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EXHIBIT 1.1
10,000,000 SHARES
ALLEGIANCE TELECOM, INC.
COMMON STOCK, PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
January o, 2000
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January o, 2000
Xxxxxxx, Xxxxx & Co.
Xxxxxxx Xxxxx Xxxxxx Inc.
Bear, Xxxxxxx & Co. Inc.
c/o Goldman, Xxxxx & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
ALLEGIANCE TELECOM, INC., a Delaware corporation (the
"COMPANY"), proposes to issue and sell to the several Underwriters named in
Schedule I hereto (the "UNDERWRITERS") and certain stockholders of the Company
(the "SELLING STOCKHOLDERS") named in Schedule II hereto, severally propose to
sell to the Underwriters, an aggregate of 10,000,000 shares of Common Stock, par
value $.01 per share of the Company (the "FIRM SHARES"), of which 6,600,000
shares are to be issued and sold by the Company and 3,400,000 shares are to be
sold by the Selling Stockholders, each Selling Shareholder selling the amount
set forth opposite such Selling Shareholder's name in Schedule II hereto.
The Company also proposes to issue and sell to the several
Underwriters not more than an additional 1,500,000 shares of its Common Stock,
par value $.01 per share (the "ADDITIONAL SHARES") if and to the extent that
you, as representatives of the several Underwriters (the "REPRESENTATIVES"),
shall have determined to exercise, on behalf of the Underwriters, the right to
purchase such shares of common stock granted to the Underwriters in Section 2
hereof. The Firm Shares and the Additional Shares are hereinafter collectively
referred to as the "SHARES". The shares of Common Stock, par value $.01 per
share, of the Company to be outstanding after giving effect to the sales
contemplated hereby are hereinafter referred to as the "COMMON STOCK". The
Company and the Selling Stockholders are hereinafter sometimes collectively
referred to as the "SELLERS".
The Company has filed with the Securities and Exchange
Commission (the "COMMISSION") a registration statement, including a prospectus,
relating to the Shares. The registration statement, including the exhibits
thereto and the documents incorporated by reference therein pursuant to Item 12
of Form S-3 under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
as amended at the time it becomes effective and including the information (if
any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Securities Act, is hereinafter
referred to as the "REGISTRATION STATEMENT"; the prospectus in the form first
used to confirm sales of Shares, including the documents incorporated
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by reference therein pursuant to Item 12 of Form S-3 under the Securities Act,
is hereinafter referred to as the "PROSPECTUS". If the Company has filed an
abbreviated registration statement to register additional shares of Common Stock
pursuant to Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION
STATEMENT"), then any reference herein to the term "Registration Statement"
shall be deemed to include such Rule 462 Registration Statement.
1. 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 become effective;
no stop order suspending the effectiveness of the Registration
Statement is in effect, and no proceedings for such purpose are pending
before or threatened by the Commission.
(b) (i) The Company meets the requirements for use of
Form S-3 under the Securities Act as of the date hereof and when the
Registration Statement on such form shall become effective, (ii) the
Registration Statement, when it became effective, did not contain and,
as amended or supplemented, if applicable, will not contain any 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, (iii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iv) the Prospectus does
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except
that the representations and warranties set forth in this paragraph do
not apply to statements or omissions in the Registration Statement or
the Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(c) The documents incorporated by reference in the
Prospectus pursuant to Item 12 of Form S-3 under the Securities Act, at
the time they were filed with the Commission, complied in all material
respects with the requirements of the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder.
(d) The Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of
the State of Delaware, has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus and
is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its
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subsidiaries, taken as a whole. Schedule A to the form of opinion of
Xxxx X. Xxxxxxxxxx, attached hereto as Exhibit C, sets forth each
jurisdiction in which the conduct of the Company's business or its
ownership or leasing of property requires it to be qualified to
transact business and be in good standing.
(e) Each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole;
all of the issued shares of capital stock of each subsidiary of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable and are owned directly by the Company, free and
clear of all liens, encumbrances, equities or claims, except for such
liens, encumbrances, equities and claims as are disclosed in the
Prospectus. There are no active subsidiaries of the Company other than
those listed on Schedule A to the form of opinion of Xxxx X.
Xxxxxxxxxx, attached hereto as Exhibit C and such Schedule A sets forth
each jurisdiction in which the conduct of the Company's business or its
ownership or leasing of property requires any subsidiary of the Company
to be qualified to transact business and be in good standing.
(f) This Agreement has been duly authorized, executed
and delivered by the Company. Each of the Irrevocable Power of Attorney
and Custody Agreements (collectively, the "POWER OF ATTORNEY AND
CUSTODY AGREEMENTS"), each dated the date hereof and signed by each
Selling Shareholder (other than Battery Ventures IV, L.P.) and the
Company as Custodian (the "CUSTODIAN"), appointing certain individuals
as the Selling Stockholders' attorneys-in-fact to the extent set forth
therein and relating to the deposit of the Shares to be sold by such
Selling Shareholder and the transactions contemplated hereby and by the
Registration Statement, have been duly authorized, executed and
delivered by the Company.
(g) The authorized capital stock of the Company
conforms as to legal matters to the description thereof contained in
the Prospectus.
(h) The shares of Common Stock (including the Shares
to be sold by the Selling Stockholders) outstanding prior to the
issuance of the Shares to be sold by the Company have been duly
authorized and are validly issued, fully paid and nonassessable.
(i) The Shares to be sold by the Company have been
duly authorized and, when issued and delivered against payment therefor
in accordance with the terms of this Agreement, will be validly issued,
fully paid and nonassessable, and the issuance of such Shares will not
be subject to any preemptive or similar rights.
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(j) The execution and delivery by the Company of, and
the performance by the Company of its obligations under, this Agreement
and the Power of Attorney and Custody Agreements will not contravene
any provision of applicable law or the certificate of incorporation or
bylaws of the Company or any agreement or other instrument binding upon
the Company or any of its subsidiaries that is material to the Company
and its subsidiaries, taken as a whole, or any judgment, order or
decree of any governmental body, agency or court having jurisdiction
over the Company or any subsidiary, and no permit, license, consent,
approval, authorization or order of, or filing, declaration or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement or
the Power of Attorney and Custody Agreements, except such as may be
required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares. The exhibit index to
the Registration Statement sets forth all agreements and instruments to
which the Company or any of its subsidiaries is a party that are
required by Item 601 of Regulation S-K to be filed as exhibits to the
Registration Statement.
(k) There has not occurred any material adverse
change, or any development involving a prospective material adverse
change, in the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole, from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement). Furthermore, except in each case as described in the
Prospectus, (i) the Company and its subsidiaries have not incurred any
material liability or obligation, direct or contingent, nor entered
into any material transaction not in the ordinary course of business;
(ii) neither the Company nor any of its subsidiaries has purchased any
of the Company's outstanding capital stock, nor declared, paid or
otherwise made any dividend or distribution of any kind on the
Company's capital stock; and (iii) there has not been any material
change in the capital stock, short-term debt or long-term debt of the
Company and its subsidiaries, taken as a whole.
(l) There are no legal or governmental proceedings
pending or threatened to which the Company or any of its subsidiaries
is a party or to which any of the properties of the Company or any of
its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or
any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required.
(m) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act
and the applicable rules and regulations of the Commission thereunder.
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(n) The Company is not and, after giving effect to
the offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as such term is defined in the Investment Company Act of 1940,
as amended.
