Exhibit 1.1
EARTHLINK,
INC.
$225,000,000 Principal
Amount
3.25% Convertible Senior Notes due
2026
Underwriting
Agreement
November 13, 2006
Underwriting
Agreement
November 13, 2006
UBS Securities LLC
Banc of America Securities LLC
as Representatives of the
Underwriters
c/o
UBS Securities LLC
299 Park Avenue
New York, New York 10171-0026
Banc of America Securities LLC
9 W. 57th Street
New York, New York 10019
Ladies and Gentlemen:
EARTHLINK, INC., a Delaware
corporation (the “ Company ”), proposes to issue
and sell to the underwriters named in Schedule A annexed
hereto (the “ Underwriters ”) $225,000,000
aggregate principal amount of its 3.25% Convertible Senior Notes
due 2026 (the “ Firm Notes ”). In
addition, solely for the purpose of covering over-allotments, the
Company proposes to grant to the Underwriters the option to
purchase from the Company up to an additional $33,750,000 aggregate
principal amount of the Company’s 3.25% Convertible Senior
Notes due 2026 (the “ Additional Notes ”).
The Firm Notes and the Additional Notes are hereinafter
collectively sometimes referred to as the “ Notes
.” UBS Securities Inc. (“ UBS ”) and
Banc of America Securities LLC are serving as the representatives
(the “ Representatives ”) of the
Underwriters.
The Notes are to be issued pursuant
to an indenture (the “ Indenture ”) to be dated
as of November 17, 2006, between the Company and Wells Fargo Bank,
N.A., as trustee (the “ Trustee ”). The
Notes will be convertible in accordance with their terms and the
terms of the Indenture into cash and, if applicable, shares of the
common stock (the “ Common Stock ”) of the
Company, $0.01 par value per share (the “ Shares
”).
The Notes and the Shares are
described in the Prospectus which is referred to below.
The Company has prepared and filed,
in accordance with the provisions of the Securities Act of 1933, as
amended, and the rules and regulations thereunder (collectively,
the “ Act ”), with the Securities and Exchange
Commission (the “ Commission ”) a registration
statement on Form S-3 (File No. 333-138600) under the Act (the
“ registration statement ”), including a
prospectus, which registration statement incorporates by reference
documents which the Company has filed, or will file, in accordance
with the provisions of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (collectively,
the “ Exchange Act ”). Such registration
statement has become effective under the Act.
Except where the context otherwise
requires, “ Registration Statement ,” as used
herein, means the registration statement, as amended at the time of
such registration statement’s effectiveness for purposes of
Section 11 of the Act, as such section applies to the respective
Underwriters (the “ Effective Time ”), including
(i) all documents filed as a part thereof or incorporated or deemed
to be incorporated by reference therein, (ii) any information
contained or incorporated by reference in a prospectus filed with
the Commission pursuant to Rule 424(b) under the Act, to the extent
such information is deemed, pursuant to Rule 430B or Rule 430C
under the Act, to be part of the registration statement at the
Effective Time, and (iii) any registration statement filed to
register the offer and sale of Notes pursuant to Rule 462(b) under
the Act.
The Company has furnished to you,
for use by the Underwriters and by dealers in connection with the
offering of the Notes, copies of one or more preliminary prospectus
supplements relating to the Notes. Except where the context
otherwise requires, “ Pre-Pricing Prospectus ,”
as used herein, means each such preliminary prospectus supplement,
in the form so furnished, and the documents incorporated by
reference therein, including any basic prospectus (whether or not
in preliminary form) furnished to you by the Company and attached
to or used with such preliminary prospectus supplement.
Except where the context otherwise requires, “ Basic
Prospectus ,” as used herein, means any such basic
prospectus and any basic prospectus furnished to you by the Company
and attached to or used with the Prospectus Supplement (as defined
below).
Except where the context otherwise
requires, “ Prospectus Supplement ,” as used
herein, means the final prospectus supplement, relating to the
Notes, filed by the Company with the Commission pursuant to Rule
424(b) under the Act on or before the second business day after the
date hereof (or such earlier time as may be required under the
Act), in the form furnished by the Company to you for use by the
Underwriters and by dealers in connection with the offering of the
Notes.
Except where the context otherwise
requires, “ Prospectus ,” as used herein, means
the Prospectus Supplement together with the Basic Prospectus
attached to or used with the Prospectus Supplement.
“ Permitted Free Writing
Prospectuses ,” as used herein, means the documents
listed on Schedule B attached hereto and each “road
show” (as defined in Rule 433 under the Act), if any, related
to the offering of the Notes contemplated hereby that is a
“written communication” (as defined in Rule 405 under
the Act). The Underwriters have not offered or sold and will
not offer or sell, without the Company’s consent, any Notes
by means of any “free writing prospectus” (as defined
in Rule 405 under the Act) that is required to be filed by the
Underwriters with the Commission pursuant to Rule 433 under the
Act, other than a Permitted Free Writing Prospectus and customary
notices in respect of the offering of Notes through the Bloomberg
system.
