1
================================================================================
GLOBAL TELESYSTEMS GROUP, INC.
(a Delaware corporation)
2,220,000 Shares of Common Stock
INTERNATIONAL PURCHASE AGREEMENT
Dated: February [ ], 1998
================================================================================
2
TABLE OF CONTENTS
Page
----
INTERNATIONAL PURCHASE AGREEMENT..................................................... 1
SECTION 1. Representations and Warranties.......................................... 4
(a) Representations and Warranties by the Company.................... 4
(i) Compliance with Registration Requirements................... 4
(ii) Independent Accountants..................................... 5
(iii) Financial Statements........................................ 5
(iv) No Material Adverse Change in Business...................... 6
(v) Good Standing of the Company................................ 6
(vi) Good Standing of Subsidiaries............................... 6
(vii) Capitalization.............................................. 7
(viii) Authorization of Agreement.................................. 7
(ix) Authorization and Description of Securities................. 8
(x) Absence of Defaults and Conflicts........................... 8
(xi) Absence of Labor Dispute.................................... 9
(xii) Absence of Proceedings...................................... 9
(xiii) Accuracy of Exhibits........................................ 10
(xiv) Possession of Intellectual Property......................... 10
(xv) Absence of Further Requirements............................. 10
(xvi) Possession of Licenses and Permits.......................... 10
(xvii) Title to Property........................................... 11
(xviii) Compliance with Cuba Act.................................... 11
(xix) Investment Company Act...................................... 11
(xx) Environmental Laws.......................................... 12
(xxi) Registration Rights......................................... 12
(b) Officer's Certificates........................................... 12
SECTION 2. Sale and Delivery to International Managers; Closing.................... 13
(a) Initial Securities............................................... 13
(b) Option Securities................................................ 13
(c) Payment.......................................................... 14
(d) Denominations; Registration...................................... 14
SECTION 3. Covenants of the Company................................................ 15
(a) Compliance with Securities Regulations and Commission Requests... 15
(b) Filing of Amendments............................................. 15
(c) Delivery of Registration Statements.............................. 16
-i-
3
Page
----
(d) Delivery of Prospectuses....................................... 16
(e) Continued Compliance with Securities Laws...................... 16
(f) Rule 158....................................................... 17
(g) Use of Proceeds................................................ 17
(h) Listing........................................................ 17
(i) Restriction on Sale of Securities.............................. 17
(j) Reporting Requirements......................................... 18
(k) Compliance with Rule 463....................................... 18
SECTION 4. Payment of Expenses................................................... 18
(a) Expenses....................................................... 18
(b) Termination of Agreement....................................... 19
SECTION 5. Conditions of International Managers Obligations...................... 19
(a) Effectiveness of Registration Statement........................ 19
(b) Opinion of Counsel for Company................................. 19
(c) Opinion of Counsel for International Managers.................. 20
(d) Officers' Certificate.......................................... 20
(e) Accountant's Comfort Letter.................................... 20
(f) Bring-down Comfort Letter...................................... 21
(g) Approval of Listing............................................ 21
(h) No Objection................................................... 21
(i) Lock-up Agreements............................................. 21
(j) Purchase of Initial U.S. Securities............................ 21
(k) Notes Offering................................................. 22
(l) Conditions to Purchase of International Option Securities...... 22
(i) Officers' Certificate..................................... 22
(ii) Opinion of Counsel for Company............................ 22
(iii) Opinion of Counsel for International Managers............. 22
(iv) Bring-down Comfort Letter................................. 22
(m) Additional Documents........................................... 23
(n) Termination of Agreement....................................... 23
SECTION 6. Indemnification....................................................... 23
(a) Indemnification of International Managers...................... 23
(b) Indemnification of Company, Directors and Officers............. 25
(c) Actions against Parties; Notification.......................... 25
(d) Settlement without Consent if Failure to Reimburse............. 26
SECTION 7. Contribution........................................................... 26
-ii-
4
Page
----
SECTION 8. Representations, Warranties and Agreements to Survive Delivery........ 28
SECTION 9. Termination of Agreement.............................................. 28
(a) Termination; General........................................... 28
(b) Liabilities.................................................... 29
SECTION 10. Default by One or More of the International Managers.................. 29
SECTION 11. Notices............................................................... 30
SECTION 12. Parties............................................................... 30
SECTION 13. GOVERNING LAW AND TIME................................................ 31
SECTION 14. Effect of Headings.................................................... 31
SCHEDULES
Schedule A - List of Underwriters......................................... Sch A-1
Schedule B - Pricing Information.......................................... Sch B-1
EXHIBITS
Exhibit A-1 - Form of Opinion of Company's Special Counsel................ A-1-1
Exhibit A-2 - Form of Opinion of Company's Counsel........................ A-2-1
Exhibit B - Form of Lock-up Letter...................................... B-1
-iii-
5
GLOBAL TELESYSTEMS GROUP, INC.
(a Delaware corporation)
2,220,000 Shares of Common Stock
(Par Value $.10 Per Share)
INTERNATIONAL PURCHASE AGREEMENT
February , 1998
XXXXXXX XXXXX INTERNATIONAL
Xxxxxxxxx, Lufkin & Xxxxxxxx International
UBS Limited
Xxxxxx Brothers International (Europe)
Baring Brothers Limited (as agent for
ING Bank N.V.