(o) The Company and its subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants, including all such laws and regulations
concerning electromagnetic radio frequency emissions ("ENVIRONMENTAL
LAWS"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(p) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for cleanup, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(q) Except as described in or contemplated by the
Prospectus, the Company and each of its subsidiaries (i) have all
necessary licenses, consents, authorizations, approvals, orders,
certificates and permits of and from, and have made all declarations
and filings with, all federal, state, local and other governmental,
administrative and regulatory authorities, all self-regulatory
organizations and all courts and other tribunals, to own, lease,
license and use its properties and assets and to conduct its business
in the manner described in the Prospectus, except to the extent that
the failure to obtain such licenses, consents, authorizations,
approvals, orders, certificates and permits or make such declarations
and filings would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole and (ii) have not received any
notice of proceedings relating to revocation or modification of any
such license, consent, authorization, approval, order, certificate or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would reasonably be expected
to result in a material adverse change in the condition, financial or
otherwise, or in the earnings, business or operations of the Company
and its subsidiaries, taken as a whole.
(r) The Company and each of its subsidiaries maintain
a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions
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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 asset accountability;
(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.
(s) The Company and each of its subsidiaries have
good and marketable title in fee simple to all real property and good
and marketable title to all personal property owned by them which is
material to the business of the Company and its subsidiaries, taken as
a whole, in each case free and clear of all liens, encumbrances and
defects, except such as are described in the Prospectus and such other
liens as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by
the Company and its subsidiaries; and any real property and buildings
held under lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as
are not material and do not materially interfere with the use made and
proposed to be made of such property and buildings by the Company and
its subsidiaries, in each case except as described in or contemplated
by the Prospectus.
(t) The Company and its subsidiaries own or possess,
or can acquire on reasonable terms, all material patents, patent
rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks and trade names currently employed by them in connection with the
business now operated by them, and neither the Company nor 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
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
(u) No material labor dispute with the employees of
the Company or any of its subsidiaries exists or, to the knowledge of
the Company, is imminent; and the Company is not aware of any existing,
threatened or imminent labor disturbance by the employees of any of its
principal suppliers, manufacturers or contractors that could have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(v) The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are customary in the businesses
in which they are engaged; neither the Company nor any of its
subsidiaries has been refused any insurance coverage sought or applied
for; and neither the Company nor any of its subsidiaries has any reason
to believe that it will not be able to
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renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would have a material and
adverse effect on the Company and its subsidiaries, taken as a whole,
except as described in or contemplated by the Prospectus.
(w) All licenses issued by the Federal Communications
Commission (the "FCC LICENSES") required for the operation of the
business of the Company and its subsidiaries are in full force and
effect and there are no pending modifications, amendments or revocation
proceedings which would adversely affect the operations of the Company
and its subsidiaries. All fees due and payable to governmental
authorities pursuant to the rules governing FCC Licenses have been paid
and no event has occurred with respect to the FCC Licenses held by the
Company and its subsidiaries which, with the giving of notice or the
lapse of time or both, would constitute grounds for revocation thereof.
Each of the Company and its subsidiaries is in compliance in all
material respects with the terms of the FCC Licenses, as applicable,
and there is no condition, event or occurrence existing, nor is there
any proceeding being conducted of which the Company has received
notice, nor, to the Company's knowledge, is there any proceeding
threatened, by any governmental authority, which would cause the
termination, suspension, cancellation or nonrenewal of any of the FCC
Licenses, or the imposition of any penalty or fine by any regulatory
authority. No registrations, filings, applications, notices, transfers,
consents, approvals, audits, qualifications, waivers or other action of
any kind is required by virtue of the execution and delivery of this
Agreement, the Power of Attorney and Custody Agreements or of the
consummation of the transactions contemplated hereby or thereby, other
than as previously obtained from the FCC (a) to avoid the loss of any
such license, permit, consent, concession or other authorization or any
asset, property or right pursuant to the terms thereof, or the
violation or breach of any applicable law thereto or (b) to enable the
Company or any of its subsidiaries to hold and enjoy the same after the
Closing Date (as defined herein) in the conduct of its business as
conducted prior to the Closing Date.
(x) Each of the Company and its subsidiaries is
solvent and has tangible and intangible assets having a fair value in
excess of the amount required to pay its probable liabilities on its
existing debts as they become absolute and matured, and has access to
adequate capital for the conduct of its business and the ability to pay
its debts from time to time incurred in connection therewith as such
debts mature. Neither the Company nor any of its subsidiaries is
contemplating either the filing of a petition by it under any state or
federal bankruptcy or insolvency laws or the liquidating of all or a
substantial portion of its property, and neither the Company nor any of
its subsidiaries has any knowledge of any person contemplating the
filing of any such petition against it.
(y) Except as described in the Prospectus, there are
no contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act
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with respect to any securities of the Company or to require the Company
to include such securities with the Shares registered pursuant to the
Registration Statement.
(z) The Company has reviewed its operations and that
of its subsidiaries to evaluate the extent to which the business or
operations of the Company of any of its subsidiaries will be affected
by the Year 2000 Problem. As a result of such review, the Company has
no reason to believe, and does not believe, that the Year 2000 Problem
will have a material adverse effect on the general affairs, management,
the current or future consolidated financial position, business
prospects, stockholders' equity or results of operations of the Company
and its subsidiaries or result in any material loss or interference
with the Company's business or operations. In addition, the discussion
of the Year 2000 Problem in the Prospectus with respect to third
parties with which the Company or any of its subsidiaries has a
material relationship is, as of the applicable filing date, and will
be, as of the date of any amendment or supplement thereto, accurate,
complete and fair in all material respects. The "Year 2000 Problem" as
used herein means any significant risk that computer hardware or
software used in the receipt, transmission, processing, manipulation,
storage, retrieval, retransmission or other utilization of data or in
the operation of mechanical or electrical systems of any kind will not,
in the case of dates or time periods occurring after December 31, 1999,
function at least as effectively as in the case of dates or time
periods occurring prior to January 1, 2000.
2. Representations and Warranties of the Selling Stockholders.
Each of the Selling Stockholders represents and warrants to and agrees with each
of the Underwriters that:
(a) This Agreement has been duly authorized, executed
and delivered by or on behalf of such Selling Shareholder.
(b) The execution and delivery by such Selling
Shareholder of, and the performance by such Selling Shareholder of its
obligations under, this Agreement and the Power of Attorney and Custody
Agreement of such Selling Shareholder will not contravene any provision
of applicable law, or the organizational documents of such Selling
Shareholder, or any agreement or other instrument binding upon such
Selling Shareholder or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over such
Selling Shareholder, and no consent, approval, authorization or order
of, or qualification with, any governmental body or agency is required
for the performance by such Selling Shareholder of its obligations
under this Agreement or the Power of Attorney and Custody Agreement of
such Selling Shareholder, except such as may be required by the
securities or Blue Sky laws of the various states in connection with
the offer and sale of the Shares.
(c) The Shares to be sold by such Selling Shareholder
pursuant to this Agreement are certificated securities in registered
form and are not held in any securities account or by or through any
securities intermediary within the meaning of the NYUCC.
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Such Selling Shareholder has and will on the Closing Date have full
right, power and authority to hold, sell, transfer and deliver the
Shares to be sold by such Selling Shareholder pursuant to this
Agreement; and upon delivery to the Underwriters of such Shares and
payment of the purchase price therefor as herein contemplated, the
Underwriters will acquire their respective interests in such Shares
(including, without limitation, all rights that such Selling
Shareholder had or has the power to transfer in such Shares) free of
any adverse claim.
