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EXHIBIT 1.1
$200,000,000
ALLEGIANCE TELECOM, INC.
[ ]% SENIOR NOTES 2008
UNDERWRITING AGREEMENT
[ ], 1998
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[ ], 1998
Xxxxxx Xxxxxxx & Co. Incorporated
Salomon Brothers Inc
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Xxxxxxx, Xxxxx & Co.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
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") $200,000,000 principal amount of its [
]% Senior Notes due 2008 (the "SECURITIES") to be issued pursuant to the
provisions of an Indenture dated as of [ ], 1998 (the "INDENTURE")
between the Company and The Bank of New York (the "TRUSTEE").
The Company has filed with the Securities and Exchange
Commission (the "COMMISSION") a registration statement, including a prospectus,
relating to the Securities. The registration statement as amended at the time
it becomes effective, 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 of 1933, as amended (the "SECURITIES ACT"), is
hereinafter referred to as the "REGISTRATION STATEMENT"; the prospectus in the
form first used to confirm sales of Securities is hereinafter referred to as
the "PROSPECTUS." If the Company has filed an abbreviated registration
statement to register additional Securities 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.
A portion of the net proceeds from the issuance of the
Securities, sufficient to purchase a sufficient amount of Pledged Securities to
provide for the first six scheduled interest payments due on the Securities,
will be held by the Trustee pursuant to a collateral pledge and security
agreement to be dated as of the Closing Date (as defined below) and to be
substantially in the form attached hereto as Exhibit A, with such revisions as
shall be reasonably satisfactory to the Underwriters and the Company (the
"Pledge Agreement").
Pursuant to an underwriting agreement, dated the date hereof,
among the Company and Xxxxxx Xxxxxxx & Co. Incorporated, Xxxxx Xxxxxx Inc.,
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation, Xxxxxxx, Xxxxx & Co. and
UBS Securities LLC, as representatives of the U.S. Underwriters (as defined
therein), and Xxxxxx Xxxxxxx & Co.
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International Limited, Xxxxx Xxxxxx Inc., Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation, Xxxxxxx, Xxxxx International and UBS Limited, as
representatives of the International Underwriters (as defined therein), the
Company will issue and sell an aggregate of 12,000,000 shares of its Common
Stock, par value $.01 per share (the "SHARES") (the "EQUITY OFFERING").
1. Representations and Warranties. 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 Registration Statement, when it became
effective, did not contain and, when 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 do not
apply (A) 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 or (B) to that part of the Registration
Statement that constitutes the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of 1939, as
amended (the "TRUST INDENTURE ACT"), of the Trustee.
(c) 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 subsidiaries,
taken as a whole. Schedule A to the form of opinion of Xxxxxxxx &
Xxxxx, attached hereto as Exhibit A, 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.
(d) 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
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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. There are no active subsidiaries of
the Company other than those listed on Schedule A to the form of
opinion of Xxxxxxxx & Xxxxx, attached hereto as Exhibit B 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.
(e) This Agreement has been duly authorized, executed and
delivered by the Company.
(f) The Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be valid and binding
obligations of the Company enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity, and will
be entitled to the benefits of the Indenture and the Pledge Agreement.
(g) The Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized and, when executed and
delivered by the Company, will be 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.
(h) The Pledge Agreement has been duly authorized and,
when executed and delivered, will be a valid and binding agreement
enforceable against the Company in accordance with its terms except as
(x) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
(y) the availability of equitable remedies may be limited by equitable
principles of general applicability.
(i) Upon the delivery to the securities intermediary of
the certificates, if any, representing the Pledged Securities (as
defined in the Pledge Agreement), any filing of financing statements
required by the UCC (as defined in the Pledge Agreement) and notation
on the records of the securities intermediary that it holds the
Pledged Securities as pledgee, the pledge of and grant of a security
interest in the
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Collateral (as defined in the Pledge Agreement) pursuant to the Pledge
Agreement for the benefit of the Trustee and the holders of the
Securities creates a valid and perfected first priority security
interest in such Collateral, securing the payment of the Obligations
(as defined in the Pledge Agreement) enforceable as such against all
creditors of the Company (and any persons purporting to purchase any
of the Collateral from the Company).