as Lead Managers of the several International Managers
c/o Merrill Xxxxx International
Ropemaker Place
00 Xxxxxxxxx Xxxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Ladies and Gentlemen:
GLOBAL TELESYSTEMS GROUP, INC., a Delaware corporation (the "Company"),
confirms its agreement with Xxxxxxx Xxxxx International ("Xxxxxxx Xxxxx") and
each of the other international underwriters named in Schedule A hereto
(collectively, the "International Managers", which term shall also include any
underwriter substituted as hereinafter provided in Section 10 hereof), for whom
Xxxxxxx Lynch, Donaldson, Lufkin & Xxxxxxxx International, UBS Limited, Xxxxxx
Brothers International (Europe) and Baring Brothers Limited (as agent for ING
Bank N.V.) are acting as representatives (in such capacity, the "Lead
Managers"), with respect to the issue and sale by the Company and the purchase
by the International Managers, acting severally and not jointly, of the
respective numbers of shares of Common Stock, par value $.10 per share, of the
Company ("Common Stock") set forth in said Schedule A, and with respect to the
grant by the Company to the International Managers, acting severally and not
jointly, of the option described in Section 2(b) hereof to purchase all or any
part of 333,000 additional shares of Common Stock to cover over-allotments, if
any. The aforesaid 2,220,000 shares of Common Stock (the "Initial International
Securities") to be purchased by the International Managers and all or any part
of the 333,000 shares of Common Stock subject to the option described in Section
2(b) hereof
6
-2-
(the "International Option Securities") are hereinafter called, collectively,
the "International Securities."
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "U.S. Purchase Agreement") providing for
the offering by the Company of an aggregate of 8,880,000 shares of Common Stock
(the "Initial U.S. Securities") through arrangements with certain underwriters
in the United States and Canada (the "U.S. Underwriters") for which Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, UBS Securities LLC, Xxxxxxxxx,
Lufkin & Xxxxxxxx Securities Corporation, Xxxxxx Brothers Inc. And Xxxxxx Xxxx
LLC. are acting as representatives (collectively, the "U.S. Representatives")
and the grant by the Company to the U.S. Underwriters, acting severally and not
jointly, of an option to purchase all or any part of the U.S. Underwriters' pro
rata portion of up to 1,332,000 additional shares of Common Stock solely to
cover over-allotments, if any (the "U.S. Option Securities" and, together with
the International Option Securities, the "Option Securities"). The Initial
U.S. Securities and the U.S. Option Securities are hereinafter called the "U.S.
Securities." It is understood that the Company is not obligated to sell, and
the International Managers are not obligated to purchase, any Initial
International Securities unless all of the Initial U.S. Securities are
contemporaneously purchased by the U.S. Underwriters.
The International Managers and the U.S. Underwriters are hereinafter
collectively called the "Underwriters," the Initial International Securities
and the Initial U.S. Securities are hereinafter collectively called the
"Initial Securities," and the International Securities, and the U.S. Securities
are hereinafter collectively called the "Securities."
The Underwriters will concurrently enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the direction
of Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated (in
such capacity, the "Global Coordinator").
The Company understands that the International Managers propose to make a
public offering of the International Securities as soon as the Lead Managers
deem advisable after this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement
7
-3-
on Form S-1 (No. 333-36555) covering the registration of the Securities under
the Securities Act of 1933, as amended (the "1933 Act"), including the related
preliminary prospectus or prospectuses. Promptly after execution and delivery of
this Agreement, the Company will either (i) prepare and file a prospectus in
accordance with the provisions of Rule 430A ("Rule 430A") of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations")
and paragraph (b) of Rule 424 ("Rule 424(b)") of the 1933 Act Regulations or
(ii) if the Company has elected to rely upon Rule 434 ("Rule 434") of the 1933
Act Regulations, prepare and file a term sheet (a "Term Sheet") in accordance
with the provisions of Rule 434 and Rule 424(b). Two forms of prospectus are to
be used in connection with the offering and sale of the Securities: one
relating to the International Securities (the "Form of International
Prospectus") and one relating to the U.S. Securities (the "Form of U.S.
Prospectus"). The Form of International Prospectus is identical to the Form of
U.S. Prospectus, except for the front cover and back cover pages and the
information under the caption "Underwriting." The information included in any
such prospectus or in any such Term Sheet, as the case may be, that was omitted
from such registration statement at the time it became effective but that is
deemed to be part of such registration statement at the time it became effective
(a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A
Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as
"Rule 434 Information." Each Form of International Prospectus and Form of U.S.
Prospectus used before such registration statement became effective, and any
prospectus that omitted, as applicable, the Rule 430A Information or the Rule
434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto, at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final Form of
International Prospectus and the final Form of U.S. Prospectus in the forms
first furnished to the Underwriters for use in connection with the offering of
the Securities are herein called the "International Prospectus" and the "U.S.
Prospectus," respectively, and collectively, the "Prospectuses." If Rule 434 is
relied on, the terms "International Prospectus" and "U.S. Prospectus" shall
refer to the preliminary International
8
-4-
Prospectus dated December 30, 1997 and preliminary U.S. Prospectus dated
December 30, 1997, respectively, each together with the applicable Term Sheet
and all references in this Agreement to the date of such Prospectuses shall mean
the date of the applicable Term Sheet. For purposes of this Agreement, all
references to the Registration Statement, any preliminary prospectus, the
International Prospectus, the U.S. Prospectus or any Term Sheet or any amendment
or supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("XXXXX").
Contemporaneously with the offering of the Securities, the Company will be
offering $[100] million of Senior Notes due 2005 (the "Notes Offering").
Consummation of both the Notes Offering and the offering of the Common Stock
are conditioned upon the consummation of the other.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each International Manager as of the date hereof, as
of the Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b), hereof and agrees with each
International Manager, as follows:
(i) Compliance with Registration Requirements. The Registration
Statement has become effective under the 1933 Act and no stop order suspending
the effectiveness of the Registration Statement has been issued under the 1933
Act and no proceedings for that purpose have been instituted or are pending or,
to the knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with.
At the respective times the Registration Statement and any
post-effective amendments thereto became effective and at the Closing
Time (and, if any International Option Securities are purchased, at the
Date of Delivery), the Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations and
did not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. Neither of the
Prospectuses nor any amendments or supplements thereto, at
9
-5-
the time the Prospectuses or any amendments or supplements thereto were
issued and at the Closing Time (and, if any International Option
Securities are purchased, at the Date of Delivery), included or will
include an untrue statement of a material fact or omitted or will omit to
state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading. If Rule 434 is used, the Company will comply with the
requirements of Rule 434 and the Prospectuses shall not be "materially
different," as such term is used in Rule 434, from the prospectuses
included in the Registration Statement at the time it became effective.
The representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or the
International Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by or on behalf of any
International Manager through the Lead Managers expressly for use in the
Registration Statement or the International Prospectus.
Each preliminary prospectus and the prospectuses 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 1933 Act, complied when
so filed in all material respects with the requirements of the 1933 Act
and the 1933 Act Regulations and each preliminary prospectus and the
Prospectuses delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
(ii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act and the
1933 Act Regulations.
(iii) Financial Statements. The financial statements included in the
Registration Statement and the Prospectuses, together with the related schedules
and notes, present fairly the financial position of the entities to which they
relate as of the dates indicated and their respective results of operations,
stockholders' equity and cash flows for the periods specified; said financial
statements have been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved.
10
-6-
The supporting schedules included in the Registration Statement present fairly
in accordance with GAAP the information required to be stated therein. The
selected financial data and the summary financial information included in the
Prospectuses present fairly the information shown therein and, in the case of
the consolidated financial data therein, have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement, and in the case of the combined financial data therein,
have been compiled from financial statements prepared on a basis consistent with
that of the audited financial statements included in the Registration Statement.
(iv) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement (at the
time it became effective), except as otherwise stated therein (at the time it
became effective), (A) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its Subsidiaries (as defined below)
considered as one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the Company and
its subsidiaries considered as one enterprise, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
(v) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under the
laws of the state of Delaware and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under this Agreement;
and the Company is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not, singly or in the aggregate, result in a Material Adverse
Effect.
(vi) Good Standing of Subsidiaries. Each "significant subsidiary" of
the Company (as such term is defined in Rule 1-02 of Regulation S-X) and all
entities in which the Company has a direct or indirect majority equity interest
11
-7-
or voting power (each a "Subsidiary" and, collectively, the "Subsidiaries") has
been duly organized (to the extent applicable) and is validly existing as a
corporation, general partnership, limited partnership, limited liability
company, closed joint stock company, or similar entity in good standing (to the
extent applicable) under the laws of the jurisdiction of its organization, has
organizational power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectuses and is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not, singly or in the
aggregate, result in a Material Adverse Effect; except as otherwise disclosed in
the Registration Statement, all of the issued and outstanding capital stock or
other ownership interests of each such Subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable (to the extent applicable) and
is owned by the Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity; none of
the outstanding shares of capital stock or other ownership interests of any
Subsidiary was issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary. The only subsidiaries of the Company are (a)
the subsidiaries listed on Exhibit 21 to the Registration Statement and (b)
certain other subsidiaries which, considered in the aggregate as a single
Subsidiary, do not constitute a "significant subsidiary" as defined in Rule 1-02
of Regulation S-X.
(vii) Capitalization. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectuses in the column entitled
"Actual" under the caption "Capitalization" (except for subsequent issuances,
if any, pursuant to this Agreement, pursuant to reservations, agreements or
employee benefit plans referred to in the Prospectuses or pursuant to the
exercise of convertible securities or options referred to in the Prospectuses).
The shares of issued and outstanding capital stock of the Company have been
duly authorized and validly issued and are fully paid and non-assessable; none
of the outstanding shares of capital stock of the Company was issued in
violation of the preemptive or other similar rights of any securityholder of
the Company.
(viii) Authorization of Agreement. This Agreement and the U.S. Purchase
Agreement have been duly authorized, executed and delivered by the Company.
12
-8-
(ix) Authorization and Description of Securities. The Securities to
be purchased by the International Managers and the U.S. Underwriters from the
Company have been duly authorized for issuance and sale to the International
Managers pursuant to this Agreement and the U.S. Underwriters pursuant to the
U.S. Purchase Agreement, respectively, and, when issued and delivered by the
Company pursuant to this Agreement and the U.S. Purchase Agreement,
respectively, against payment of the consideration set forth herein and the U.S.
Purchase Agreement, respectively, will be validly issued, fully paid and
non-assessable; the Common Stock conforms in all material respects to all
statements relating thereto contained in the Prospectuses and such description
conforms to the rights set forth in the instruments defining the same; no holder
of the Securities will be subject to personal liability by reason of being such
a holder; and the issuance of the Securities is not subject to the preemptive or
other similar rights of any securityholder of the Company.
(x) Absence of Defaults and Conflicts. Neither the Company nor any
of its Ventures (as defined below) is in violation of its charter or by-laws (or
equivalent constitutive documents) or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of its
Ventures is a party or by which it or any of them may be bound, or to which any
of the property or assets of the Company or any Venture is subject
(collectively, "Agreements and Instruments") except for such defaults that would
not, singly or in the aggregate, result in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement and the U.S. Purchase
Agreement and the consummation of the transactions contemplated in this
Agreement, the U.S. Purchase Agreement and in the Registration Statement
(including the issuance and sale of the Securities and the use of the proceeds
from the sale of the Securities as described in the Prospectuses under the
caption "Use of Proceeds") and compliance by the Company with its obligations
under this Agreement and the U.S. Purchase Agreement have been duly authorized
by all necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined below) under,
or result in the creation or imposition of any lien, charge or
13
-9-
encumbrance upon any property or assets of the Company or any Venture pursuant
to, the Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a Material
Adverse Effect), nor will such action result in any violation of the provisions
of the charter or by-laws (or equivalent constitutive documents) of the Company
or any Venture or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any Venture or any
of their assets, properties or operations. As used herein, (a) "Ventures" means
all entities in which the Company has a direct or indirect greater than 25%
equity interest or voting power and (b) a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Company or any Venture.
(xi) Absence of Labor Dispute. No labor dispute with the employees of
the Company or any Venture exists or, to the knowledge of the Company, is
threatened, and the Company is not aware of any existing or threatened labor
disturbance by the employees of any of its or any Venture's principal suppliers,
manufacturers, customers or contractors, which, in either case, may reasonably
be expected to, singly or in the aggregate, result in a Material Adverse Effect.
