EXHIBIT 1.1
CONVERGENT COMMUNICATIONS, INC.
Common Stock, no par value
Underwriting Agreement
----------------------
______ __, 1999
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.,
▇.▇. ▇▇▇▇▇▇ & Co., Inc.
Warburg Dillon Read LLC
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Convergent Communicatio
ns, Inc., a Colorado corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of [_______] shares and, at the election of the
Underwriters, up to [_______] additional shares of Common Stock, no par value
("Stock") of the Company and the Shareholders of the Company named in Schedule
II hereto (the "Selling Shareholders") propose, subject to the terms and
conditions stated herein, to sell to the Underwriters an aggregate of
[_________] shares. The aggregate [______] shares to be sold by the Company and
the Selling Shareholders is herein called the "Firm Shares" and the aggregate of
[______] additional shares to be sold by the Company, at the election of the
Underwriters, is herein called the "Optional Shares". The Firm Shares and the
Optional Shares that the Underwriters elect to purchase pursuant to Section 2
hereof are herein collectively called the "Shares".
1.
(a) The Company represents and warrants to, and agrees with, each
of the Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-[_____]) (the
"Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in
the form heretofore or hereafter delivered to you, and, excluding exhibits
thereto, to you for each of the other Underwriters, have been declared
effective by the Commission in such form; other than a registration
statement, if any, increasing the size of the offering (a "Rule 462(b)
Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act"), which
became effective upon filing, no other document with respect to the Initial
Registration Statement has heretofore been filed with the Commission; and
no stop order suspending the effectiveness of the Initial Registration
Statement, any post-effective amendment thereto or the Rule 462(b)
Registration Statement, if any, has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission (any preliminary
prospectus included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act is hereinafter called a "Preliminary Prospectus";
the various parts of the Initial Registration Statement
and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and
including the information contained in the form of final prospectus filed
with the Commission pursuant to Rule 424(b) under the Act in accordance
with Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to
be part of the Initial Registration Statement at the time it was declared
effective, each as amended at the time such part of the Initial
Registration Statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "Registration Statement"; such final
prospectus, in the form first filed pursuant to Rule 424(b) under the Act,
is hereinafter called the "Prospectus";
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of
filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder, and did 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, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use therein or by a Selling Shareholder
expressly for use in the preparation of the answers therein to Item 7 of
Form S-1;
(iii) This Agreement has been duly authorized, executed and delivered
by the Company.
(iv) The Registration Statement conforms, and the Prospectus and any
further
amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder and do
not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
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; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by an Underwriter through ▇▇▇▇▇▇▇, Sachs & Co. expressly for use therein or
by a Selling Shareholder expressly for use in the preparation of the
answers therein to I
tem 7 of Form S-1;
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(v) (A) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Prospectus any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Prospectus; and, (B) since the respective dates as of which information is
given in the Registration Statement and 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 n
ot in the
ordinary course of business and (ii) there has not been any change in the
capital stock or long-term debt of the Company or any of its subsidiaries
or any material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of the
Company and its subsidiaries, taken as a whole, otherwise than as set forth
or contemplated in the Prospectus;
(vi) The Company and its subsidiaries do not own any real property
and have good and marketable title to all personal property owned by them,
free and clear of all liens, encumbrances and defects except such as are
described in the Prospectus or such 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 interfere with the use made and
proposed to be made of such property and buildings by the Company and its
subsidiaries;
(vii) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Colorado;
each subsidiary of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation; and each of the Company and its subsidiaries
has the power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which
it owns
or leases properties or conducts any business so as to require such
qualification, except where the failure to be so qualified or be in good
standing would not have a material adverse effect on the general affairs,
management, the current or future financial position, shareholders' equity
or results of operations of the Company and its subsidiaries, taken as a
whole (a "Material Adverse Effect");
(viii) The Company and each of its subsidiaries have all concessions,
licenses, certificates, franchises, permits, authorizations, approvals,
orders and other rights from, and has made all declarations and filings
with, all Federal, state and local authorities (including, without
limitation, the Federal Communications Commission), all self-regulatory
authorities and all courts and other tribunals (each, an "Authorization")
that are necessary to conduct their businesses as described in the
Prospectus, except as described in the P
rospectus and except insofar as the
failure to obtain any such Authorization or make such filings would not
result in a Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation, suspension or modification of any such Authorization. All such
Authorizations are valid and in full force and effect and
3
the Company and its subsidiaries are in compliance in all material respects
with the terms and conditions of all such Authorizations and with the rules
and regulations of the regulatory authorities having jurisdiction with
respect thereto, except where the failure to be in full force and effect or
be in compliance would not result in a Material Adverse Effect.