“ Disclosure Package
,” as used herein, means any Pre-Pricing Prospectus or Basic
Prospectus, in either case together with any combination of one or
more of the Permitted Free Writing Prospectuses, if any.
2
Any reference herein to the
registration statement, the Registration Statement, any Basic
Prospectus, any Pre-Pricing Prospectus, the Prospectus Supplement,
the Prospectus or any Permitted Free Writing Prospectus shall be
deemed to refer to and include the documents, if any, incorporated
by reference, or deemed to be incorporated by reference, therein
(the “ Incorporated Documents ”), including,
unless the context otherwise requires, the documents, if any, filed
as exhibits to such Incorporated Documents. Any reference
herein to the terms “ amend ,” “
amendment ” or “ supplement ” with
respect to the Registration Statement, any Basic Prospectus, any
Pre-Pricing Prospectus, the Prospectus Supplement, the Prospectus
or any Permitted Free Writing Prospectus shall be deemed to refer
to and include the filing of any document under the Exchange Act on
or after the initial effective date of the Registration Statement,
or the date of such Basic Prospectus, such Pre-Pricing Prospectus,
the Prospectus Supplement, the Prospectus or such Permitted Free
Writing Prospectus, as the case may be, and deemed to be
incorporated therein by reference.
As used in this Agreement, “
business day ” shall mean a day on which the New York
Stock Exchange (the “ NYSE ”) is open for
trading. The terms “herein,”
“hereof,” “hereto,”
“hereinafter” and similar terms, as used in this
Agreement, shall in each case refer to this Agreement as a whole
and not to any particular section, paragraph, sentence or other
subdivision of this Agreement. The term “or,” as
used herein, is not exclusive.
The Company and the Underwriters
agree as follows:
1.
Sale and Purchase . Upon the basis of the
representations and warranties and subject to the other terms and
conditions herein set forth, the Company agrees to issue and sell
to the respective Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase from the Company the
aggregate principal amount of Firm Notes set forth opposite the
name of such Underwriter in Schedule A attached hereto,
subject to adjustment in accordance with Section 8 hereof, in each
case at a purchase price of 97.313% of the principal amount thereof
(the “ Purchase Price ”).
In addition, the Company hereby
grants to the several Underwriters the option (the “
Over-Allotment Option ”) to purchase, and upon the
basis of the representations and warranties and subject to the
terms and conditions herein set forth, the Underwriters shall have
the right to purchase, severally and not jointly, from the Company,
ratably in accordance with the aggregate principal amount of Firm
Notes to be purchased by each of them, all or a portion of the
Additional Notes as may be necessary to cover over-allotments made
in connection with the offering of the Firm Notes, at the Purchase
Price, plus accrued interest, if any, from the “time of
purchase” (as hereinafter defined) to the “additional
time of purchase” (as hereinafter defined), such accrued
interest to be calculated in the same manner and at the same rate
at which interest accrues on the Notes in accordance with their
terms and the terms of the Indenture. The Over-Allotment
Option may be exercised by the Representatives on behalf of the
several Underwriters at any time and from time to time on or before
the thirtieth (30 th
) day following the date of the
Prospectus Supplement by written notice to the Company. Such
notice shall set forth the aggregate principal amount of Additional
Notes as to which the Over-Allotment Option is being exercised and
the date and time when the Additional Notes are to be delivered
(any such date and
3
time being herein referred to as an
“ additional time of purchase ”);
provided , however , that no additional time of
purchase shall be earlier than the “time of purchase”
(as defined below) nor earlier than the second business day after
the date on which the Over-Allotment Option shall have been
exercised nor later than the tenth business day after the date on
which the Over-Allotment Option shall have been exercised.
The principal amount of Additional Notes to be sold to each
Underwriter shall be the principal amount which bears the same
proportion to the aggregate principal amount of Additional Notes
being purchased as the principal amount of Firm Notes set forth
opposite the name of such Underwriter on Schedule A hereto
bears to the aggregate principal amount of Firm Notes, subject to
adjustment in accordance with Section 8 hereof.
2.
Payment and Delivery . Payment of the purchase price
for the Firm Notes shall be made to the Company by Federal Funds
wire transfer, against delivery of the Firm Notes to you through
the facilities of The Depository Trust Company (“ DTC
”) for the respective accounts of the Underwriters.