(d) Certificates for all of the Shares to be sold by
such Selling Shareholder pursuant to this Agreement in suitable form
for transfer by delivery or accompanied by duly executed instruments of
transfer or assignment in blank or to the Underwriters, with signatures
guaranteed, have been placed in custody with the Custodian (as defined
under the Power of Attorney and Custody Agreement) with irrevocable
conditional instructions to deliver such Shares to the Underwriters
pursuant to this Agreement.
(e) Such Selling Shareholder has, and on the Closing
Date will have, the legal right and power, and all authorization and
approval required by law, to enter into this Agreement and the Power of
Attorney and Custody Agreement of such Selling Shareholder.
(f) The Power of Attorney and Custody Agreement of
such Selling Shareholder has been duly authorized, executed and
delivered by such Selling Shareholder and is a valid and binding
agreement of such Selling Shareholder, enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles of equity.
(g) (i) The Registration Statement, when it became
effective, did not contain and, as amended or supplemented, if
applicable, will not contain any 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, (ii) the
Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with
the Securities Act and the applicable rules and regulations of the
Commission thereunder and (iii) the Prospectus does not contain and, as
amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that the representations
and warranties set forth in this paragraph 2(g) (x) do not apply to
statements or omissions in the Registration Statement or the Prospectus
based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use
therein and (y) relate only to information relating to such Selling
Shareholder furnished in writing by or on behalf of such Selling
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Shareholder expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements
thereto.
3. Agreements to Sell and Purchase. Each Seller, severally and
not jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from such Seller the respective numbers of Firm
Shares set forth in Schedule I hereto opposite such Underwriter's name at
U.S.$.o a share ("PURCHASE PRICE").
On the basis of the representations and warranties contained
in this Agreement, and subject to its terms and conditions, the Company agrees
to sell to the Underwriters the Additional Shares, and the Underwriters shall
have a one-time right to purchase, severally and not jointly, up to 1,500,000
Additional Shares at the Purchase Price. If the Representatives, on behalf of
the Underwriters, elect to exercise such option, the Representatives shall so
notify the Company in writing not later than 30 days after the date of this
Agreement, which notice shall specify the number of Additional Shares to be
purchased by the Underwriters and the date on which such shares are to be
purchased (which date of purchase, if other than the Closing Date (as defined
below), shall be at least two business days after such notice is delivered,
unless the Company consents otherwise). Such date may be the same as the Closing
Date but not earlier than the Closing Date nor later than ten business days
after the date of such notice. Additional Shares may be purchased as provided in
Section 5 hereof solely for the purpose of covering overallotments made in
connection with the offering of the Firm Shares. If any Additional Shares are to
be purchased, each Underwriter agrees, severally and not jointly, to purchase
the number of Additional Shares (subject to such adjustments to eliminate
fractional shares as the Representatives may determine) that bears the same
proportion to the total number of Additional Shares to be purchased as the
number of Firm Shares set forth in Schedule I hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.
The Company hereby agrees that, without the prior written
consent of Xxxxxxx, Xxxxx & Co., Xxxxxxx Xxxxx Barney Inc. and Bear, Xxxxxxx &
Co. Inc. on behalf of the Underwriters, it will not, during the period ending 90
days after the date of the Prospectus, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
or (ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the Shares to be sold
hereunder, (B) the issuance by the Company of shares of Common Stock upon the
exercise of an option or warrant or the conversion of a security outstanding on
the date hereof and as described in the Prospectus, (C) the issuance by the
Company of additional options to purchase Common Stock pursuant to the
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Company's 1997 Nonqualified Stock Option Plan or 1998 Stock Incentive Plan, (D)
the issuance by the Company of shares of Common Stock pursuant to the Company's
Employee Stock Discount Purchase Plan, the 1997 Nonqualified Stock Option Plan
or the 1998 Stock Incentive Plan or (E) transactions relating to shares of
Common Stock or other securities acquired in open market transactions after
completion of the offering contemplated by the Prospectus.
4. Terms of Public Offering. The Sellers are advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement has become
effective and this Agreement has been executed as in your judgment is advisable.
The Sellers are further advised by you that the Shares are to be offered to the
public initially at U.S.$.o a share (the "PUBLIC OFFERING PRICE") and to certain
dealers selected by you at a price that represents a concession not in excess of
U.S.$.o a share under the Public Offering Price, and that any Underwriter may
allow, and such dealers may reallow, a concession, not in excess of U.S.$.o a
share, to any Underwriter or to certain other dealers.
5. Payment and Delivery. Payment for the Firm Shares to be
sold by each Seller shall be made to such Seller in Federal or other funds
immediately available in New York City against delivery of such Firm Shares for
the respective accounts of the several Underwriters at 9:00 a.m., New York City
time, on January o, 2000, or at such other time on the same or such other date,
not later than January o, 2000, as shall be designated in writing by you. The
time and date of such payment are hereinafter referred to as the "CLOSING DATE".
Payment for any Additional Shares shall be made to the Company
in Federal or other funds immediately available in New York City against
delivery of such Additional Shares for the respective accounts of the several
Underwriters at 9:00 a.m., New York City time, on the date specified in the
notice described in Section 3 or at such other time on the same or on such other
later date, in any event not later than o, 2000 as shall be designated in
writing by the Representatives. The time and date of such payment are
hereinafter referred to as the "OPTION CLOSING DATE".
Certificates for the Firm Shares and Additional Shares shall
be in definitive form and registered in such names and in such denominations as
you shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The
obligations of the Sellers to sell the Shares to the Underwriters and the
several obligations of the Underwriters to purchase and pay for the Shares on
the Closing Date are subject to the condition that the Registration Statement
shall have become effective not later than 4:30 p.m. (New York City time) on the
date hereof.
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The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date:
(i) there shall not have occurred any
downgrading, nor shall any notice have been given of any
intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any
change, or any development involving a prospective change, in
the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries,
taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement) that, in your judgment, is
material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the
Closing Date a certificate, dated the Closing Date and signed by an
executive officer of the Company, to the effect set forth in Section
6(a)(i) above and to the effect that the representations and warranties
of the Company contained in this Agreement are true and correct as of
the Closing Date and that the Company has complied with all of the
agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate
may rely upon the best of his or her knowledge as to proceedings
threatened.
(c) The Underwriters shall have received on the
Closing Date an opinion of Xxxxxxxx & Xxxxx, outside counsel for the
Company, dated the Closing Date, to the effect set forth in Exhibit B.
(d) The Underwriters shall have received on the
Closing Date an opinion of Xxxx X. Xxxxxxxxxx, General Counsel of the
Company, dated the Closing Date, to the effect set forth in Exhibit C.
(e) The Underwriters shall have received on the
Closing Date an opinion of Xxxxxxxx & Xxxxx, counsel for Madison
Dearborn Capital Partners, Frontenac
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Company, Frontenac VII Limited Partnership and Frontenac Masters VII
Limited Partnership, dated the Closing Date, to the effect set forth in
Exhibit D.
(f) The Underwriters shall have received on the
Closing Date an opinion of Xxxxx, Xxxxxxx & Xxxxxxxxx LLP, counsel for
Battery Ventures IV, L.P., dated the Closing Date, to the effect set
forth in Exhibit E.