(ix) The Company and its subsidiaries own or have had licensed to
them or otherwise have the benefit or use under the authority of the owners
thereof of, all patents, patent rights, inventions, trademarks, service
marks, trade names and copyrights (in each case, registered or not), know-
how (including trade secrets and other unpatented and/o
r unpatentable
proprietary or confidential information, software, systems or procedures),
computer programs, technical data and information (collectively,
"Intellectual Property Rights") that are reasonably necessary for the
conduct of the business of the Company and its subsidiaries as described in
the Prospectus, except where the failure to own, have licensed to them or
otherwise have the benefit or use of such Intellectual Property Rights
would not result in a Material Adverse Effect; and, except as set forth or
contemplated in the Prospectus, there are no unresolved assertions that the
Company or any of its subsidiaries has infringed the Intellectual Property
Rights of others, except where such assertions if resolved unfavorably
against the Company and its subsidiaries would not result in a Material
Adverse Effect;
(x) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued share
s of capital stock of the
Company have been duly and validly authorized and issued, are fully paid
and non-assessable and conform to the description of the Stock contained in
the Prospectus; and 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 or indirectly by
the Company, free and clear of all liens, encumbrances, equities or claims,
other than liens securing the credit facility with NationsCredit Capital
Corp. as described in the Prospectus and the restrictions on transfer of
these shares contained in the indenture for the Company's 13% Senior Notes
due 2008;
(xi) The unissued Shares to be issued and sold by the Company to
the Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be
duly and validly issued
and fully paid and non-assessable and will conform
to the description of the Stock contained in the Prospectus;
(xii) The issue and sale of the Shares by the Company and the
compliance by the Company with all of the provisions of this Agreement and
the consummation of the transactions herein contemplated will not conflict
with or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such action result
in any violation of the provisions of the Articles of Incorporation or By-
laws of the Company or any statute or any order, rule or regulation of any
court or governmental agency or
body having jurisdiction over the Company
or any of its subsidiaries or any of their properties; and no consent,
approval, authorization, order,
4
registration or qualification of or with any such court or governmental
agency or body is required for the issue and sale of the Shares or the
consummation by the Company of the transactions contemplated by this
Agreement otherwise than those which have been obtained, except the
registration under the Act of the Shares and such consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters;
(xiii) Neither the Company nor any of its subsidiaries (A) is in
violation of its Articles of Incorporation or By-laws or (B) in default in
the performance or obs
ervance of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or
by which it or any of its properties may be bound, except, in the case of
clause (B), for any such default which would not result in a Material
Adverse Effect;
(xiv) The statements set forth (A) in the Prospectus under the
caption "Description of Capital Stock", insofar as they purport to
constitute a summary of the terms of the Stock, and under the captions
"Description of Indebtedness" and "Shares Eligible for Future Sale",
insofar as they constitute summaries of legal matters or documents referred
to therein and (B) in the Registration Statement under Items 14 and 15,
insofar as such statements constitute summaries of legal matters or
documents referred to therein, in each case, are accurate, complete and
fair in all material respects
;
(xv) Other than as set forth in the Prospectus, there are no legal
or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a Material Adverse Effect; and, to the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(xvi) The Company is not and, after giving effect to the offering
and sale of the Shares, will not be an "investment company", as such term
is defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(xvii) No material labor dispute with the employees of the Company or
any of its subsidiaries exists, except as described in or contemplated by
the Prospect
us, or, to the knowledge of the Company, is imminent; and the
Company is not aware of any existing labor disturbance by the employees of
any of its principal suppliers, manufacturers or contractors that might
reasonably be expected to result in a Material Adverse Effect;
(xviii) PricewaterhouseCoopers, L.L.P., who have certified certain
financial statements of the Company and its subsidiaries, are independent
public accountants as required by the Act and the rules and regulations of
the Commission thereunder;
(xix) The Company has reviewed its operations and that of its
subsidiaries and any third parties with which the Company or any of its
subsidiaries has a material relationship to evaluate the extent to which
the business or operations of the Company or any of its subsidiaries will
be affected by Year 2000 issues. As a result of such review, the
5
Company represents and warrants that the disclosure in the Registration
Statement relating to Year 2000 issues is accurate and complies in all
material respects with the rules and regulations under the Act. "Year 2000
issues" as used herein means Year 2000 issues described in or contemplated
by the Commission's Interpretation: Disclosure of Year 2000 Issues and
Consequences by Public Companies, Investment Advisers, Investment
Companies, and Municipal Securities Issuers (Release No. 33-7558);
(xx) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (A) transactions are executed in accordance with management's gene
ral
or specific authorizations, (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (C)
access to assets is permitted only in accordance with management's general
or specific authorization, and (D) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(b) Each of the Selling Shareholders severally represents and warrants to,