Such payment and delivery shall be made at 10:00 A.M., New York
City time, on November 17, 2006 (unless another time shall be
agreed to by you and the Company or unless postponed in accordance
with the provisions of Section 8 hereof). The time at which
such payment and delivery are to be made is hereinafter sometimes
called the “ time of purchase .”
Electronic transfer of the Firm Notes shall be made to you at the
time of purchase in such names and in such denominations as you
shall specify.
Payment of the purchase price for
the Additional Notes shall be made at the additional time of
purchase in the same manner and at the same office and time of day
as the payment for the Firm Notes. Electronic transfer of the
Additional Notes shall be made to you at the additional time of
purchase in such names and in such denominations as you shall
specify.
For the purpose of expediting the
checking of the certificates for the Notes by you, the Company
agrees to make such certificates available to you for such purpose
at least one full business day preceding the time of purchase or
the additional time of purchase, as the case may be.
Deliveries of the documents
described in Section 6 hereof with respect to the purchase of the
Notes shall be made at the offices of Davis Polk & Wardwell at
450 Lexington Avenue, New York, New York 10017, at 9:00 A.M., New
York City time, on the date of the closing of the purchase of the
Firm Notes or the Additional Notes, as the case may be.
3.
Representations and Warranties of the Company . The
Company represents and warrants to and agrees with each of the
Underwriters that:
(a)
the Registration Statement has heretofore become effective under
the Act or, with respect to any registration statement to be filed
to register the offer and sale of Notes pursuant to Rule 462(b)
under the Act, will be filed with the Commission and become
effective under the Act no later than 10:00 P.M., New York City
time, on the date of determination of the public offering price for
the Notes; no stop order of the Commission preventing or suspending
the use of any Basic Prospectus, any Pre-Pricing Prospectus, the
Prospectus Supplement, the Prospectus or any Permitted Free
Writing
4
Prospectus, or
the effectiveness of the Registration Statement, has been issued,
and no proceedings for such purpose have been instituted or, to the
Company’s knowledge, are contemplated by the
Commission;
(b)
the Registration Statement complied when it became effective,
complies as of the date hereof and, as amended or supplemented, at
the time of purchase, each additional time of purchase, if any, and
at all times during which a prospectus is required by the Act to be
delivered (whether physically or through compliance with Rule 172
under the Act or any similar rule) in connection with any sale of
Notes, will comply, in all material respects, with the requirements
of the Act; the conditions to the use of Form S-3 in connection
with the offering and sale of the Notes as contemplated hereby have
been satisfied; the Registration Statement constitutes an
“automatic shelf registration statement” (as defined in
Rule 405 under the Act); the Company has not received, from the
Commission, a notice, pursuant to Rule 401(g)(2), of objection to
the use of the automatic shelf registration statement form; as of
the determination date applicable to the Registration Statement
(and any amendment thereof) and the offering contemplated hereby,
the Company is a “well-known seasoned issuer” as
defined in Rule 405 under the Act; the Registration Statement
meets, and the offering and sale of the Notes as contemplated
hereby complies with, the requirements of Rule 415 under the Act
(including, without limitation, Rule 415(a)(5) under the Act); the
Registration Statement did not, as of the Effective Time, contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading; each Pre-Pricing Prospectus
complied, at the time it was filed with the Commission, and
complies as of the date hereof, in all material respects with the
requirements of the Act; at no time during the period that begins
on the earlier of the date of such Pre-Pricing Prospectus and the
date such Pre-Pricing Prospectus was filed with the Commission and
ends at the time of purchase did or will any Pre-Pricing
Prospectus, as then amended or supplemented, include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and
at no time during such period did or will any Pre-Pricing
Prospectus, as then amended or supplemented, together with any
combination of one or more of the then issued Permitted Free
Writing Prospectuses, if any, include an untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; each Basic Prospectus
complied or will comply, as of its date and the date it was or will
be filed with the Commission, complies as of the date hereof (if
filed with the Commission on or prior to the date hereof) and, at
the time of purchase, each additional time of purchase, if any, and
at all times during which a prospectus is required by the Act to be
delivered (whether physically or through compliance with Rule 172
under the Act or any similar rule) in connection with any sale of
Notes, will comply, in all material respects, with the requirements
of the Act; at no time during the period that begins on the earlier
of the date of such Basic Prospectus and the date such Basic
Prospectus was filed with the Commission and ends at the time of
purchase did or will any Basic Prospectus, as then amended or
supplemented, include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the
5
circumstances
under which they were made, not misleading, and at no time during
such period did or will any Basic Prospectus, as then amended or
