromise of any material account receivable of the Company
or any subsidiary and (x) there has been no material change in
pricing or royalties set or charged by the Company or any
subsidiary to their respective customers or licensees or in pricing
or royalties set or charged by persons who have licensed
Intellectual Property Rights to the Company or any of its
subsidiaries.
(cc) KPMG LLP, who has expressed
their opinion with respect to the financial statements (which term
as used in this Agreement includes the related notes thereto) and
supporting schedules included in the Prospectus Supplement, are
independent public or certified public accountants within the
meaning of Regulation S-X under the Securities Act and the Exchange
Act. Except as expressly stated in the letters delivered pursuant
to Section 7(g) hereof, the historical financial statements,
together with related schedules and notes thereto, comply as to
form in all material respects with the requirements applicable to
registration statements on Form S-1 under the Securities Act and
present fairly in all material respects the financial position and
results of operations of the Company and its subsidiaries, at the
dates and for the periods indicated. Such financial statements have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods
presented. The pro forma financial information included in the
Prospectus Supplement has been prepared on a basis consistent with
such historical financial statements of the Company and its
subsidiaries, and gives effect to assumptions made on a reasonable
basis and present fairly in all material respects the historical
and proposed transactions contemplated by this Agreement and the
Prospectus Supplement.
(dd) The financial statements,
together with the related notes, included in the Prospectus
Supplement present fairly in all material respects the consolidated
financial position of the Company and its subsidiaries as of and at
the dates indicated and the results of their operations and cash
flows for the periods specified. Such financial statements have
been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods
involved, except as may be expressly stated in the related notes
thereto. The financial data set forth in the Prospectus Supplement
under the caption “Capitalization,” and the financial
data schedule set forth in the Registration Statement fairly
present the information set forth therein on a basis consistent
with that of the audited financial statements contained in the
Prospectus Supplement.
10
(ee) Except as pursuant to this
Agreement, there are no contracts, agreements or understandings
between the Company and any other person that would give rise to a
valid claim against the Company or BAS for a brokerage commission,
finder’s fee or like payment in connection with the sale of
the Shares.
(ff) The statements (including the
assumptions described therein) included in the Prospectus
Supplement (i) are within the coverage of Rule 175(b) under the
Securities Act to the extent such data constitute forward looking
statements as defined in Rule 175(c) and (ii) were made by the
Company with a reasonable basis and reflect the Company’s
good faith estimate of the matters described therein.
(gg) Each certificate signed by any
officer of the Company and delivered to BAS or counsel for BAS
shall be deemed to be a representation and warranty by the Company
to BAS as to the matters covered thereby.
(hh) The conditions for use of Form
S-3, as in effect on the date hereof and as in effect immediately
prior to October 21, 1992, as set forth in the General Instructions
thereto, have been satisfied.
The Company acknowledges that BAS
and, for purposes of the opinions to be delivered to BAS pursuant
to Section 7 hereof, counsel to the Company and counsel to BAS,
will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
2. Representations and Warranties
of AHM . AHM represents and warrants to, and agrees with, BAS
on the date hereof and on each day of the Prospectus Delivery
Period (as defined below) that:
(a) AHM has full right, power and
authority to execute and deliver this Agreement and the
Acknowledgment and Agreement, to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated by
this Agreement, the Forward Sale Agreement, the Acknowledgment and
Agreement, the Registration Statement and the Prospectus
Supplement. This Agreement, the Acknowledgment and Agreement and
the transactions contemplated by this Agreement, the Forward Sale
Agreement, the Acknowledgment and Agreement, the Registration
Statement and the Prospectus Supplement have been duly and validly
authorized by AHM. This Agreement and the Acknowledgment and
Agreement have been duly and validly executed and delivered by AHM
and constitute the legal, valid and binding obligations of AHM,
enforceable in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors’ rights generally and except as enforceability may
be subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).
(b) No consent of, from or with any
judicial, regulatory or other legal or governmental agency or body
or any third party, foreign or domestic, is required for the
execution, delivery and performance by AHM of this Agreement or the
Forward Sale Agreement, or the consummation by AHM of the
transactions contemplated herein or therein,
11
except such as have been obtained under the
Securities Act and such as may be required under the state or
foreign securities laws, the blue sky laws of any jurisdiction, the
NASD or the NASDR.
(c) The execution, delivery and
performance by AHM of this Agreement, the Acknowledgment and
Agreement and the Forward Sale Agreement, and the consummation of
any of the transactions contemplated herein or therein or in the
Prospectus Supplement by AHM or the fulfillment of the terms hereof
or thereof by AHM will not (A) conflict with, result in a breach or
violation of, or constitute a default (or an event that with notice
or lapse of time, or both, would constitute a default) under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of AHM (other than pursuant
to the Forward Sale Agreement) pursuant to any law, statute, rule
or regulation or the terms of any material indenture or other
material agreement or instrument to which AHM is party or bound, or
to which any of the material property or material assets of AHM is
subject or (B) result in any violation of the provisions of the
Articles of Incorporation or Bylaws of AHM or (C) result in any
violation or breach of any judgment, order, decree statute, rule or
regulation applicable to AHM of any court or any public,
governmental or regulatory agency or body, administrative agency or
arbitrator having jurisdiction over AHM.
(d) Except as disclosed in the
Prospectus Supplement, there are no contracts, agreements or
understandings between AHM and any person that would give rise to a
valid claim against BAS for a brokerage commission, finder’s
fee or other like payment in connection with this Forward
Transaction.
(e) AHM has reviewed and is familiar
with the Registration Statement and the Prospectus Supplement and
(i) has no knowledge of any misstatement of a material fact or
failure to state a material fact necessary to make the statements
in the Prospectus Supplement, in light of the circumstances under
which they were made, not misleading and (iii) is not prompted to
enter into this Agreement or the Forward Transaction by any
material adverse information concerning the Company or any
subsidiary which is not set forth i