(g) The Underwriters shall have received on the
Closing Date an opinion of Xxxxxxx Berlin Shereff Xxxxxxxx, LLP,
regulatory counsel for the Company, dated the Closing Date, to the
effect set forth in Exhibit F.
The opinions of Xxxxxxxx & Xxxxx, Xxxx X. Tresnowski,
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP and Xxxxx, Xxxxxxx & Xxxxxxxxx LLP
shall be rendered to the Underwriters at the request of the Company or
one or more of the Selling Stockholders, as the case may be, and shall
so state therein.
(h) The Underwriters shall have received on the
Closing Date an opinion of Shearman & Sterling, counsel for the
Underwriters, dated the Closing Date, in form and substance reasonably
satisfactory to you.
(i) The Underwriters shall have received, on each of
the date hereof and the Closing Date, a letter dated the date hereof or
the Closing Date, as the case may be, in form and substance
satisfactory to the Underwriters, from Xxxxxx Xxxxxxxx LLP, independent
public accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus;
provided that the letter delivered on the Closing Date shall use a
"cut-off date" not earlier than the date hereof.
(j) The "lockup" agreements, each substantially in
the form of (x) Exhibit A-1 hereto, between you and the Company's
directors, executive officers and certain founder employees of the
Company and (y) Exhibit A-2 hereto, between you and the fund investors
and the Selling Stockholders, relating to sales and certain other
dispositions of shares of Common Stock or certain other securities
(effective in each case for 90 days from the date of the Prospectus)
delivered to you on or before the date hereof, shall be in full force
and effect on the Closing Date. The parties to be subject to the
"lock-up" agreements are listed on Exhibit A-3 hereto.
(k) The Company shall have obtained duly executed
waivers from each of Xxxxxx Xxxxxxx Capital Partners III, L.P., MSCP
III 892 Investors, L.P., Xxxxxx Xxxxxxx Capital Investors, L.P. and
Battery Ventures IV, L.P. (collectively, the "fund investors") and each
of the requisite management investors with respect to the fund
investors' and all of the management investors' rights to require the
Company to
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include such person's Common Stock with the Shares registered pursuant
to the Registration Statement.
(l) The representations and warranties of each
Selling Shareholder contained in this Agreement shall be true and
correct as of the Closing Date and each Selling Shareholder shall have
complied with all of the agreements and satisfied all of the conditions
on its part to be performed or satisfied hereunder on or before the
Closing Date. The Underwriters shall have received on the Closing Date
certificates dated the Closing Date and signed by the Selling
Stockholders or by their attorneys-in-fact to the effect set forth in
this Section 6(k).
(m) The Underwriters shall have received such other
certificates and documents as they or their counsel may reasonably
request.
(n) The several obligations of the Underwriters to
purchase Additional Shares hereunder are subject to the delivery to the
Representatives on the Option Closing Date of such documents as they
may reasonably request with respect to the good standing of the
Company, the due authorization and issuance of the Additional Shares
and other matters related to the Company and the issuance of the
Additional Shares.
7. Covenants. In further consideration of the agreements of
the Underwriters herein contained, the Company, except as otherwise provided
below, covenants with each Underwriter as follows:
(a) To furnish to you, without charge, six signed
copies of the Registration Statement (including exhibits thereto) and
for delivery to each other Underwriter a conformed copy of the
Registration Statement (without exhibits thereto) and to furnish to you
in New York City, without charge, prior to 10:00 a.m. New York City
time on the business day next succeeding the date of this Agreement and
during the period mentioned in Section 7(c) below, as many copies of
the Prospectus and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object, and to file
with the Commission within the applicable period specified in Rule
424(b) under the Securities Act any prospectus required to be filed
pursuant to such Rule.
(c) If, during such period after the first date of
the public offering of the Shares as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall
occur or condition exist as a result of which it is necessary to amend
or supplement the
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Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the Underwriters, it
is necessary to amend or supplement the Prospectus to comply with
applicable law, forthwith to prepare, file with the Commission and
furnish, at its own expense, to the Underwriters and to the dealers
(whose names and addresses you will furnish to the Company) to which
Shares may have been sold by you on behalf of the Underwriters and to
any other dealers upon request, either amendments or supplements to the
Prospectus so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with applicable
law.
(d) To use its best effort to register or qualify the
Shares for offer and sale under all applicable state securities or
"blue sky" laws of such jurisdictions as you shall reasonably request;
provided, however, that the Company shall not be required to (i)
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to qualify but
for this Section 7(d), (ii) file any general consent to service of
process or (iii) subject itself to taxation in any such jurisdiction if
it is not so subject.
(e) To make generally available to the Company's
security holders and to you as soon as practicable an earning statement
covering the twelve-month period beginning after the effective date of
the Registration Statement (as defined in Rule 158(c) of the Securities
Act) that satisfies the provisions of Section 11(a) of the Securities
Act and the rules and regulations of the Commission thereunder.
(f) Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, the
Company agrees to pay or cause to be paid all expenses incident to the
performance of its obligations under this Agreement, including: (i) the
fees, disbursements and expenses of the Company's counsel, the
Company's accountants and counsel for the Selling Stockholders in
connection with the registration and delivery of the Shares under the
Securities Act and all other fees or expenses in connection with the
preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the
mailing and delivering of copies thereof to the Underwriters and
dealers, in the quantities hereinabove specified, (ii) all costs and
expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon,
(iii) the cost of printing or producing any Blue Sky or legal
investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with
the qualification of the Shares for offer and sale under state
securities laws as provided in Section 7(d) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in
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connection with the Blue Sky or legal investment memorandum, (iv) all
filing fees and the reasonable fees and disbursements of counsel to the
Underwriters incurred in connection with the review and qualification
of the offering of the Shares by the National Association of Securities
Dealers, Inc. ("NASD"), (v) all costs and expenses incident to listing
the Shares to be issued by the Company on the Nasdaq National Market,
(vi) the cost of printing certificates representing the Shares, (vii)
the costs and charges of any transfer agent, registrar or depositary,
(viii) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the
marketing of the offering of the Shares, including, without limitation,
expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection
with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the representatives and
officers of the Company and any such consultants, and the cost of any
aircraft chartered in connection with the road show, and (ix) all other
costs and expenses incident to the performance of the obligations of
the Company hereunder for which provision is not otherwise made in this
Section; provided, however, that each of the Selling Stockholders
hereby acknowledges that the Purchase Price to be paid by the
Underwriters to each of the Selling Stockholders in respect of the sale
of their respective Shares as contemplated hereunder, reflects the
payment by each of such Selling Stockholders of the underwriting
discounts and commissions payable to the Underwriters as contemplated
hereunder. It is understood, however, that except as provided in this
Section, Section 8 entitled "Indemnity and Contribution", and the last
paragraph of Section 10 below, the Underwriters will pay all of their
costs and expenses, including fees and disbursements of their counsel,
transfer and income taxes payable on resale of any of the Shares by
them and any advertising expenses connected with any offers they may
make.
The provisions of this Section shall not supersede or
otherwise affect any agreement that the Sellers may otherwise have for
the allocation of such expenses among themselves.
(g) The Company will not, without the prior consent
of Xxxxxxx, Sachs & Co., Xxxxxxx Xxxxx Xxxxxx Inc. and Bear, Xxxxxxx &
Co. Inc., release any securityholder listed on Exhibit A-3 hereto from
the terms of any "lockup" arrangements between the Company and such
securityholder.