supplemented, together with any combination of one or more of the
then issued Permitted Free Writing Prospectuses, if any, include an
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; each of the Prospectus Supplement and the Prospectus
will comply, as of the date that it is filed with the Commission,
the date of the Prospectus Supplement, the time of purchase, each
additional time of purchase, if any, and at all times during which
a prospectus is required by the Act to be delivered (whether
physically or through compliance with Rule 172 under the Act or any
similar rule) in connection with any sale of Notes, in all material
respects, with the requirements of the Act (in the case of the
Prospectus, including, without limitation, Section 10(a) of the
Act); at no time during the period that begins on the earlier of
the date of the Prospectus Supplement and the date the Prospectus
Supplement is filed with the Commission and ends at the later of
the time of purchase, the latest additional time of purchase, if
any, and the end of the period during which a prospectus is
required by the Act to be delivered (whether physically or through
compliance with Rule 172 under the Act or any similar rule) in
connection with any sale of Notes did or will any Prospectus
Supplement or the Prospectus, as then amended or supplemented,
include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; at no time during the period that begins on the date of
such Permitted Free Writing Prospectus and ends at the time of
purchase did or will any Permitted Free Writing Prospectus include
an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; provided , however , that the Company
makes no representation or warranty in this Section 3(b) with
respect to any statement contained in the Registration Statement,
any Pre-Pricing Prospectus, the Prospectus or any Permitted Free
Writing Prospectus in reliance upon and in conformity with
information concerning an Underwriter and furnished in writing by
or on behalf of such Underwriter through you to the Company
expressly for use in the Registration Statement, such Pre-Pricing
Prospectus, the Prospectus or such Permitted Free Writing
Prospectus; each Incorporated Document, at the time such document
was filed, or will be filed, with the Commission or at the time
such document became or becomes effective, as applicable, complied
or will comply, in all material respects, with the requirements of
the Exchange Act and did not or will not, as applicable, include an
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading;
(c)
prior to the execution of this Agreement, the Company has not,
directly or indirectly, offered or sold any Notes by means of any
“prospectus” (within the meaning of the Act) or used
any “prospectus” (within the meaning of the Act) in
connection with the offer or sale of the Notes, in each case other
than the Pre-Pricing Prospectuses and the Permitted Free Writing
Prospectuses, if any; the Company has not, directly or indirectly,
prepared, used or referred to any Permitted Free Writing Prospectus
except in compliance with Rule 163 or with Rules 164 and 433 under
the Act; assuming that such Permitted
6
Free Writing
Prospectus is so sent or given after the Registration Statement was
filed with the Commission (and after such Permitted Free Writing
Prospectus was, if required pursuant to Rule 433(d) under the Act,
filed with the Commission), the sending or giving, by any
Underwriter, of any Permitted Free Writing Prospectus will satisfy
the provisions of Rule 164 and Rule 433 (without reliance on
subsections (b), (c) and (d) of Rule 164); the conditions set forth
in one or more of subclauses (i) through (iv), inclusive, of Rule
433(b)(1) under the Act are satisfied, and the registration
statement relating to the offering of the Notes contemplated
hereby, as initially filed with the Commission, includes a
prospectus that, other than by reason of Rule 433 or Rule 431 under
the Act, satisfies the requirements of Section 10 of the Act;
neither the Company nor the Underwriters are disqualified, by
reason of subsection (f) or (g) of Rule 164 under the Act, from
using, in connection with the offer and sale of the Notes,
“free writing prospectuses” (as defined in Rule 405
under the Act) pursuant to Rules 164 and 433 under the Act; the
Company is not an “ineligible issuer” (as defined in
Rule 405 under the Act) as of the eligibility determination date
for purposes of Rules 164 and 433 under the Act with respect to the
offering of the Notes contemplated by the Registration Statement;
the parties hereto agree and understand that the content of any and
all “road shows” (as defined in Rule 433 under the Act)
related to the offering of the Notes contemplated hereby is solely
the property of the Company;
(d)
in accordance with Rule 2710(b)(7)(C)(i) of the National
Association of Securities Dealers, Inc. (the “ NASD
”), the Notes have been registered with the Commission on
Form S-3 under the Act pursuant to the standards for such Form S-3
in effect prior to October 21, 1992;
(e)
as of the date of this Agreement, the Company has an authorized and
outstanding capitalization as set forth in the Registration
Statement, the Pre-Pricing Prospectuses and the Prospectus under
“Capitalization” and “Description of capital
stock” (and any similar sections or information, if any,
contained in any Permitted Free Writing Prospectus), and, as of the
time of purchase and any additional time of purchase, as the case
may be, the Company shall have an authorized and outstanding
capitalization as set forth in the Registration Statement, the
Pre-Pricing Prospectuses and the Prospectus under
“Capitalization” and “Description of capital