and agrees with, each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders necessary
for the execution and delivery by such Selling Shareholder of this
Agreement and the Power of Attorney and the Custody Agreement hereinafter
referred to, and for the sale and delivery of the Shares to be sold by such
Selling Shareholder here
under, have been obtained; and such Selling
Shareholder has full right, power and authority to enter into this
Agreement, the Power-of-Attorney and the Custody Agreement and to sell,
assign, transfer and deliver the Shares to be sold by such Selling
Shareholder hereunder;
(ii) The sale of the Shares to be sold by such Selling Shareholder
hereunder and the compliance by such Selling Shareholder with all of the
provisions of this Agreement, the Power of Attorney and the Custody
Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
statute, indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which such Selling Shareholder is a party or by
which such Selling Shareholder is bound or to which any of the property or
assets of such Selling Sha
reholder is subject, nor will such action result
in any violation of the provisions of the Certificate of Incorporation or
By-laws of such Selling Shareholder if such Selling Shareholder is a
corporation, the Partnership Agreement of such Selling Shareholder if such
Selling Shareholder is a partnership or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over such Selling Shareholder or the property of such Selling Shareholder;
(iii) Such Selling Shareholder has, and immediately prior to the
First Time of Delivery (as defined in Section 4 hereof) such Selling
Shareholder will have, good and valid title to the Shares to be sold by
such Selling Shareholder hereunder, free and clear of all liens,
encumbrances, equities or claims; and, upon delivery of such Shares and
payment
6
therefor pursuant hereto, good and valid title to such Shares, free and
clear of all liens, encumbrances, equities or claims, will pass to the
several Underwriters;
(iv) During the period beginning from the date hereof and
continuing to and including the date 180 days after the First Time of
Delivery, not to offer, sell, contract to sell or otherwise dispose of,
except as provided hereunder, any securities of the Company that are
substantially similar to the Shares, including but not limited to any
securities that are convertible into or exchangeable for, or that represent
the right to receive, Stock or any such substantially similar securities
(other than pursuant to employee stock option pla
ns existing on the date of
this Agreement), without your prior written consent;
(v) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares;
(vi) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in conformity
with written information furnished to the Company by such Selling
Shareholder expressly for use therein, such Preliminary Prospectus and the
Registration Statement did, and the Prospectus and any further amendments
or supplements to the Registration Statement and the Prospectus, when they
become effective or a
re filed with the Commission, as the case may be, will
conform in all material respects to the requirements of the Act and the
rules and regulations of the Commission thereunder and 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;
(vii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Shareholder will deliver to you prior to or at
the First Time of Delivery (as hereinafter defined) a properly completed
and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations
in lieu thereof);
(viii) Certificates in negotiable form representing all of the Shares
to be sold by such Selling Shareholder hereunder have been placed in
custody under a Custody Agreement, in the form heretofore furnished to you
(the "Custody Agreement"), duly executed and delivered by such Selling
Shareholder to [Name of Custodian], as custodian (the "Custodian"), and
such Selling Shareholder has duly executed and delivered a Power of
Attorney, in the form heretofore furnished to you (the "Power of
Attorney"), appointing the persons indicated in Schedule II hereto, and
each of them, as such Selling Shareholder's attorneys-in-fact (the
"Attorneys-in-Fact") with authority to execute and deliver this Agreement
on behalf of such Selling Shareholder, to determine the purchase price to
be paid by the Underwriters to the Selling Shareholders as provided in
Section 2 hereof, to authorize the delivery of the Shares to be sold by
such Selling Shareholder hereunder and otherwise to act on behalf of such
Selling Shareholder in c
onnection with the transactions contemplated by
this Agreement and the Custody Agreement; and
7
(ix) The Shares represented by the certificates held in custody for
such Selling Shareholder under the Custody Agreement are subject to the
interests of the Underwriters hereunder; the arrangements made by such
Selling Shareholder for such custody, and the appointment by such Selling
Shareholder of the Attorneys-in-Fact by the Power of Attorney, are to that
extent irrevocable; the obligations of the Selling Shareholders hereunder
shall not be terminated by operation of law, whether by the death or
incapacity of any individual Selling Shareholder or, in the case of an
estate or trust, by the death or incapacity of any executor or trustee or
the termination of such estate or trust, or in the case of a
partnership or
corporation, by the dissolution of such partnership or corporation, or by
the occurrence of any other event; if any individual Selling Shareholder or
any such executor or trustee should die or become incapacitated, or if any
such estate or trust should be terminated, or if any such partnership or
corporation should be dissolved, or if any other such event should occur,
before the delivery of the Shares hereunder, certificates representing the
Shares shall be delivered by or on behalf of the Selling Shareholders in
accordance with the terms and conditions of this Agreement and of the
Custody Agreements; and actions taken by the Attorneys-in-Fact pursuant to
the Powers of Attorney shall be as valid as if such death, incapacity,
termination, dissolution or other event had not occurred, regardless of
whether or not the Custodian, the Attorneys-in-Fact, or any of them, shall
have received notice of such death, incapacity, termina
tion, dissolution or
other event.