(h) The Company will conduct its affairs and operate
its business so as not to be deemed an "investment company" required to
be registered under the Investment Company Act of 1940, as amended.
8. Indemnity and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), from and against any and all losses, claims, damages
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and liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein; provided, however,
that the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any such losses, claims, damages or liabilities purchased
Shares, or any person controlling such Underwriter, if a copy of the Prospectus
(as then amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered, at or
prior to the written confirmation of the sale of the Shares to such person, and
if the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities, unless such failure
is the result of noncompliance by the Company with Section 6(a) hereof.
(b) Each Selling Shareholder agrees, severally and
not jointly, to indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but (x) only with reference to information
relating to such Selling Shareholder furnished in writing by or on behalf of
such Selling Shareholder expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements thereto
and (y) only to the extent of the gross proceeds received by such Selling
Shareholder from the offering of the Shares; provided, however, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured
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the defect giving rise to such losses, claims, damages or liabilities, unless
such failure is the result of noncompliance by the Company with Section 6(a)
hereof.
(c) Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, its directors, its officers
who sign the Registration Statement, the Selling Stockholders and each person,
if any, who controls the Company or any Selling Shareholder within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company and the Selling
Stockholders to such Underwriter, but only with reference to information
relating to such Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements thereto.
(d) In case any proceeding (including any
governmental investigation) shall be instituted involving any person in respect
of which indemnity may be sought pursuant to Section 8(a), 8(b) or 8(c), such
person (the "INDEMNIFIED PARTY") shall promptly notify the person against whom
such indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Xxxxxxx, Xxxxx & Co., Xxxxxxx Xxxxx Barney Inc. and
Bear, Xxxxxxx & Co. Inc., in the case of parties indemnified pursuant to Section
8(a) and (b), and by the Company, in the case of parties indemnified pursuant to
Section 8(c). The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 60 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
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indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement (i) includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding, provided that such unconditional release may be subject to a
parallel release of a claimant or plaintiff by such indemnified party from all
liability in respect of claims or counterclaims asserted by such indemnified
party, and (ii) does not include a statement as to, or an admission of, fault,
culpability or a failure to act by or on behalf of any indemnified party.
(e) To the extent the indemnification provided for in
Section 8(a), 8(b) or 8(c) is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party or parties on the one hand
and the Underwriters on the other hand from the offering of the Shares or (ii)
if the allocation provided by clause 8(e)(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 8(e)(i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
indemnifying party or parties on the one hand and the Underwriters on the other
hand in connection with the offering of the Shares shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by the indemnifying party or parties and
the total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover of the Prospectus, bear to
the aggregate Public Offering Price of the Shares. The relative fault of the
indemnifying party or parties on the one hand and the Underwriters on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or parties or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 8 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint. In no
event shall the liability of the Selling Shareholder under Section 8(e) exceed
the amount that such Selling Shareholder would have been required to pay under
Section 8(b) (taking into account both 8(b)(x) and (y)) had such indemnification
been held to be available thereunder.
(f) The Sellers and the Underwriters agree that it
would not be just or equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if
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the Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in Section 8(d). The amount paid or payable by an indemnified party
as a result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, 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, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 8 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
(g) The indemnity and contribution provisions
contained in this Section 8 and the representations, warranties and other
statements of the Company and the Selling Stockholders contained in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter, any Selling
Shareholder or any person controlling any Selling Shareholder, or by or on
behalf of the Company, its officers or directors or any person controlling the
Company and (iii) acceptance of and payment for any of the Shares.
(h) The Company hereby acknowledges that the
indemnification provisions set forth in the Amended and Restated Registration
Agreement dated September 13, 1999 between the Company and the other parties
named therein are in full force and effect as of the date hereof and that such
provisions are applicable in accordance with their terms to the sale of the
Shares as contemplated hereby.
9. Termination. This Agreement shall be subject to termination
by notice given by you to the Company, if (a) after the execution and delivery
of this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 9(a)(i) through 9(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment,
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impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus.
10. Effectiveness; Defaulting Underwriters. This Agreement
shall become effective upon the execution and delivery hereof by the parties
hereto.
If, on the Closing Date or the Option Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse to
purchase Shares that it has or they have agreed to purchase hereunder on such
date, and the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule I bears to the
aggregate number of Firm Shares set forth opposite the names of all such
nondefaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; provided that in no event shall the
number of Shares that any Underwriter has agreed to purchase pursuant to this
Agreement be increased pursuant to this Section 10 by an amount in excess of
one-ninth of such number of Shares without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail
or refuse to purchase Firm Shares and the aggregate number of Firm Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Firm Shares to be purchased, and arrangements satisfactory to you, the
Company and the Selling Stockholders for the purchase of such Firm Shares are
not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any nondefaulting Underwriter, the Company or
the Selling Stockholders. In any such case either you or the relevant Sellers
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. If, on the Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Additional Shares to be purchased, the
non-defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase Additional Shares or (ii) purchase not less
than the number of Additional Shares that such non-defaulting Underwriters would
have been obligated to purchase in the absence of such default. Any action taken
under this paragraph shall not relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or
any of them, because of any failure or refusal on the part of any Seller to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason any Seller shall be unable to perform its obligations under
this Agreement, the Sellers will reimburse the Underwriters or such Underwriters
as have so terminated this Agreement with respect to themselves, severally, for
all out-of-pocket expenses (including the fees and disbursements of their
counsel) reasonably
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incurred by such Underwriters in connection with this Agreement or the offering
contemplated hereunder.
11. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
13. Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
14. Notice. All notices and other communications under this
Agreement shall be in writing, and, if sent to the Underwriters, be mailed,
delivered or sent by facsimile transmission to:
Xxxxxxx, Xxxxx & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel's Office
Facsimile Number: (000) 000-0000
or, if sent to the Company, will be mailed, delivered or sent by facsimile
transmission to the Company at:
Allegiance Telecom, Inc.
0 Xxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxx
Senior Vice President, General
Counsel and Secretary
Facsimile Number: (000) 000-0000
22
24
Very truly yours,
ALLEGIANCE TELECOM, INC.
By:
----------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Senior Vice President,
General Counsel and Secretary
Madison Dearborn Capital Partners II, L.P.
Frontenac VII Limited Partnership
Frontenac Masters VII Limited Partnership
By:
----------------------------------------
Attorney-in-Fact
Battery Ventures IV, L.P.
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Director
Accepted as of the date hereof:
XXXXXXX, SACHS & CO.
XXXXXXX XXXXX XXXXXX INC.
BEAR, XXXXXXX & CO. INC.
Acting severally on behalf of themselves
and the several Underwriters
named in Schedule I hereto.
By: Xxxxxxx, Xxxxx & Co.