(xii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental agency
or body, domestic or foreign, now pending, or, to the knowledge of the Company,
threatened, against or affecting the Company or any Venture, which is required
to be disclosed in the Registration Statement (other than as disclosed
therein), or which, singly or in the aggregate, might reasonably be expected to
result in a Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets of the Company or any
Venture or the consummation of the transactions contemplated in this Agreement
and the U.S. Purchase Agreement or the performance by the Company of its
obligations hereunder or thereunder; the aggregate of all pending legal or
governmental proceedings to which the Company or any Venture is a party or of
which any of their respective property or assets is the subject which are not
described in the Registration Statement, including ordinary routine litigation
incidental to the business, singly or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
14
-10-
(xiii) Accuracy of Exhibits. There are no contracts or documents which
are required to be described in the Registration Statement or the Prospectuses
or to be filed as exhibits thereto which have not been so described and filed
as required.
(xiv) Possession of Intellectual Property. The Company and the
Ventures own or possess, or can acquire on reasonable terms, adequate 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, trade names or
other intellectual property (collectively, "Intellectual Property") necessary to
carry on the business now operated by them, except to the extent the failure to
so own, possess or be able to acquire would not result in a Material Adverse
Effect, and neither the Company nor any Venture has received any notice or is
otherwise aware of any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or inadequate
to protect the interest of the Company or any Venture therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, singly or in the aggregate, would result
in a Material Adverse Effect.
(xv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations hereunder, in
connection with the offering, issuance or sale of the Securities under this
Agreement and the U.S. Purchase Agreement or the consummation of the
transactions contemplated by this Agreement and the U.S. Purchase Agreement,
except such as have been already obtained or as may be required under the 1933
Act or the 1933 Act Regulations and foreign or state securities or blue sky
laws.
(xvi) Possession of Licenses and Permits. Except as otherwise
disclosed in the Registration Statement, the Company and the Ventures possess
such material permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them; the Company and the Ventures are in compliance
with the terms and conditions of all such Governmental Licenses, except where
the failure so to
15
-11-
comply would not, singly or in the aggregate, result in a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force and effect,
except when the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a Material
Adverse Effect; and neither the Company nor any Venture has received any notice
of proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material Adverse
Effect.
(xvii) Title to Property. The Company and the Ventures have good and
marketable title to all real property owned by the Company and the Ventures and
good title to all other properties owned by them, in each case, free and clear
of all mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the Prospectuses
or (b) do not, singly or in the aggregate, 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 or any Venture; and all of the leases and subleases
material to the business of the Company and the Ventures, considered as one
enterprise, and under which the Company or any Venture holds properties
described in the Prospectuses, are in full force and effect, and neither the
Company nor any Venture has any notice of any material claim of any sort that
has been asserted by anyone adverse to the rights of the Company or any Venture
under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or such Venture to the continued
possession of the leased or subleased premises under any such lease or
sublease.
(xviii) Compliance with Cuba Act. The Company has complied with, and is
and will be in compliance with, the provisions of that certain Florida act
relating to disclosure of doing business with Cuba, codified as Section 517.075
of the Florida statutes, and the rules and regulations thereunder
(collectively, the "Cuba Act") or is exempt therefrom.
(xix) Investment Company Act. Neither the Company nor any of its
Subsidiaries is, nor upon the issuance and sale of the Securities as herein
contemplated and the application of the net proceeds therefrom as described in
the Prospectuses will be, an "investment company" or an entity "controlled" by
an "investment company" as such terms are defined in the Investment Company Act
of 1940, as amended (the "1940 Act").
16
-12-
(xx) Environmental Laws. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) neither the Company nor any Venture is in
violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or protection of
human health, the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company and
the Ventures have all permits, authorizations and approvals required under any
applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any Ventures and (D) there are no
events or circumstances that might reasonably be expected to form the basis of
an order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the Company
or any Ventures relating to Hazardous Materials or any Environmental Laws.
(xxi) Registration Rights. Except as disclosed in the Prospectuses,
there are no persons with registration rights or other similar rights to have
any securities registered pursuant to the Registration Statement or otherwise
registered by the Company under the 1933 Act.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any Ventures delivered to the Global Coordinator, the Lead Managers
or to counsel for the International Managers shall be deemed a representation
and warranty by the Company herein to each International Manager as to the
matters covered thereby.
17
-13-
SECTION 2. Sale and Delivery to International Managers; Closing
(a) Initial Securities. The Company agrees to sell to each International
Managers, severally and not jointly, and on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, each International Manager, severally and not jointly, agrees to
purchase from the Company, at the price per share set forth in Schedule B, the
number of Initial International Securities set forth in Schedule A opposite the
name of such International Manager, plus any additional number of Initial
International Securities which such International Manager may become obligated
to purchase pursuant to the provisions of Section 10 hereof.
(b) Option Securities. In addition, the Company hereby grants an option
to the International Managers, severally and not jointly, to purchase up to an
additional 333,000 shares of Common Stock at the price per share set forth in
Schedule B, less an amount per share equal to any dividends or distributions
declared by the Company and payable on the Initial International Securities but
not payable on the International Option Securities. The option hereby granted
will expire 30 days after the date hereof and may be exercised not more than
two times in whole or in part only for the purpose of covering over-allotments
which may be made in connection with the offering and distribution of the
Initial International Securities upon notice by the Global Coordinator to the
Company setting forth the number of International Option Securities as to which
the several International Managers are then exercising the option and the time
and date of payment and delivery for such International Option Securities. Any
such time and date of delivery for the International Option Securities (a "Date
of Delivery") shall be determined by the Global Coordinator, but shall not be
later than seven full business days after the exercise of said option, nor in
any event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the International Option Securities, each
of the International Managers, acting severally and not jointly, on the basis
of the representations and warranties of the Company contained herein and
subject to the terms and conditions herein set forth, will purchase that
proportion of the total number of International Option Securities then being
purchased which the number of Initial International Securities set forth in
Schedule A opposite the name of such International Underwriter bears to the
total number of Initial International Securities, subject in each case to such
adjustments as the
18
-14-
Global Coordinator in its discretion shall make to eliminate any sales or
purchases of fractional shares.