(j) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement,
the Indenture, the Pledge Agreement and the Securities will not
contravene any provision of applicable law or the certificate of
incorporation or by-laws 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, the Indenture, the Pledge Agreement or the Securities,
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
Securities. Schedule B to the form of opinion of Xxxxxxxx & Xxxxx,
attached hereto as Exhibit A, sets forth all material agreements and
instruments to which the Company or any of its subsidiaries is a
party.
(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
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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 or Rule 462 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.
(n) The Company is not and, after giving effect to the
offering and sale of the Securities and 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 clean-up, 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
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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 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
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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 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 Indenture, the Pledge Agreement or the Securities or of the
consummation of the transactions contemplated hereby, 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
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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 with respect to any
securities of the Company or to require the Company to include such
securities with the Securities registered pursuant to the Registration
Statement.
2. Agreements to Sell and Purchase. The Company 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 the Company the respective principal amounts of Securities set
forth in Schedule I hereto opposite its name at [ ]% of their principal
amount (the "PURCHASE PRICE") plus accrued interest, if any, from [
], 1998 to the date of payment and delivery.
The Company hereby agrees that, without the prior written
consent of Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the Underwriters, it
will not, during the period beginning on the date hereof and continuing to and
including the Closing Date, offer, sell, contract to sell or otherwise dispose
of any debt of the Company or warrants to purchase debt of the Company
substantially similar to the Securities, other than the sale of the Securities
under this Agreement and commercial paper issued in the ordinary course of
business.
3. Terms of Public Offering. The Company is advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Securities as soon after the Registration Statement has become
effective and this Agreement has been executed as in your judgment is
advisable. The Company is further advised by you that the Securities are to be
offered to the public initially at [ ]% of their principal amount (the
"PUBLIC OFFERING PRICE") plus accrued interest, if any, and to certain dealers
selected by you at a price that represents a concession not in excess of [
]% of the Public Offering Price, and that any Underwriter may allow, and such
dealers may reallow, a concession, not in excess of [ ]% of the Public
Offering Price, to any Underwriter or to certain other dealers.
4. Payment and Delivery. Payment for the Securities shall be
made to the Company (which will immediately deposit a portion of the proceeds
sufficient to purchase the Pledged Securities with the Trustee pursuant to the
Pledge Agreement) in Federal or other funds immediately available in New York
City against delivery of the Securities for the respective accounts of the
several Underwriters at a closing to be held at the offices of Shearman &
Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx 9:00 a.m., New York City
time, on [ ],
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1998, or at such other time on the same or such other date, not later than [
], 1998, as shall be designated in writing by you. The time and date of such
payment are hereinafter referred to as the "CLOSING DATE".
Certificates for the Securities shall be in definitive form or
global form, as specified by you, 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. The certificates evidencing the Securities
shall be delivered to you on the Closing Date for the respective accounts of
the several Underwriters, with any transfer taxes payable in connection with
the transfer of the Securities to the Underwriters duly paid, against payment
of the Purchase Price therefor plus accrued interest, if any to the date of
payment and delivery.
5. Conditions to the Underwriters' Obligations. The
obligations of the Company to sell the Securities to the Underwriters and the
several obligations of the Underwriters to purchase and pay for the Securities
on the Closing Date are subject to the condition that the Registration
Statement shall have become effective not later than [ ] (New York City time)
on the date hereof.
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 Securities 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 5(a)(i)
above and to the effect that the representations and warranties
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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 Xxxxxxx & Berlin, Chartered, regulatory counsel for
the Company, dated the Closing Date, to the effect set forth in
Exhibit C.
The opinions of Xxxxxxxx & Xxxxx and Xxxxxxx & Berlin,
Chartered, shall be rendered to the Underwriters at the request of the Company
and shall so state therein.
(e) The Underwriters shall have received on the Closing
Date an opinion of Xxxxxxxx & Xxxxxxxx, counsel for the Underwriters,
dated the Closing Date, in form and substance reasonably satisfactory
to you.
(f) 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.
(g) The Underwriters shall have received such other
certificates and documents as they or their counsel may reasonably
request.
The obligations of the Underwriters hereunder are also
conditioned upon the concurrent closing of the Equity Offering as described in
the Prospectus.
6. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with
each Underwriter as follows:
(a) To furnish to you, without charge, five signed copies
of the Registration Statement (including exhibits thereto) and for
delivery to each other Underwriter a
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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 6(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 Securities 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 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 Securities 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 law.