By:
----------------------------------
Name:
Title:
25
SCHEDULE I
UNDERWRITERS
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
Xxxxxxx, Sachs & Co. o
Xxxxxxx Xxxxx Xxxxxx Inc. o
Bear, Xxxxxxx, & Co. Inc. o
Morgan Xxxxxxx & Co. Incorporated o
Warburg Dillon Read LLC o
TD Securities (USA) Inc. o
FleetBoston Xxxxxxxxx Xxxxxxxx Inc. o
J. J. B. Xxxxxxxx, X. X. Xxxxx, Inc. o
ING Barings LLC o
Credit Lyonnais Securities (USA) Inc. o
First Union Securities, Inc. o
Total Firm Shares ................................... 6,600,000
26
SCHEDULE II
SELLING STOCKHOLDERS
NUMBER OF
SHARES SOLD
SELLING STOCKHOLDERS
Madison Dearborn Capital Partners II, L.P. 1,000,000
Frontenac VII Limited Partnership 952,381
Frontenac Masters VII Limited Partnership 47,619
Battery Ventures IV, L.P. 1,400,000
Total........................................... 3,400,000
27
EXHIBIT A-1
[FORM OF LOCK-UP LETTER]
, 1999
------------
Xxxxxxx, Sachs & Co.
Xxxxxxx Xxxxx Xxxxxx
Bear, Xxxxxxx & Co. Inc.
c/o Goldman, Sachs & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxxx, Xxxxx & Co., Xxxxxxx Xxxxx Barney
Inc. and Bear, Xxxxxxx & Co. Inc. (together, the "Representatives") propose to
enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") with
Allegiance Telecom, Inc., a Delaware corporation (the "COMPANY"), and certain
selling stockholders providing for the public offering (the "PUBLIC OFFERING")
by the several Underwriters, including the Representatives (the "UNDERWRITERS"),
of shares (the "SHARES") of the Common Stock, par value $.01 per share of the
Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of the Representatives on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 90 days after the date of the final prospectus relating
to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock,
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) transactions relating
to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering, (b) any transfer for
estate planning purposes of shares of Common Stock (i) to a trust or partnership
for the benefit of such transferor
28
or such transferor's parents, siblings, spouse, descendants (whether or not
adopted) or stepchildren (collectively, the "Family Group") or (ii) by gift,
will or intestate succession to such transferor's Family Group, (c) except with
respect to shares owned by Xxxxx X. Xxxxxxx, Xxxxxx X. Xxxx and C. Xxxxxx Xxxx,
transfers by any of the entities and/or individuals listed on Schedule A-1
hereto for any purpose of not more than an aggregate of 10% of the undersigned's
shares of Common Stock, or (d) transfers of not more than an aggregate of 20% of
the undersigned's shares of Common Stock for the purpose of making a charitable
contribution to a not-for-profit organization; provided that, with respect to
any transfers pursuant to clause (b), as a condition precedent to such transfer,
the transferee of any such transfer, or the trustee or legal guardian on behalf
of any such transferee, duly executes and delivers this Agreement; and further
provided that, with respect to any transfers pursuant to clause (d), as a
condition precedent to such transfer, the transferee of any such transfer, or
the trustee or legal guardian on behalf of any such transferee, duly executes
and delivers an Agreement substantially in the form attached hereto as Schedule
A-2. In addition, the undersigned agrees that, without the prior written consent
of the Representatives on behalf of the Underwriters, it will not, during the
period commencing on the date hereof and ending 90 days after the date of the
Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock that would result in a registration
statement relating to such Common Stock or security being filed prior to the
date 90 days after the date of the Prospectus.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Sellers and the Underwriters.
Very truly yours,
-----------------------------------------
(Name)
-----------------------------------------
(Address)
X-0-0
00
XXXXXXXX X-0
[ADDITIONAL FORM OF LOCK-UP LETTER]
, 1999
------------
Xxxxxxx, Xxxxx & Co.
Xxxxxxx Xxxxx Xxxxxx
Bear, Xxxxxxx & Co. Inc.
c/o Goldman, Sachs & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxxx, Xxxxx & Co., Xxxxxxx Xxxxx Barney
Inc. and Bear, Xxxxxxx & Co. Inc. (together, the "Representatives") propose to
enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") with
Allegiance Telecom, Inc., a Delaware corporation (the "COMPANY"), and certain
selling stockholders providing for the public offering (the "PUBLIC OFFERING")
by the several Underwriters, including the Representatives (the "UNDERWRITERS"),
of shares (the "SHARES") of the Common Stock, par value $.01 per share of the
Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of the Representatives on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 90 days after the date of the final prospectus relating
to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock,
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to transactions relating to
shares of Common Stock or other securities acquired in open market transactions
after the completion of the Public Offering. In addition, the undersigned agrees
that, without the prior
A-2-1
30
written consent of the Representatives on behalf of the Underwriters, it will
not, during the period commencing on the date hereof and ending 90 days after
the date of the Prospectus, make any demand for or exercise any right with
respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock that would
result in a registration statement relating to such Common Stock or security
being filed prior to the date 90 days after the date of the Prospectus.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Sellers and the Underwriters.
Very truly yours,
-----------------------------------------
(Name)
-----------------------------------------
(Address)
A-2-2
31
EXHIBIT A-2
[FORM OF LOCK-UP LETTER]
, 1999
------------
Xxxxxxx, Xxxxx & Co.
Xxxxxxx Xxxxx Xxxxxx
Bear, Xxxxxxx & Co. Inc.
c/o Goldman, Sachs & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxxx, Xxxxx & Co., Xxxxxxx Xxxxx Barney
Inc. and Bear, Xxxxxxx & Co. Inc. (together, the "Representatives") propose to
enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") with
Allegiance Telecom, Inc., a Delaware corporation (the "COMPANY"), and certain
selling stockholders providing for the public offering (the "PUBLIC Offering")
by the several Underwriters, including the Representatives (the "UNDERWRITERS"),
of shares (the "SHARES") of the Common Stock, par value $.01 per share of the
Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of the Representatives on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 90 days after the date of the final prospectus relating
to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock,
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. In addition, the undersigned agrees that, without the prior written
consent of the Representatives on behalf of the Underwriters, it will not,
during the
A-2-1
32
period commencing on the date hereof and ending 90 days after the date of the
Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock that would result in a registration
statement relating to such Common Stock or security being filed prior to the
date 90 days after the date of the Prospectus.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Sellers and the Underwriters.
Very truly yours,
-----------------------------------------
(Name)
-----------------------------------------
(Address)
33
EXHIBIT B
Opinion of Xxxxxxxx & Xxxxx
[Attach draft opinion of Xxxxxxxx & Xxxxx to be delivered pursuant to
Section 6(c) of the Underwriting Agreement to the effect that:]
1. The Underwriting Agreement and each of the Power of Attorney and Custody
Agreements have been duly authorized, executed and delivered by the
Company; each Power of Attorney and Custody Agreement is a valid and
binding agreement of the Company, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity.
2. Upon the delivery to DTC or its agent of the Shares registered in the name
designated by DTC (including, without limitation, Cede & Co.), and upon the
crediting of the Shares to the securities accounts of the several
Underwriters with DTC, DTC will be a "protected purchaser" of the Shares
(as defined in Section 8-303 of the NYUCC) and will acquire its interest in
the Shares free of any adverse claim (assuming that DTC is without notice
of any adverse claim).
3. Upon the payment of the purchase price for the Shares and the crediting of
the Shares to the securities accounts of the several Underwriters with DTC,
each of the Underwriters will acquire a security entitlement (within the
meaning of Section 8-501 of the NYUCC) in respect of the Shares to be
purchased by it, and no action (whether framed in conversion, replevin,
constructive trust, equitable lien, or other theory) based on an adverse
claim may be asserted against the Underwriters with respect to such
security entitlement (assuming that the Underwriters are without notice of
the adverse claim).