(c) Payment. Payment of the purchase price for the Initial Securities
shall be made at the offices of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 or at such other place as shall be agreed upon by the
Global Coordinator and the Company, at 9:00 A.M. (Eastern time) on the third
(fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on the date
hereof) business day after the date hereof (unless postponed in accordance with
the provisions of Section 10), or such other time not later than ten business
days after such date as shall be agreed upon by the Global Coordinator and the
Company (such time and date of payment and delivery being herein called
"Closing Time").
In addition, in the event that any or all of the International Option
Securities are purchased by the International Managers, payment of the purchase
price for such International Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Company, on each Date of Delivery as specified in
the notice from the Global Coordinator to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company. It is understood
that each International Manager has authorized the Lead Manager, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial International Securities and the International Option
Securities, if any, which it has agreed to purchase. Xxxxxxx Xxxxx,
individually and not as representative of the International Managers, may (but
shall not be obligated to) make payment of the purchase price for the Initial
International Securities or the International Option Securities, if any, to be
purchased by any International Manager whose funds have not been received by
the Closing Time or the relevant Date of Delivery, as the case may be, but such
payment shall not relieve such International Manager from its obligations
hereunder.
(d) Denominations; Registration. Certificates for the Initial
International Securities and the International Option Securities, if any, shall
be in such denominations and registered in such names as the Lead Managers may
request in writing at least one full business day before the Closing Time or
the relevant Date of Delivery, as the case may be. The certificates
19
-15-
for the Initial International Securities and the International Option
Securities, if any, will be made available for examination and packaging by the
Lead Managers in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
International Manager as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule
430A or Rule 434, as applicable, and will notify the Global Coordinator
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectuses or any amended Prospectuses shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectuses or for additional information,
and (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to Rule 424(b) and
will take such steps as it deems necessary to ascertain promptly whether the
form of prospectus transmitted for filing under Rule 424(b) was received for
filing by the Commission and, in the event that it was not, it will promptly
file such prospectus. The Company will make every reasonable effort to prevent
the issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Global Coordinator
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), any Term Sheet or any
amendment, supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the Prospectuses,
will furnish the Global Coordinator with copies of any such documents a
reasonable amount of time prior to such proposed filing or use, as the case may
be, and will not file or use any such document to which the Global Coordinator
or counsel for the International Managers shall reasonably object within three
Business Days after being furnished such documents.
20
-16-
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the Lead Managers and counsel for the International Managers,
without charge, signed copies of the Registration Statement as originally filed
and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and signed copies of all consents and
certificates of experts, and will also deliver to the Lead Managers, without
charge, a conformed copy of the Registration Statement as originally filed and
of each amendment thereto (without exhibits) for each of the International
Managers. The copies of the Registration Statement and each amendment thereto
furnished to the International Managers will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX, except
to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
International Manager, without charge, as many copies of each preliminary
prospectus as such International Manager reasonably requested, and the Company
hereby consents to the use of such copies for purposes permitted by the 1933
Act. The Company will furnish to each International Manager, without charge,
during the period when the International Prospectus is required to be delivered
under the 1933 Act or the Securities Exchange of 1934 (the "1934 Act"), such
number of copies of the International Prospectus (as amended or supplemented)
as such International Manager may reasonably request. The International
Prospectus and any amendments or supplements thereto furnished to the
International Managers will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to XXXXX, except to the
extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the completion
of the distribution of the Securities as contemplated in this Agreement, the
U.S. Purchase Agreement and the Prospectuses. If at any time when a prospectus
is required by the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of which
it is necessary, in the reasonable opinion of counsel for the International
Managers or for the Company, to amend the Registration Statement or amend or
supplement any Prospectus in order that the Prospectuses will not include any
untrue statements of a material fact or
21
-17-
omit to state a material fact necessary in order to make the statements therein
not misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the reasonable opinion
of any such counsel, at any such time to amend the Registration Statement or
amend or supplement any Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, subject to Section 3(b), such amendment or supplement
as may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectuses comply with such requirements, and
the Company will furnish to the International Managers such number of copies of
such amendment or supplement as the International Managers may reasonably
request.
(f) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders an earnings statement for the purposes of, and to provide the
benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act.
(g) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Prospectuses
under "Use of Proceeds."
(h) Listing. The Company will use its best efforts to effect the
admission of the Securities on the European Association of Securities Dealers
Automated Quotation ("EASDAQ") system and comply with the requirements of such
exchange to maintain such listing. The Company will use its best efforts to
effect and maintain the quotation of the Securities on the Nasdaq National
Market and will file with the Nasdaq National Market all documents and notices
required by the Nasdaq National Market of companies that have securities that
are traded in the over-the-counter market and quotations for which are reported
by the Nasdaq National Market.
(i) Restriction on Sale of Securities. During a period of 180 days from
the date of the Prospectuses, the Company will not, without the prior written
consent of the Global Coordinator, (i) directly or indirectly, 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 or
otherwise transfer or dispose of any share of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or file any
registration statement under the 1933 Act with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any
22
-18-
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Common Stock, whether any such swap or
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 sale of the Securities hereunder and under
the U.S. Purchase Agreement, (B) the issuance of any shares of Common Stock by
the Company upon the exercise of options or warrants or the conversion of
securities outstanding on the date hereof and referred to in the Prospectuses or
(C) the purchase or acquisition of shares of Common Stock pursuant to contracts
entered into prior to the date hereof and referred to in the Prospectus.
(j) Reporting Requirements. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant to
the 1934 Act and rules and regulations of the Commission thereunder within the
time periods referred to therein.