2. Subject to the terms and conditions herein set forth, (a) the
Company and each of the Selling Shareholders agree, severally and not jointly,
to sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company and each of the Selling
Shareholders, at a purchase price per share of $[_____], the number of Firm
Shares (to be adjusted by you so as to eliminate fractional shares) determined
by multiplying the aggregate number of Shares to be sold by the Company and each
of the Selling Shareholders as set forth opposite their respective names in
Schedule II hereto by a fraction, the numerator of which is the aggregate number
of Firm Shares to be purchased by such Underwriter as set forth opposite the
name of such Underwriter in Schedule I hereto and the denominator of which is
the aggregate number of Firm Shares to be purchased by all of the Underwriters
from the Company and all of the Selling
Shareholders hereunder and (b) in the
event and to the extent that the Underwriters shall exercise the election to
purchase Optional Shares as provided below, the Company agrees to sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the purchase price per share set forth
in clause (a) of this Section 2, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
thei
r election up to [_________] Optional Shares, at the purchase price per
share set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company,
given within a period of 30 calendar days after the date of this Agreement,
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you but
in no event earlier than the First
8
Time of Delivery (as defined in Section 4 hereof) or, unless you and the Company
otherwise agree in writing, earlier than two or later than ten business days
after the date of such notice.
3. Upon the authorization by you of the release of the Firm
Shares, the several Underwriters propose to offer the Firm Shares for sale upon
the terms and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder,
in definitive form, and in such authorized denominations and registered in such
names as ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. may request upon at least forty-eight hours' prior
notice to the Company and the Selling Shareholders shall be delivered by or on
behalf of the Company and the Selling Shareho
lders to ▇▇▇▇▇▇▇, Sachs & Co.,
[through the facilities of The Depository Trust Company ("DTC"),] for the
account of such Underwriter, against payment by or on behalf of such Underwriter
of the purchase price therefor by wire transfer of Federal (same-day) funds to
the account specified by the Company and the [Custodian][Selling Shareholders],
as their interests may appear, to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. at least forty-eight
hours in advance. The Company will cause the certificates representing the
Shares to be made available for checking and packaging at least twenty-four
hours prior to the Time of Delivery (as defined below) with respect thereto [at
the office of DTC or its designated custodian] [▇▇▇▇▇▇▇, Sachs & Co., ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇] (the "Designated Office"). The time and date
of such delivery and payment shall be, with respect to the Firm Shares, 9:30
a.m., New York City time, on __________, 1999 or such other time and date as
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and the Company and the [Custodian
][Selling Shareholders]
may agree upon in writing, and, with respect to the Optional Shares, 9:30 a.m.,
New York time, on the date specified by ▇▇▇▇▇▇▇, Sachs & Co. in the written
notice given by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. of the Underwriters' election to purchase
such Optional Shares, or such other time and date as ▇▇▇▇▇▇▇, Sachs & Co. and
the Company may agree upon in writing. Such time and date for delivery of the
Firm Shares is herein called the "First Time of Delivery", such time and date
for delivery of the Optional Shares, if not the First Time of Delivery, is
herein called the "Second Time of Delivery", and each such time and date for
delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or
on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross receipt for the Shares and any additional matters reasonably requested by
the Underwriters to be included in the Company's certificate pursuant to Section
7(n) here
of, will be delivered at the offices of Shearman & Sterling, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Closing Location"), and the Shares
will be delivered at the Designated Office, all at such Time of Delivery. A
meeting will be held at the Closing Location at 1:00 p.m., New York City time,
on the New York Business Day next preceding such Time of Delivery, at which
meeting the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto. For the
purposes of this Section 4, "New York Business Day" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday that is not a day on which banking
institutions in New York are generally authorized or obligated by law or
executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later than
the Commiss
ion's close of business on the second business day following the
execution and delivery of this
9
Agreement, or, if applicable, such earlier time as may be required by Rule
430A(a)(3) under the Act; to make no further amendment or any supplement to
the Registration Statement or Prospectus which shall be disapproved by you
promptly after reasonable notice thereof; to advise you, promptly after it