4. The Company is not required to obtain any consent, approval, authorization
or order of, or qualify with, any governmental body, court or agency for
the performance by the Company of its obligations under the Underwriting
Agreement or the Power of Attorney and Custody Agreements, except for any
such consent, approval, authorization or order which may be required under
the so-called "Blue Sky" or securities laws of any states (as to which we
express no opinion or advice) in connection with the offer and sale of the
Shares by the Underwriters.
5. The Company is not, and after giving effect to the offering and sale of the
Shares and the application of the proceeds thereof as described in the
Prospectus will not be, an "investment company" as defined in the
Investment Company Act of 1940, as amended.
6. The statements in the Prospectus under the captions "Certain Relationships
and Related Transactions," "Description of Certain Indebtedness,"
"Description of Capital Stock" and "Underwriting," and the statements in
Item 14 and Item 15 of the Registration Statement, in each case insofar as
such statements constitute summaries of the legal matters, documents and
proceedings referred to therein, in all material respects fairly present
the
34
information with respect to such legal matters, documents and proceedings
and fairly summarize the matters referred to therein.
7. The authorized capital stock of the Company conforms in all material
respects to the description thereof set forth in the Prospectus under the
caption "Description of Capital Stock."
8. We (A) are of the opinion that (a) the Registration Statement and
Prospectus except for financial statements and schedules and other
financial data included therein as to which such counsel need not express
any opinion) comply as to form in all material respects with the Securities
Act and the applicable rules and regulations of the Commission thereunder,
and (b) the documents incorporated by reference in the Prospectus (except
for financial statements and schedules and other financial data included
therein as to which such counsel need not express any opinion), at the time
they were filed with the Commission, complied in all material respects with
the requirements of the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder, (B) have no reason
to believe that (except for financial statements and schedules and other
financial data as to which such counsel need not express any belief) the
Registration Statement and the prospectus included therein at the time the
Registration Statement became effective contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and (C)
have no reason to believe that (except for financial statements and
schedules and other financial data as to which such counsel need not
express any belief) the Prospectus contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
With respect to (8) above, Xxxxxxxx & Xxxxx may state that their opinion
and belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements thereto
and review and discussion of the contents thereof, but are without independent
check or verification, except as specified.
B-2
35
EXHIBIT C
Opinion of Xxxx X. Xxxxxxxxxx
[Attach draft opinion of Xxxx X. Xxxxxxxxxx to be delivered pursuant to
Section 6(d) of the Underwriting Agreement to the effect that:]
1. Each of the Company and each subsidiary of the Company listed on Schedule A
attached hereto (each, a "Subsidiary") is a corporation validly existing
and in good standing under the laws of Delaware, has the corporate power
and authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction set forth opposite its name on such Schedule
A.
2. All of the issued shares of capital stock of each Subsidiary have been duly
and validly authorized and issued and are fully paid and non-assessable.
3. The shares of Common Stock (including the Shares to be sold by the Selling
Stockholders) outstanding prior to the issuance of the Shares to be sold by
the Company have been duly authorized and are validly issued, fully paid
and nonassessable.
4. The Shares to be sold by the Company have been duly authorized and, when
issued and delivered in accordance with the terms of the Underwriting
Agreement, will be validly issued, fully paid and nonassessable, and the
issuance of such Shares will not be subject to any preemptive or similar
rights.
5. The execution and delivery by the Company of, and the performance by the
Company of its obligations under, the Underwriting Agreement and the Power
of Attorney and Custody Agreements will not (i) violate the Company's
Certificate of Incorporation or Bylaws or (ii) constitute a violation by
the Company of any applicable provision of any law, statute or regulation
(except that we express no opinion in this paragraph as to compliance with
any disclosure requirement or any prohibition against fraud or
misrepresentation or as to whether performance of any indemnification or
contribution provisions would be permitted) or (iii) breach, or result in a
default under, any existing obligation of the Company under any of the
agreements listed on Schedule B hereto (provided that we express no opinion
as to compliance with any financial test or cross default provision that
may be contained in any such agreement, if any).
6. To our knowledge, there is no action, suit, proceeding or investigation
before or by any court or governmental agency or body, domestic or foreign,
pending or threatened against, the Company or any Subsidiary that is
required to be described in the Registration Statement or the Prospectus
that is not so described nor are there any statutes, regulations, contracts
or other documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required.
36
7. All of the issued shares of capital stock of each Subsidiary are owned
directly of record by the Company, free and clear of all perfected liens,
encumbrances, equities or claims, except for such liens, encumbrances,
equities or claims as are disclosed in the Prospectus, and to the best of
our knowledge, such shares are owned beneficially by the Company.
C-2
37
EXHIBIT D
Opinion of Xxxxxxxx & Xxxxx
[Attach draft opinion of Xxxxxxxx & Xxxxx to be delivered pursuant to
Section 6(e) of the Underwriting Agreement to the effect that:]
1. The Underwriting Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Stockholders.
2. The execution and delivery by each Selling Shareholder of, and the
performance by such Selling Shareholder of its obligations under, this Agreement
and the Power of Attorney and Custody Agreement of such Selling Shareholder will
not contravene any provision of applicable law, or the organizational documents
of such Selling Shareholder, or, to the best of such counsel's knowledge, any
agreement or other instrument binding upon such Selling Shareholder or, to the
best of such counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over such Selling
Shareholder, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by such Selling Shareholder of its obligations under the
Underwriting Agreement or the Power of Attorney and Custody Agreement of such
Selling Shareholder, except such as may be required by the securities or Blue
Sky laws of the various states in connection with offer and sale of the Shares.
3. Each Selling Shareholder has full right, power and authority to
sell, transfer and deliver such Shares pursuant to the Underwriting Agreement.
Assuming that (i) the Shares to be sold by each Selling Shareholder are
registered securities in certificated form and not held in any securities
account or by or through a securities intermediary within the meaning of the
NYUCC (ii) the certificate or certificates representing the Shares to be sold by
such Selling Shareholder pursuant to the Underwriting Agreement have been
effectively endorsed in blank in accordance with the NYUCC, and (iii) Transfer
Agent in its capacity as Custodian for the Underwriter is not acting as a
securities intermediary then, by delivery of such certificate or certificates to
the Underwriters, and upon payment therefor by the Underwriters pursuant to the
Underwriting Agreement, each Underwriter will be a "protected purchaser" of the
Shares to be purchased by it (within the meanings of Section 8-501 and 8-303 of
the NYUCC) and will acquire its interest in such Shares (including, without
limitation, all rights that such Selling Shareholder had or has the power to
transfer in such Shares) free of any adverse claim (assuming that the
Underwriters are without notice of any adverse claim).
4. The Power of Attorney and Custody Agreement of each Selling
Shareholder has been duly authorized, executed and delivered by such Selling
Shareholder and is a valid and binding agreement of such Selling Shareholder
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and general
principles of equity.
5. We (A) are of the opinion that (a) the Registration Statement and
Prospectus and (b) the documents incorporated by reference in the Prospectus
(except, in each case, for financial statements and schedules and other
financial data included therein as to which such counsel need not express any
opinion) comply as to form in all material respects with the
38
Securities Act and the applicable rules and regulations of the Commission
thereunder, and (b) the documents incorporated by reference in the Prospectus
(except for financial statements and schedules and other financial data included
therein as to which such counsel need not express any opinion) at the time they
were filed with the Commission, complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Commission thereunder, (B) have no reason to believe that
(except for financial statements and schedules and other financial data as to
which such counsel need not express any belief) the Registration Statement and
the prospectus included therein at the time the Registration Statement became
effective contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading and (C) have no reason to believe that (except
for financial statements and schedules and other financial data as to which such
counsel need not express any belief) the Prospectus when issued contained or as
of the date such opinion is delivered contains any untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
With respect to item 5 above, Xxxxxxxx & Xxxxx may state that their
opinion and belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements thereto
and review and discussion of the contents thereof, but are without independent
check or verification, except as specified.