(k) Compliance with Rule 463. The Company will comply with Rule 463 of
the 1933 Act Regulations.
SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay
all expenses incident to the performance of its obligations under this
Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Agreement, any Agreement among
Underwriters and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the Securities to the
Underwriters, including any stock or other transfer taxes and any stamp or other
duties payable upon the sale, issuance or delivery of the Securities to the
Underwriters and the transfer of the Securities between the U.S. Underwriters
and the International Managers, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectuses and any amendments or supplements thereto, (vi) the
preparation, printing and delivery to the Underwriters of copies of the Blue Sky
Survey and any supplement thereto, (vii) the fees and expenses of any transfer
agent or registrar for the Securities, (viii) the filing fees incident to, and
the
23
-19-
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the National Association of Securities Dealers, Inc. (the
"NASD") of the terms of the sale of the Securities and (ix) the fees and
expenses incurred in connection with the listing of the Securities on EASDAQ and
inclusion of the Securities in the Nasdaq National Market.
(b) Termination of Agreement. If this Agreement is terminated by the
Lead Managers in accordance with the provisions of Section 5 or Section 9(a)(i)
hereof, the Company shall reimburse the Lead Managers for all of their
out-of-pocket expenses reasonably incurred by the International Managers in
connection with this Agreement or the offering of the Securities contemplated
hereunder, including the reasonable fees and disbursements of counsel and
special counsel for the International Managers.
SECTION 5. Conditions of International Managers Obligations.
The obligations of the several International Managers hereunder are subject to
the accuracy of the representations and warranties of the Company contained in
Section 1 hereof and in certificates of any officer of the Company or any
subsidiary of the Company delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations hereunder, and
to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement has become effective and at Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the International Managers. A
prospectus containing the Rule 430A Information shall have been filed
with the Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the
Company has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 424(b).
(b) Opinion of Counsel for Company. At Closing Time, the Lead
Managers shall have received the favorable opinion, dated as of Closing
Time, of each of Shearman &
24
-20-
Sterling, counsel for the Company, Xxxxx Xxxxxx, Senior Vice President and
General Counsel of the Company, Coudert Brothers, special counsel for the
Company and special regulatory counsel for Hermes Europe Railtel B.V.,
Chenko Didkovskiy & Partners, special Ukranian counsel to Bancomsvyaz, and
Somodeco, counsel and regulatory counsel to GTS Monaco Access X.X.X., each
in form and substance satisfactory to counsel for the U.S. Underwriters,
together with signed or reproduced copies of such letter for each of the
other U.S. Underwriters to the effect set forth in Exhibits A-1 through
A-__ hereto.
(c) Opinion of Counsel for International Managers. At Closing
Time, the Lead Managers shall have received the favorable opinion, dated
as of Closing Time, of each of Xxxxxx Xxxxxx & Xxxxxxx, counsel for the
International Managers, and Xxxxxxxx Chance, special Russian counsel to
the International Managers, together with signed or reproduced copies of
such letter for each of the other International Managers as to such
matters as are reasonably requested by the Lead Managers.
(d) Officers' Certificate. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectuses, any material adverse change in
the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, and the Lead Managers shall have received a
certificate of the President or a Vice President of the Company and of the
chief financial or chief accounting officer of the Company, dated as of
Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Section 1(a)
hereof are true and correct with the same force and effect as though
expressly made at and as of Closing Time, (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to Closing Time, and (iv) no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or are pending
or, to the knowledge of such officer, are contemplated by the Commission.
(e) Accountant's Comfort Letter. At the time of the execution of
this Agreement, the Lead Managers shall have
25
-21-
received from Ernst & Young a letter dated such date, in form and
substance satisfactory to the Lead Managers, together with signed or
reproduced copies of such letter for each of the other International
Managers 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 Prospectuses.
(f) Bring-down Comfort Letter. At Closing Time, the Lead Managers
shall have received from Ernst & Young a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the
specified date referred to shall be a date not more than three business
days prior to Closing Time.
(g) Approval of Listing. At Closing Time, the Securities shall
have been approved for listing on EASDAQ, subject only to official notice
of issuance. At Closing Time, the Securities shall have been approved
for inclusion in the Nasdaq National Market, subject only to official
notice of issuance.
(h) No Objection. The NASD has confirmed that it has not raised
any objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(i) Lock-up Agreements. At the date of this Agreement, the
Underwriters shall have received an agreement substantially in the form
of Exhibit B hereto signed by holders of shares of Common Stock,
warrants, options or other rights to purchase or acquire shares of Common
Stock or other securities convertible or exchangeable into Common Stock
(other than the Company's Convertible Bonds due 2000 (the "Convertible
Bonds")) representing not less than 93% of the outstanding Common Stock
(excluding the effect of the Convertible Bonds).
(j) Purchase of Initial U.S. Securities. Contemporaneously with
the purchase by the International Managers of the Initial International
Securities under this Agreement, the U.S. Representatives shall have
purchased the Initial U.S. Securities under the U.S. Purchase Agreement.
26
-22-
(k) Notes Offering. Contemporaneously with the purchase by the
Underwriters of the Securities under this Agreement, the Company shall
have consummated the Notes Offering.
(l) Conditions to Purchase of International Option Securities. In
the event that the International Managers exercise their option provided
in Section 2(b) hereof to purchase all or any portion of the
International Option Securities, the representations and warranties of
the Company contained herein and the statements in any certificates
furnished by the Company or any subsidiary of the Company hereunder shall
be true and correct as of each Date of Delivery and, at the relevant Date
of Delivery, the Lead Managers shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and
of the chief financial or chief accounting officer of the Company
confirming that the certificate delivered at the Closing Time
pursuant to Section 5(d) hereof remains true and correct as of such
Date of Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion,
dated as of such Date of Delivery, of each of counsels listed in
Section 5(b), each in form and substance satisfactory to counsel
for the Lead Managers, relating to the International Option
Securities to be purchased on such Date of Delivery and otherwise
to the same effect as the opinion required by Section 5(b) hereof.