stock” (and any similar sections or information, if any,
contained in any Permitted Free Writing Prospectus) (subject, in
each case, to the issuance of shares of Common Stock upon exercise
of stock options and rights disclosed as outstanding in the
Registration Statement (excluding the exhibits thereto), each
Pre-Pricing Prospectus and the Prospectus and the grant of options
under existing stock option plans described in the Registration
Statement (excluding the exhibits thereto), each Pre-Pricing
Prospectus and the Prospectus); all of the issued and outstanding
shares of capital stock, including the Common Stock, of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable, have been issued in compliance with all applicable
securities laws and were not issued in violation of any preemptive
right, resale right, right of first refusal or similar right; upon
issuance, the Shares will be duly listed, and admitted and
authorized for trading, on the Nasdaq Global Select Market (the
“ NASDAQ ”);
7
(f)
the Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own, lease and
operate its properties and conduct its business as described in the
Registration Statement, the Pre-Pricing Prospectuses, the
Prospectus and the Permitted Free-Writing Prospectuses, if any, to
execute and deliver this Agreement, the Indenture and the Notes and
to issue, sell and deliver the Notes and the Shares issuable upon
conversion of the Notes as contemplated by this Agreement, the
Indenture and the Notes;
(g)
the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the
ownership or leasing of its properties or the conduct of its
business requires such qualification, except where the failure to
be so qualified and in good standing would not, individually or in
the aggregate, either (i) have a material adverse effect on the
business, properties, financial condition, results of operations or
prospects of the Company, the Subsidiaries (as defined below) and
HELIO (as defined below) taken as a whole, (ii) prevent or
materially interfere with consummation of the transactions
contemplated by this Agreement, the Indenture or the Notes or (iii)
result in the delisting of shares of Common Stock from the NASDAQ
(the occurrence of any such effect or any such prevention or
interference or any such result described in the foregoing clauses
(i), (ii) and (iii) being herein referred to as a “
Material Adverse Effect ”);
(h)
the Company has no subsidiaries (as defined under the Act) other
than those identified in Exhibit 21 to the Company’s Annual
Report on Form 10-K for the year ended December 31, 2005
(collectively, the “ Subsidiaries ”); except as
described in the Registration Statement, the Pre-Pricing
Prospectuses and the Prospectus, the Company owns all of the issued
and outstanding capital stock of each of the Subsidiaries; other
than the capital stock of the Subsidiaries, and other than the
Company’s interest in HELIO LLC, a Delaware limited liability
company (“ HELIO ”), a joint venture with SK
Telecom Co., Ltd., and except as described in the Registration
Statement, the Pre-Pricing Prospectuses and the Prospectus, the
Company does not own, directly or indirectly, any shares of stock
or any other equity interests or long-term debt securities of any
corporation, firm, partnership, joint venture, association or other
entity; complete and correct copies of the charters and the bylaws
(or other organizational documents) of the Company and each
Significant Subsidiary and all amendments thereto have been
delivered to you, and no changes therein will be made on or after
the date hereof through and including the time of purchase or, if
later, any additional time of purchase; each Significant Subsidiary
has been duly incorporated and is validly existing as a corporation
in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own, lease and
operate its properties and to conduct its business as described in
the Registration Statement, the Pre-Pricing Prospectuses, the
Prospectus and the Permitted Free Writing Prospectuses, if any;
each Significant Subsidiary is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction
where the ownership or leasing of its properties or the conduct of
its business requires such qualification, except where the failure
to be so qualified and in good standing would not, individually or
in the aggregate, have a Material Adverse Effect; all
8
of the
outstanding shares of capital stock of each of the Significant
Subsidiaries have been duly authorized and validly issued, are
fully paid and non-assessable, have been issued in compliance with
all applicable securities laws, were not issued in violation of any
preemptive right, resale right, right of first refusal or similar
right and are owned by the Company subject to no security interest,
other encumbrance or adverse claims; and no options, warrants or
other rights to purchase, agreements or other obligations to issue
or other rights to convert any obligation into shares of capital
stock or ownership interests in the Significant Subsidiaries are
outstanding; the Company has no “significant
subsidiary,” as that term is defined in Rule 1-02(w) of
Regulation S-X under the Act, other than People PC Inc. and New
Edge Holding Company (collectively, the “ Significant
Subsidiaries ”); the Company owns 48% of the issued and
outstanding membership interests of HELIO; and HELIO has been duly
organized and is validly existing as a limited liability company in
good standing under the laws of Delaware, with corporate power and
authority to own, lease and operate its properties and to conduct
its business as described in the Registration Statement, the