X-0
00
XXXXXXX X
Xxxxxxx xx Xxxxx, Xxxxxxx & Xxxxxxxxx
[Attach draft opinion of Xxxxx, Xxxxxxx & Xxxxxxxxx to be delivered
pursuant to Section 6(f) of the Underwriting Agreement to the effect that:]
1. The Underwriting Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Stockholders.
2. The execution and delivery by each Selling Shareholder of, and the
performance by such Selling Shareholder of its obligations under, this Agreement
and the Power of Attorney and Custody Agreement of such Selling Shareholder will
not contravene any provision of applicable law, or the organizational documents
of such Selling Shareholder, or, to the best of such counsel's knowledge, any
agreement or other instrument binding upon such Selling Shareholder or, to the
best of such counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over such Selling
Shareholder, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by such Selling Shareholder of its obligations under the
Underwriting Agreement or the Power of Attorney and Custody Agreement of such
Selling Shareholder, except such as may be required by the securities or Blue
Sky laws of the various states in connection with offer and sale of the Shares.
3. Each Selling Shareholder has full right, power and authority to
sell, transfer and deliver such Shares pursuant to the Underwriting Agreement.
Assuming that (i) the Shares to be sold by each Selling Shareholder are
registered securities in certificated form and not held in any securities
account or by or through a securities intermediary within the meaning of the
NYUCC (ii) the certificate or certificates representing the Shares to be sold by
such Selling Shareholder pursuant to the Underwriting Agreement have been
effectively endorsed in blank in accordance with the NYUCC, and (iii) Transfer
Agent in its capacity as Custodian for the Underwriter is not acting as a
securities intermediary then, by delivery of such certificate or certificates to
the Underwriters, and upon payment therefor by the Underwriters pursuant to the
Underwriting Agreement, each Underwriter will be a "protected purchaser" of the
Shares to be purchased by it (within the meanings of Section 8-501 and 8-303 of
the NYUCC) and will acquire its interest in such Shares (including, without
limitation, all rights that such Selling Shareholder had or has the power to
transfer in such Shares) free of any adverse claim (assuming that the
Underwriters are without notice of any adverse claim).
4. The Power of Attorney and Custody Agreement of each Selling
Shareholder has been duly authorized, executed and delivered by such Selling
Shareholder and is a valid and binding agreement of such Selling Shareholder
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and general
principles of equity.
40
EXHIBIT F
Opinion of Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
[Attach draft opinion of Xxxxxxx Berlin Shereff Xxxxxxxx, LLP to be delivered
pursuant to Section 6(f) of the Underwriting Agreement to the effect that:]
(A) (1) the execution and delivery of the Underwriting Agreement and
the Power of Attorney and Custody Agreements by the Company and the
consummation of the transactions contemplated thereby do not violate (i)
the Communications Act, (ii) any Federal Communications Law applicable to
the Company and/or Subsidiaries, (iii) any State Communications Law
applicable to the Company and/or Subsidiaries, and (iv) to the best of our
knowledge, any decree from any court; and (2) no authorization of the FCC
or any PUC that has not already been received from, or prior filing that
has not already been made with, such agency is necessary for the execution
and delivery of the Underwriting Agreement or the Power of Attorney and
Custody Agreements by the Company and the consummation of the transactions
contemplated thereby in accordance with the terms thereof, except where the
failure to obtain such authorization or make such filling would not have a
material adverse effect on the prospects, condition, financial or
otherwise, or on the earnings, business or operations of the Company and
its Subsidiaries, taken as a whole;
(B) to the best of our knowledge and relying on the factual
representations in the Certificate: (1) each of the Company and its
Subsidiaries has made all reports and filings, and paid all fees, required
by the FCC and the PUCs, and has all certificates, orders, permits,
licenses, authorizations, consents, and approvals of and from, and has made
all filings and registrations, with the FCC and the PUCs necessary to own,
lease, license and use its properties and assets and to conduct its
business in the manner described in the Prospectus; and (2) none of the
Company or any of its Subsidiaries has received any notice of proceedings
relating to the violation, revocation or modification of any such
certificates, orders, permits, licenses, authorizations, consents, or
approvals, or the qualification or rejection of any such filing or
registration, the effect of which, singly or in the aggregate, would have a
material adverse effect on the prospects, condition, financial or
otherwise, or on the earnings, business or operations of the Company and
its Subsidiaries, taken as a whole;
(C) to the best of our knowledge, neither the Company nor any of its
subsidiaries is in violation of, or in default under, any provision of
Federal Communications Law or State Communications Law, the effect of
which, singly or in the aggregate, would have a material adverse effect on
the prospects, condition, financial or otherwise, or on the earnings,
business or operations of the Company and its Subsidiaries, taken as a
whole;
(D) to the best of our knowledge after due inquiry and relying on the
factual representations of the Certificate: (i) no adverse judgment, decree
or order of the FCC or any PUC has been issued against the Company or any
of its Subsidiaries and (ii) no litigation, proceeding (other than
certification applications initiated by the Company or its
41
Subsidiaries), inquiry or investigation has been commenced or threatened
against the Company or any of its Subsidiaries before or by the FCC or any
PUC which, if decided adversely to the Company's interest, would have a
material adverse effect on the Company and its Subsidiaries, taken as a
whole; and
(E) the statements in the Prospectus under the captions "Risk Factors
-- If We Do Not Interconnect with Our Primary Competitors, the Incumbent
Local Exchange Carriers, Our Business Will Be Adversely Affected", "Risk
Factors -- Our Principal Competitors for Local Services, the Incumbent
Local Exchange Carriers, and Potential Additional Competitors, Have
Advantages that May Adversely Affect Our Ability to Compete with Them",
"Risk Factors -- Our Need to Comply with Extensive Government Regulation
Can Increase Our Costs And Slow Our Growth", "Risk Factors -- Deregulation
of the Telecommunications Industry Involves Uncertainties, and the
Resolution of These Uncertainties Could Adversely Affect Our Business",
"Risk Factors -- The Regulation of Interconnection with Incumbent Local
Exchange Carriers Involves Uncertainties, and the Resolution of These
Uncertainties Could Adversely Affect Our Business", "Risk Factors --
Significant Competition in Providing Long Distance and Internet Services
Could Reduce the Demand for and Profitability of Our Services," "Risk
Factors -- We Could Lose Revenue if Calls to Internet Service Providers Are
Treated As Long Distance Interstate Calls", "Risk Factors -- The Regulation
of Access Charges Involves Uncertainties, and the Resolution of These
Uncertainties Could Adversely Affect Our Business", "Business -- Overview",
"Business -- Market Opportunity", "Business -- Implementation of Services"
and "Business -- Regulation", "Business -- Competition", to the extent that
they discuss international and U.S. federal, state, and local statutes,
regulations and proceedings with respect to telecommunications regulatory
matters, fairly summarize the matters referred to therein.
F-2