(iii) Opinion of Counsel for International Managers. The
favorable opinion of Xxxxxx Xxxxxx & Xxxxxxx, counsel for the
International Managers and Xxxxxxxx Chance, special counsel to the
International Managers, dated such Date of Delivery, relating to
the International Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required
by Section 5(c) hereof.
(iv) Bring-down Comfort Letter. A letter from Ernst & Young,
in form and substance satisfactory to the Lead Managers and dated
such Date of Delivery, substantially in the same form and substance
as the letter furnished to the Lead Managers pursuant to
27
-23-
Section 5(f) hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more than
five days prior to such Date of Delivery.
(m) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the International Managers shall have been
furnished with such documents and opinions as they may reasonably request
for the purpose of enabling them to pass upon the issuance and sale of
the Securities as herein contemplated, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment
of any of the conditions, herein contained; and all proceedings taken by
the Company in connection with the issuance and sale of the Securities as
herein contemplated shall be reasonably satisfactory in form and
substance to the Lead Managers and counsel for the International
Managers.
(n) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of International Option Securities on a Date of Delivery which
is after the Closing Time, the obligations of the several International
Managers to purchase the relevant Option Securities, may be terminated by
the Lead Managers by notice to the Company at any time at or prior to
Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party
except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of International Managers. The Company agrees to
indemnify and hold harmless each International Manager and each person, if any,
who controls any International Manager within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or the omission or alleged omission
28
-24-
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact included in any preliminary
prospectus or the Prospectuses (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including the
fees and disbursements of counsel chosen by Xxxxxxx Xxxxx), reasonably incurred
in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of any International Manager through the Lead Managers expressly for
use in the Registration Statement (or any amendment or supplement thereto),
including the Rule 430A Information and the Rule 434 Information, if
applicable, or any preliminary prospectus or the International Prospectus (or
any amendment or supplement thereto); provided, further the Company will not be
liable to any International Manager with respect to any preliminary prospectus
to the extent that any such loss, liability, claim, damage or expense of such
International Manager results from the fact that such International Manager
sold Securities to a person as to whom it shall be established in the related
proceedings that there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the
29
-25-
Prospectus (or of the Prospectus as then amended or supplemented if the Company
shall have furnished such International Manager with such amendment or
supplement thereto prior to the written confirmation of such sale), if such
delivery was required by the Act, and such loss, liability, claim, damage or
expense results from an untrue statement or omission of a material fact
contained in such preliminary prospectus that was completely corrected in the
Prospectus (or of the Prospectus as then amended or supplemented if the Company
shall have furnished such International Manager with such amendment or
supplement thereto prior to the written confirmation of such sale).
(b) Indemnification of Company, Directors and Officers. Each
International Manager severally agrees to indemnify and hold harmless the
Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment or supplement thereto), including the
Rule 430A Information and the Rule 434 Information, if applicable, or any
preliminary International prospectus or the International Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such International Manager
through the Lead Managers expressly for use in the Registration Statement (or
any amendment or supplement thereto) or such preliminary prospectus or the
International Prospectus (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve
such indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this
indemnity agreement. In the case of parties indemnified pursuant to Section
6(a) above, counsel to the indemnified parties shall be selected by Xxxxxxx
Xxxxx, and, in the case of parties indemnified pursuant to Section 6(b) above,
counsel to the indemnified parties shall be selected by the Company. An
indemnifying
30
-26-
party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim 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.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company
31
-27-
on the one hand and the International Managers on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and of the
International Managers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
International Managers on the other hand in connection with the offering of the
International Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
International Securities pursuant to this Agreement (before deducting expenses)
received by the Company and the total underwriting discount received by the
International Managers, in each case as set forth on the cover of the
International Prospectus, or, if Rule 434 is used, the corresponding location on
the Term Sheet, bear to the aggregate initial public offering price of the
International Securities as set forth on such cover.
The relative fault of the Company on the one hand and the
International Managers on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or by the International Managers and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the International Managers agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the International Managers were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by
32
-28-
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue or alleged untrue statement or omission or
alleged omission.
Notwithstanding the provisions of this Section 7, no International
Manager shall be required to contribute any amount in excess of the amount by
which the total price at which the International Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such International Manager has otherwise been required to pay
by reason of any 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 0000 Xxx) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
International Manager within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
International Manager, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company.
The International Managers' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the number of Initial International
Securities set forth opposite their respective names in Schedule A hereto and
not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any Venture submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Lead Manager or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Lead Managers.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Lead Managers may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as
33
-29-
of which information is given in the International Prospectus, any material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, or (ii) if there has occurred any material adverse change in the
financial markets in the United States or the international financial markets,
any outbreak of hostilities or escalation thereof or other calamity or crisis or
any change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Lead Managers,
impracticable to market the Securities or to enforce contracts for the sale of
the Securities, or (iii) if trading in any securities of the Company has been
suspended or materially limited by the Commission, or EASDAQ, Luxembourg Stock
Exchange or the Nasdaq National Market, or if trading generally on the American
Stock Exchange or the New York Stock Exchange or in the Nasdaq National Market
has been suspended or materially limited, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices have been required, by any
of said exchanges or by such system or by order of the Commission, the NASD or
any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that
Sections 1, 6, 7 and 8 shall survive such termination and remain in full force
and effect.
SECTION 10. Default by One or More of the International Managers. If
one or more of the International Managers shall fail at Closing Time or a Date
of Delivery to purchase the Securities which it or they are obligated to
purchase under this Agreement (the "Defaulted Securities"), the International
Managers shall have the right, within 24 hours thereafter, to make arrangements
for one or more of the non-defaulting International Managers, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the International Managers shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the number of International Securities to be
34
-30-
purchased on such date, each of the non-defaulting International Managers
shall be obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
International Managers, or
(b) if the number of Defaulted Securities exceeds 10% of the number
of International Securities to be purchased on such date, this Agreement
or, with respect to any Date of Delivery which occurs after the Closing
Time, the obligation of the International Managers to purchase and of the
Company to sell the Option Securities to be purchased and sold on such
Date of Delivery shall terminate without liability on the part of any
non-defaulting International Managers.