Pre-Pricing Prospectuses, the Prospectus and the Permitted Free
Writing Prospectuses, if any;
(i)
this Agreement has been duly authorized, executed and delivered by
the Company;
(j)
the Indenture has been duly qualified under the Trust Indenture Act
of 1939, as amended (the “ Trust Indenture Act
”) and has been duly authorized by the Company and, when
executed and delivered by the Company and the Trustee, will be a
legal, valid and binding agreement of the Company, enforceable in
accordance with its terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ rights generally and
general principles of equity;
(k)
the Notes have been duly authorized by the Company and, when
executed and delivered by the Company and duly authenticated in
accordance with the terms of the Indenture and delivered to and
paid for by the Underwriters in accordance with the terms hereof,
will constitute legal, valid and binding obligations of the
Company, enforceable in accordance with their terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors’ rights generally and general principles of equity,
and will be entitled to the benefits of the Indenture; the Shares
issuable upon conversion of the Notes have been duly authorized and
validly reserved for issuance upon conversion of the Notes, and,
upon conversion of the Notes in accordance with their terms and the
terms of the Indenture, will be issued free of statutory and
contractual preemptive rights, resale rights, rights of first
refusal and similar rights and free of any voting restrictions (and
will be free of any restriction, pursuant to the Company’s
charter or bylaws or any agreement or other instrument to which the
Company is a party, upon the transfer thereof), and are sufficient
in number to meet the current conversion requirements (assuming all
conditions to such conversion have been satisfied) based on the
product of (i) the Conversion Rate (as defined in the Indenture) in
effect as of the time of purchase and as of each additional time of
purchase and (ii) the aggregate principal amount, expressed in
thousands of dollars, of Notes to be
9
outstanding
immediately after such time of purchase or additional time of
purchase, as applicable; such Shares, when so issued upon such
conversion in accordance with the terms of the Notes and of the
Indenture, will be duly and validly issued and fully paid and
nonassessable; and the certificates for such Shares will be in due
and proper form;
(l)
the terms of the Notes, the Indenture and the capital stock of the
Company, including the Shares, conform in all material respects to
each description thereof contained in the Registration Statement,
the Pre-Pricing Prospectuses, the Prospectus and the Permitted
Free-Writing Prospectuses, if any;
(m)
neither the Company nor any of the Significant Subsidiaries nor
HELIO is in breach or violation of or in default under (nor has any
event occurred which, with notice, lapse of time or both, would
result in any breach or violation of, constitute a default under or
give the holder of any indebtedness (or a person acting on such
holder’s behalf) the right to require the repurchase,
redemption or repayment of all or a part of such indebtedness
under) (A) its charter or bylaws, or (B) any indenture, mortgage,
deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any license, lease, contract or other agreement or
instrument to which it is a party or by which it or any of its
properties may be bound or affected, or (C) any federal, state,
local or foreign law, regulation or rule, or (D) any rule or
regulation of any self-regulatory organization or other
non-governmental regulatory authority (including, without
limitation, the rules and regulations of the NASDAQ), or (E) any
decree, judgment or order applicable to it or any of its
properties, except for, in the case of clauses (B), (C), (D) or (E)
above, any breach, violation or default which would not,
individually or in the aggregate, have a Material Adverse
Effect;
(n)
the execution, delivery and performance of this Agreement, the
Indenture and the Notes and the consummation of the transactions
contemplated hereby and thereby, including the issuance of the
Notes and the issuance of the Shares issuable upon conversion of
the Notes as described in the Registration Statement, the
Pre-Pricing Prospectuses, the Prospectus and the Permitted
Free-Writing Prospectuses, if any, will not conflict with, result
in any breach or violation of or constitute a default under (nor
constitute any event which, with notice, lapse of time or both,
would result in any breach or violation of, constitute a default
under or give the holder of any indebtedness (or a person acting on
such holder’s behalf) the right to require the repurchase,
redemption or repayment of all or a part of such indebtedness
under) (or result in the creation or imposition of a lien, charge
or encumbrance on any property or assets of the Company or any
Subsidiary or HELIO pursuant to) (A) the charter or bylaws of the
Company or any of the Significant Subsidiaries or HELIO, or (B) any
indenture, mortgage, deed of trust, bank loan or credit agreement
or other evidence of indebtedness, or any license, lease, contract
or other agreement or instrument to which the Company or any of the
Subsidiaries or HELIO is a party or by which any of them or any of
their respective properties may be bound or affected, or (C) any
federal, state, local or foreign law, regulation or rule, or (D)
any rule or regulation of any self-regulatory organization or other
non-governmental regulatory authority (including, without
limitation, the rules and regulations of the NASDAQ), or (E) any
decree, judgment or order applicable to the
10
Company or any of