(d) To use its best effort to register or qualify the
Securities 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 6(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) If the Company elects to rely on Rule 462(b) under
the Securities Act, the Company shall file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) under the
Securities Act no later than the earlier of (i) 10:00 p.m. Eastern
time on the date hereof and (ii) the time confirmations are sent or
given, as specified by Rule 462(b)(2) under the Securities Act, and
shall pay the applicable fees in accordance with Rule 111 under the
Securities Act.
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(f) 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.
(g) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, 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 and the Company's
accountants in connection with the registration and delivery of the
Securities 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 Securities 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 Securities under state securities laws
and all expenses in connection with the qualification of the
Securities for offer and sale under state securities laws as provided
in Section 6(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with
such qualification and in 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
Securities by the National Association of Securities Dealers, Inc.,
(v) any fees charged by rating agencies for the rating of the
Securities, (vi) the cost of preparation, issuance and delivery of the
Securities, (vii) the costs and charges of the Trustee, (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 Securities, 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.
It is understood, however, that except as provided in this Section,
Section 7 entitled "Indemnity and Contribution", and the last
paragraph of Section 9 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 Securities
by them and any advertising expenses connected with any offers they
may make.
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7. 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 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 Securities, 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 Securities 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 Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, its officers who
sign the Registration Statement and each person, if any, who controls the
Company 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 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.
(c) 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 7(a) or 7(b), 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
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15
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 Xxxxxx Xxxxxxx & Co.
Incorporated, in the case of parties indemnified pursuant to Section 7(a), and
by the Company, in the case of parties indemnified pursuant to Section 7(b).
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 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 includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) To the extent the indemnification provided for in
Section 7(a) or 7(b) 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 Company on the one hand and the Underwriters on the
other hand from the offering of the Securities or (ii) if the allocation
provided by clause 7(d)(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 7(d)(i) above but also the relative fault of the Company 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 Company on the one hand and the Underwriters
on the other hand in connection with the offering of the Securities shall be
deemed to be in the same respective proportions as the net proceeds from the
offering of the Securities (before deducting expenses) received by the
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Company 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 Securities. The
relative fault of the Company on the one hand and of 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 Company 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 7 are several in proportion to the respective principal amounts of
Securities they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would
not be just or equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if 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 7(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 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities 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 7 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.
(f) The indemnity and contribution provisions contained
in this Section 7 and the representations, warranties and other statements of
the Company 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 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 Securities.
8. 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
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17
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
8(a)(i) through 8(a)(iv), such event singly or together with any other such
event makes it, in your judgment, impracticable to market the Securities on the
terms and in the manner contemplated in the Prospectus.
9. Effectiveness; Defaulting Underwriters. This Agreement
shall become effective upon the execution and delivery hereof by the parties
hereto.
If, on the Closing Date, any one or more of the Underwriters
shall fail or refuse to purchase Securities that it has or they have agreed to
purchase hereunder on such date, and the aggregate principal amount of
Securities which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase is not more than one-tenth of the aggregate principal
amount of the Securities to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the principal amount of
Securities set forth opposite their respective names in Schedule I bears to the
principal amount of Securities set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as you may specify,
to purchase the Securities which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase on such date; provided that in no
event shall the principal amount of Securities that any Underwriter has agreed
to purchase pursuant to this Agreement be increased pursuant to this Section 9
by an amount in excess of one-ninth of such principal amount of Securities
without the written consent of such Underwriter. If, on the Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Securities and the
aggregate principal amount of Securities with respect to which such default
occurs is more than one-tenth of the aggregate principal amount of Securities
to be purchased, and arrangements satisfactory to you and the Company for the
purchase of such Securities are not made within 36 hours after such default,
this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case either you or the
Company 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. 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 the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement, the Company 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.
10. 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.
11. 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.
12. Applicable Law. This Agreement shall be governed by the
laws of the State of New York.
13. 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:
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: High Yield New Issue Group
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.
0000 Xxxxxxxx Xxxx.
Dallas, Texas 75207
Attention: Chief Financial Officer
Facsimile Number: (000) 000-0000
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Very truly yours,
ALLEGIANCE TELECOM, INC.
By:
---------------------------------
Name:
Title:
Accepted as of the date hereof
XXXXXX XXXXXXX & CO. INCORPORATED
SALOMON BROTHERS INC
XXXXXXXXX, XXXXXX & XXXXXXXX SECURITIES CORPORATION
XXXXXXX, XXXXX & CO.