receives notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish you with
copies thereof; to advise you, promptly after it receives notice thereof,
of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any Preliminar
y Prospectus or
prospectus, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the issuance
of any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus or suspending any such qualification,
promptly to use its best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with
such laws so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be necessary to complet
e the
distribution of the Shares, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(c) Prior to 12:00 P.M., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time to
time, to furnish the Underwriters with copies of the Prospectus in New York
City in such quantities as you may reasonably request and, if the delivery
of a prospectus is required at any time prior to the expiration of nine
months after the time of issue of the Prospectus in connection with the
offering or sale of the Shares and if at such time any event shall have
occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the l
ight of the circumstances under which they were made when
such Prospectus is delivered, not misleading, or, if for any other reason
it shall be necessary during such period to amend or supplement the
Prospectus in order to comply with the Act, to notify you and upon your
request to prepare and furnish without charge to each Underwriter and to
any dealer in securities such number of copies as you may from time to time
request of an amended Prospectus or a supplement to the Prospectus which
will correct such statement or omission or effect such compliance, and in
case any Underwriter is required to deliver a prospectus in connection with
sales of any of the Shares at any time nine months or more after the time
of issue of the Prospectus, upon your request but at the expense of such
Underwriter, to prepare and deliver to such Underwriter as many copies as
you may request of an amended or supplemented Prospectus complying with
Section 10(a)(3)
of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the
10
Company and its subsidiaries (which need not be audited) complying with
Section 11(a) of the Act and the rules and regulations thereunder
(including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to an including the date 180 days after the First Time of
Delivery, not to offer, sell, contract to sell, hedge or otherwise dispose
of, except as provided hereunder, any Stock or any other securities of the
Company that are substantially similar to the Stock, including but not
limited to, any securities that are convertible into or exchangeable for,
or that represent the right to receive, Stock or any such substantially
similar securitie
s (other than pursuant to employee stock option or benefit
plans existing on, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, or upon the exercise of warrants
or options outstanding as of, the date of this Agreement), without your
prior written consent; notwithstanding the foregoing, the Company may issue
Stock or substantially similar securities or securities convertible into or
exchangeable for shares of Stock in connection with strategic relationships
and acquisitions of businesses, technologies or products complementary to
those other Company, so long as the recipients of such securities agree to
be bound by an equivalent lock-up agreement for the remainder of the 180-
day lock-up period;
(f) To furnish to its shareholders as soon as practicable after
the end of each fiscal year an annual report (including a balance sheet and
statements of income, shareholders' equity and cash fl
ows of the Company
and its consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter
ending after the effective date of the Registration Statement), to make
available to its shareholders consolidated summary financial information of
the Company and its subsidiaries for such quarter in reasonable detail;
(g) During a period of three years from the effective date of the
Registration Statement, to furnish to you one copy of all reports or other
communications (financial or other) furnished to shareholders, and copies
of any reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of
securities of the Company is listed, provided that any reports, financial
statements or other communications that are available by ▇▇▇▇▇ n
eed not be
furnished; and (ii) such additional information concerning the business and
financial condition of the Company as you may from time to time reasonably
request (such financial statements to be on a consolidated basis to the
extent the accounts of the Company and its subsidiaries are consolidated in
reports furnished to its shareholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds";
(i) To use its best efforts to list for quotation the Shares on
the National Association of Securities Dealers Automated Quotations
National Market System ("NASDAQ");
11
(j) To file with the Commission such information on Form 10-Q or
Form 10-K as may be required by Rule 463 under the Act; and
(k) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the
date of this Agreement, and the Company shall at the time of filing either
pay to the Commission the filing fee for the Rule 462(b) Registration
Statement or give irrevocable instructions for the payment of such fee
pursuant to Rule 111(b) under the Act.