the Significant Subsidiaries or HELIO or any of their respective
properties, except in the case of (B), (C), (D) or (E) above, for
such occurrences that could not, individually or in the aggregate,
have a Material Adverse Effect or result in any liability for any
Underwriter;
(o)
no approval, authorization, consent or order of or filing with any
federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency, or of or with any
self-regulatory organization or other non-governmental regulatory
authority (including, without limitation, the NASDAQ), or approval
of the stockholders of the Company, is required in connection with
the issuance and sale of the Notes or the issuance of Shares upon
conversion of the Notes or the consummation of the transactions as
contemplated by this Agreement, the Indenture or the Notes, other
than (i) as have been obtained from NASDAQ, and (ii) as may be
required under the securities or blue sky laws of the various
jurisdictions in which the Notes are being offered by the
Underwriters;
(p)
except as described in the Registration Statement (excluding the
exhibits thereto), each Pre-Pricing Prospectus and the Prospectus,
(i) no person has the right, contractual or otherwise, to cause the
Company to issue or sell to it any shares of Common Stock or shares
of any other capital stock or other equity interests of the
Company, (ii) no person has any preemptive rights, resale rights,
rights of first refusal or other rights to purchase any shares of
Common Stock or shares of any other capital stock of or other
equity interests in the Company and (iii) no person has the right
to act as an underwriter or initial purchaser or as a financial
advisor to the Company in connection with the offer and sale of the
Notes; no person has the right, contractual or otherwise, to cause
the Company to register under the Act any shares of Common Stock or
shares of any other capital stock of or other equity interests in
the Company, or to include any such shares or interests in the
Registration Statement or the offering contemplated
thereby;
(q)
each of the Company and the Subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all
necessary filings required under any applicable law, regulation or
rule, and has obtained all necessary licenses, authorizations,
consents and approvals from other persons, in order to conduct
their respective businesses, except where the failure to do so
would not, individually or in the aggregate, have a Material
Adverse Effect; neither the Company nor any of the Significant
Subsidiaries is in violation of, or in default under, or has
received notice of any proceedings relating to revocation or
modification of, any such license, authorization, consent or
approval or any federal, state, local or foreign law, regulation or
rule or any decree, order or judgment applicable to the Company or
any of the Significant Subsidiaries, except where such violation,
default, revocation or modification would not, individually or in
the aggregate, have a Material Adverse Effect;
(r)
there are no actions, suits, claims, investigations or proceedings
pending or, to the Company’s knowledge, threatened or
contemplated to which the Company or any of the Subsidiaries or
HELIO or any of their respective directors or officers is or would
be a party or of which any of their respective properties is or
would be subject at
11
law or in equity,
before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency, or before
or by any self-regulatory organization or other non-governmental
regulatory authority (including, without limitation, the NASDAQ),
except any such action, suit, claim, investigation or proceeding
which, if resolved adversely to the Company or any Subsidiary or
HELIO, would not result in a judgment, decree or order having,
individually or in the aggregate, a Material Adverse
Effect;
(s)
Ernst & Young LLP, whose report on the consolidated financial
statements of the Company and the Subsidiaries is included or
incorporated by reference in the Registration Statement, each
Pre-Pricing Prospectus and the Prospectus, are independent
registered public accountants as required by the Act and by the
rules of the Public Company Accounting Oversight Board;
(t)
the financial statements included or incorporated by reference in
the Registration Statement, the Pre-Pricing Prospectuses, the
Prospectus and the Permitted Free-Writing Prospectuses, if any,
together with the related notes and schedules, present fairly the
consolidated financial position of the Company and the Subsidiaries
as of the dates indicated and the consolidated results of
operations, cash flows and changes in stockholders’ equity of
the Company for the periods specified and have been prepared in
compliance with the requirements of the Act and Exchange Act and in
conformity with U.S. generally accepted accounting principles
applied on a consistent basis during the periods involved; the
other financial and statistical data contained or incorporated by
reference in the Registration Statement, the Pre-Pricing
Prospectuses, the Prospectus and the Permitted Free-Writing
Prospectuses, if any, are accurately and fairly presented and
prepared on a basis consistent with the financial statements and
books and records of the Company; there are no financial statements
(historical or pro forma) that are required to be included or
incorporated by reference in the Registration Statement, any
Pre-Pricing Prospectus or the Prospectus that are not included or
incorporated by reference as required; the Company and the
Subsidiaries do not have any material liabilities or obligations,
direct or contingent (including any off-balance sheet obligations),