No action taken pursuant to this Section shall relieve any defaulting
International Managers from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery which is
after the Closing Time, which does not result in a termination of the obligation
of the International Managers to purchase and the Company to sell the relevant
International Option Securities, as the case may be, either the Lead Managers or
the Company shall have the right to postpone Closing Time or the relevant Date
of Delivery, as the case may be, for a period not exceeding seven days in order
to effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the term "International
Manager" includes any person substituted for an International Manager under this
Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
International Managers shall be directed to the Lead Managers c/o Merrill Xxxxx
at North Tower, World Financial Center, New York, New York 10281-1201, attention
of Xxxxxx Xxxxxx; and notices to the Company shall be directed to it at 0000
Xxxxxxxx Xxxxx, Xxxxx Xxxxx - 00xx Xxxxx, XxXxxx, XX 00000, attention of Xxxxxxx
X. Xxxxxxx.
SECTION 12. Parties. This Agreement shall each inure to the benefit
of and be binding upon the International Managers and the Company and their
respective successors.
35
-31-
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the International
Managers and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the International Managers and the Company and
their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Securities from any
International Managers shall be deemed to be a successor by reason merely of
such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the International Managers and the Company in accordance with its terms.
36
-32-
Very truly yours,
GLOBAL TELESYSTEMS GROUP, INC.
By
------------------------------------
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX INTERNATIONAL
XXXXXXXXX, LUFKIN & XXXXXXXX
INTERNATIONAL
UBS LIMITED
XXXXXX BROTHERS INTERNATIONAL (EUROPE)
BARING BROTHERS LIMITED (as agent for
ING BANK N.V.)
By: XXXXXXX XXXXX INTERNATIONAL
By
---------------------------------------
Authorized Signatory
For themselves and as Lead Managers of the other International Managers named
in Schedule A hereto.
37
SCHEDULE A
Number of
Initial U.S.
Name of International Manager Securities
----------------------------- ----------
Xxxxxxx Xxxxx International.......................
Xxxxxxxxx, Lufkin & Xxxxxxxx International........
UBS Limited.......................................
Xxxxxx Brothers International (Europe)............
Baring Brothers (as agent for ING Bank N.V.)......
Names of Co-Lead Managers
-------------------------
Total............................................. 2,220,000
=========
Schedule A-1
38
SCHEDULE B
GLOBAL TELESYSTEMS GROUP, INC.
Shares of Common Stock
(Par Value $.10 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $__________.
2. The purchase price per share for the International Securities to
be paid by the several International Managers shall be $__________, being
an amount equal to the initial public offering price set forth above less
$__________ per share; provided that the purchase price per share for any
International Option Securities purchased upon the exercise of the
over-allotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial International Securities but not
payable on the International Option Securities.
Schedule B-1
39
Exhibit A-1
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
A-1-1
40
Exhibit A-2
FORM OF OPINION OF COMPANY'S SPECIAL COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
A-2-1
41
Exhibit B
, 1997
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES
CORPORATION
UBS SECURITIES LLC
XXXXXX BROTHERS INC.
XXXXXX XXXX LLC
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx, Xxxxx, Xxxxxx, Xxxxxx & Xxxxx
Incorporated
North Tower
World Financial Center
Xxx Xxxx, Xxx Xxxx 00000-0000
Xxxxxx Xxxxxx of America
as U.S. Representatives of the several Underwriters to be named in
the within-mentioned Purchase Agreements
Re: Agreement not to sell or otherwise dispose of securities of
Global TeleSystems Group, Inc.
Ladies and Gentlemen:
The undersigned, a stockholder of Global TeleSystems Group, Inc. (the
"Company"), understands that the Company has filed a registration statement on
Form S-1 with the Securities and Exchange Commission in connection with the
initial public offering (the "Offering") of shares of Common Stock ("Shares")
of the Company. The undersigned further understands that the Company proposes
to enter into a U.S. purchase agreement (the "U.S. Purchase Agreement") with
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"),
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation, UBS Securities LLC, Xxxxxx
Brothers Inc. and Xxxxxx Xxxx LLC (the "U.S. Representatives"), on behalf of
the U.S. underwriters (collectively, the "U.S. Underwriters"), and a separate
international purchase agreement (the "International Purchase Agreement";
together with the U.S.
X-0
00
Xxxxxxxx Xxxxxxxxx, the "Purchase Agreements") with Xxxxxxx Xxxxx
International, UBS Limited, Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation, Xxxxxx Brothers Inc. and ING Bank N.V. (the "International
Representatives") on behalf of the international managers (collectively, the
"International Managers", and, together with the U.S. Underwriters, the
"Underwriters"), in connection with the Offering.
In recognition of the benefit that such Offering will confer upon the
undersigned as a stockholder of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and in order to induce the Company and the Underwriters to enter into the
respective Purchase Agreements and to proceed with the Offering, the
undersigned hereby agrees, that, should the Offering be consummated, for a
period of 180 days after the date of the Purchase Agreements relating to the
Offering, the undersigned will not, without the prior written consent of
Xxxxxxx Xxxxx, directly or indirectly, (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 for the sale of, or otherwise
dispose of or transfer any Shares or any securities convertible into or
exchangeable or exercisable for any Shares, whether now owned or hereafter
acquired by the undersigned or with respect to which the undersigned has or
hereafter acquires the power of disposition or request the filing of any
registration statement under the Securities Act of 1933, as amended, with
respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of Shares, whether any such
swap transaction is to be settled by delivery of the Shares or other
securities, in cash or otherwise.
Sincerely,
Name of Stockholder:
----------------------------------
(Print)
Signature:
----------------------------------
By:
(if not natural person)
B-2