Acting severally on behalf
of themselves and the
several Underwriters
named herein.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By:
------------------------------
Name:
Title:
20
SCHEDULE I
Principal Amount
of Securities
Underwriter To Be Purchased
----------- ----------------
Xxxxxx Xxxxxxx & Co. Incorporated
Salomon Brothers Inc
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Xxxxxxx, Xxxxx & Co.
------------------
Total . . . . . . . . . . . . . . 200,000,000
==================
21
EXHIBIT A
[Form of Pledge Agreement]
22
EXHIBIT B
Opinion of Xxxxxxxx & Xxxxx
[Attach opinion of Xxxxxxxx & Xxxxx, to be delivered pursuant to
Section 5(c) of the Underwriting Agreement to the effect that:]
1. Each of the Company and each subsidiary of the Company listed on
Schedule A attached thereto (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 Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
4. The Notes have been duly authorized by the Company and, when executed
and authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Underwriters in accordance with
the terms of the Underwriting Agreement, will be valid and binding
obligations of the Company, enforceable in accordance with their
terms; and will be entitled to the benefits of the Indenture and the
Pledge Agreement, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws
affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
5. The Indenture has been duly authorized, executed and delivered by, and
is a valid and binding obligation of, the Company, enforceable in
accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and
similar laws affecting creditors' rights and remedies generally and to
general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity).
6. The Pledge Agreement has been duly authorized, executed and delivered
by, and is a valid and binding agreement of, the Company, enforceable
in accordance with its terms except as (x) the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (y) the availability of equitable
remedies may be limited by equitable principles of general
applicability; and upon the Closing Date, the pledge of and grant of a
security interest in the Pledged Securities
23
(assuming delivery thereof to the Trustee) for the benefit of the
Trustee and the holders of the Notes constitutes a perfected security
interest in the Pledged Securities, enforceable as against all
creditors of the Company (and any persons purporting to purchase any
of the Pledged Securities from the Company).
7. The execution and delivery by the Company of, and the performance by
the Company of its obligations under, the Underwriting Agreement, the
Indenture, the Pledge Agreement and the Securities, 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).
8. 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, the Indenture, the Pledge Agreement
or the Securities, 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).
9. 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.
10. The Company is not, and after giving effect to the offering and sale
of the Securities and 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.
11. The statements in the Prospectus under the captions "Description of
the Notes," "Certain Relationships and Transactions," "Certain United
States Federal Tax Consequences," "Description of Capital Stock" and
"Underwriters," and Item 14 and Item 15 in 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
A-2
24
fairly present the information with respect to such legal matters,
documents and proceedings and fairly summarize the matters referred to
therein.
12. The terms of the Notes and the Indenture conform in all material
respects to the descriptions thereof contained in the Prospectus under
the caption "Description of the Notes."
13. 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."
14. We (1) are of the opinion that the Registration Statement and
Prospectus (except for financial statements and schedules and other
financial and statistical 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, (2) have no reason to
believe that (except for financial statements and schedules and other
financial and statistical data as to which such counsel need not
express any belief and except for that part of the Registration
Statement that constitutes the Form T-1 heretofore referred to) 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 (3) have no reason to believe that (except
for financial statements and schedules and other financial and
statistical data as to which such counsel need not express any belief)
the Prospectus when issued contained or as of the date such opinion is
issued 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 light of the circumstances under which they
were made, not misleading.
With respect to opinion (14) above, such counsel may state that its
opinion and belief are based upon its 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.
A-3
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EXHIBIT C
Opinion of Xxxxxxx & Berlin
[Attach opinion of Xxxxxxx & Berlin, to be delivered pursuant to
Section 5(d) of the Underwriting Agreement to the effect that:]
(A) (1) the execution and delivery of the
Underwriting Agreement, the Indenture, the Pledge Agreement and the
Securities 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, the Indenture, the Pledge
Agreement or the Securities 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;
26
(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 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;
(E) the statements in the Prospectus under the captions
"Risk Factors -- Difficulties in Implementing Local and Enhanced
Services," "Risk Factors -- Competition," "Risk Factors -- Government
Regulation," "Business -- Regulation," "Business -- Market
Opportunity," and "Business -- Competition," exclusive of cross
references therein to other sections of the Prospectus, 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; and
(F) 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; and to the
best of our knowledge, are owned beneficially by the Company.
B-2