not described in the Registration Statement, the Pre-Pricing
Prospectuses and the Prospectus; and all disclosures contained or
incorporated by reference in the Registration Statement, the
Pre-Pricing Prospectuses, the Prospectus and the Permitted
Free-Writing Prospectuses, if any, regarding “non-GAAP
financial measures” (as such term is defined by the rules and
regulations of the Commission) comply with Regulation G of the
Exchange Act and Item 10 of Regulation S-K under the
Act;
(u)
subsequent to the respective dates as of which information is given
in the Registration Statement, the Pre-Pricing Prospectuses, the
Prospectus and the Permitted Free-Writing Prospectuses, if any, in
each case excluding any amendments or supplements to the foregoing
made after the execution of this Agreement, there has not been (i)
any material adverse change, or any development involving a
prospective material adverse change, in the business, properties,
management, financial condition or results of operations of the
Company and the Subsidiaries and HELIO and taken as a whole, (ii)
any transaction that is material to the Company and the
Subsidiaries and
12
HELIO taken as a
whole, (iii) any obligation or liability, direct or contingent
(including any off-balance sheet obligations), incurred by the
Company or any Subsidiary or HELIO, which is material to the
Company and the Subsidiaries and HELIO taken as a whole, (iv) any
change in the capital stock or outstanding indebtedness of the
Company or any Subsidiaries or HELIO or (v) any dividend or
distribution of any kind declared, paid or made on the capital
stock of the Company or any Subsidiary or HELIO;
(v)
the Company has obtained for the benefit of the Underwriters the
agreement (a “ Lock-Up Agreement ”), in the form
set forth as Exhibit A hereto, of each of its directors and
“officers” (within the meaning of Rule 16a-1(f) under
the Exchange Act), each of whom is identified in Exhibit A-1
hereto;
(w)
neither the Company nor any Significant Subsidiary is and, after
giving effect to the offering and sale of the Notes and the
application of the proceeds thereof, neither of them will be an
“investment company” as such term is defined in the
Investment Company Act of 1940, as amended (the “
Investment Company Act ”);
(x)
the Company and each of the Subsidiaries have good and marketable
title to all property (real and personal) described in the
Registration Statement, the Pre-Pricing Prospectuses, the
Prospectus and the Permitted Free-Writing Prospectuses, if any, as
being owned by any of them, free and clear of all liens, claims,
security interests or other encumbrances, except where the failure
to do so would not, individually or in the aggregate, have a
Material Adverse Effect; all the property described in the
Registration Statement, the Pre-Pricing Prospectuses, the
Prospectus and the Permitted Free-Writing Prospectuses, if any, as
being held under lease by the Company or a Subsidiary is held
thereby under valid, subsisting and enforceable leases, except
where the failure to do so would not, individually or in the
aggregate, have a Material Adverse Effect;
(y)
the Company and the Subsidiaries and HELIO own, or have obtained
valid and enforceable licenses for, or other rights to use, the
inventions, patent applications, patents, trademarks (both
registered and unregistered), tradenames, service names,
copyrights, trade secrets and other proprietary information
described in the Registration Statement, the Pre-Pricing
Prospectuses, the Prospectus and the Permitted Free-Writing
Prospectuses, if any, as being owned or licensed by them or which
are necessary for the conduct of their respective businesses as
currently conducted or as proposed to be conducted, except where
the failure to own, license or have such rights would not,
individually or in the aggregate, have a Material Adverse Effect
(collectively, “ Intellectual Property ”); and
except as would not, individually or in the aggregate, have a
Material Adverse Effect: (i) there are no third parties who have
or, to the Company’s knowledge, will be able to establish
rights to any Intellectual Property, except for, and to the extent
of, the ownership rights of the owners of the Intellectual Property
which the Registration Statement, the Pre-Pricing Prospectuses and
the Prospectus disclose is licensed to the Company; (ii) there is
no infringement by third parties of any Intellectual Property;
(iii) except as described in the Registration Statement, the
Pre-Pricing Prospectuses and the Prospectus, there is no pending
or, to the Company’s knowledge, threatened action, suit,
proceeding or claim by others challenging the Company’s
rights
13
in or to any
Intellectual Property, and the Company is unaware of any facts
which could form a reasonable basis for any such action, suit,
proceeding or claim; (iv) except as described in the Registration
Statement, the Pre-Pricing Prospectuses and the Prospectus, there
is no pending or, to the Company’s knowledge, threatened
action, suit, proceeding or claim by others challenging the
validity, enforceability or scope of any Intellectual Property, and
the Company is unaware of any facts which could form a reasonable
basis for any such action, suit, proceeding or claim; (v) except as
described in the Registration Statement, the Pre-Pricing
Prospectuses and the Prospectus, there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or
claim by others that the Company or any Subsidiary or HELIO
infringes or otherwise violates, or would, upon the
commercialization of any product or service described in the
Registration Statement, the Pre-Pricing Prospectuses, the
Prospectus and the Permitted Free-Writing Prospectuses, if any, as
under
|