6. The Company and each of the Selling Shareholders covenant and
agree with one another and with the several Underwriters that (a) the Company
will pay or cause to be paid the following: (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Shares under the Act and all other expenses in connection
with the preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus and the Prospectus and amendments and supplements thereto
and the mailing and delivering of copies thereof to the Underwriters and
dealers; (ii) the cost of printing or otherwise duplicating any Agreement among
Underwriters, this Agreement, the Blue Sky Memorandum; (iii) all expenses in
connection with the qualification of the Shares for offering and sale under
state securities laws as provided in Section 5(b) hereof, including the
reasonable fees and disbursements of counsel for the Underwriters in connection
with such qualification and in connection with the Blue Sky survey; (iv) all
fees and expenses in connection with listing the Shares on the NASDAQ; (v) the
filing fees incident to, and the fees and disbursements of counsel for the
Underwriters in connection with, securing any required review by the National
Association of Securities Dealers, Inc. of the terms of the sale of the Shares,
which fees and expenses shall not be in excess of $________; (vi) the cost of
preparing stock certificates; the cost and charges of any transfer agent or
registrar; and all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section and (b) unless otherwise agreed between such Selling Shareholder and the
Company, such Selling Shareholder will pay or cause to be paid all costs and
expenses incident to the performance of such Selling Shareholder's obligations
hereunder which are not otherwise specifically provided for in this Section,
including (i) any fees and expenses of counsel for such Selling Shareholder,
(ii) such Selling Shareholder's pro rata share of the fees and expenses of the
Attorneys-in-Fact and the Custodian, and (iii) all expenses and taxes incident
to the sale and delivery of the Shares to be sold by such Selling Shareholder to
the Underwriters hereunder. In connection with clause (b) of the preceding
sentence, ▇▇▇▇▇▇▇, Sachs & Co. agrees to pay New York State stock transfer tax,
and the Selling Shareholder agrees to reimburse ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. for
associated carrying costs if such tax payment is not rebated on the day of
payment and for any portion of such tax payment not rebated. It is understood,
however, that, except as provided in this Section, and Sections 8 and 11 hereof,
the Underwriters will pay all of their own costs and expenses, including the
fees of their counsel, stock transfer taxes on resale of any of the Shares by
them, and any advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the
Shares to be delivered at each Time of Delivery, shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company and of the Selling Shareholders herein are, at and as
of such Time of Delivery, true and correct, the condition that
12
the Company and the Selling Shareholders shall have performed all of its and
their obligations hereunder theretofore to be performed, and the following
additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for
such filing by the rules and regulations under the Act and in accordance
with Section 5(a) hereof; if the Company has elected to rely upon Rule
462(b), the Rule 462(b) Registration Statement shall have become effective
by 10:00 P.M., Washington, D.C. time, on the date of this Agreement; no
stop order suspending the effectiveness of the Registration Statement or
any part thereof shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and all requests
for additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction;
(b) Shearman & Sterling, counsel for the Underwriters, shall have
furnished to you such written opinion or opinions (a draft of each such
opinion is attached as Annex II(a) hereto), dated such Time of Delivery,
with respect to the matters covered in paragraphs (xi)(A) and (xiii) of
subsection (c) below as well as such other related matters as you may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(c) ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Company, shall have
furnished to you their written opinion (a draft of such opinion is attached
as Annex II(b) hereto), dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Colorado with corporate power and authority to own its properties
and conduct its business as described in the Prospectus;
(ii) The Shares being delivered at such Time of Delivery
have been duly and validly authorized and issued and are fully paid
and non-assessable; and the Shares conform to the description of the
Stock contained in the Prospectus;
(iii) Based solely on certificates from government officials,
each of the Company and its subsidiaries has been duly qualified as a
foreign corporation for the transaction of business and is in good
standing under the laws of the following states: [list to be inserted
by such counsel];
(iv) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation; and all of the
issued shares of capital stock of each such subsidiary are owned of
record, directly or indirectly, by the Company, free and clear of all
liens, encumbrances, equities or claims other than liens securing the
credit facility with NationsCredit Capital Corp. as described in the
Prospectus and the restrictions on transfer of these shares contained
in the indenture for the Company's 13% Senior Note due 2008 (such
counsel being entitled to rely in respect of the opinion
13
in this clause upon certificates of government officials and, in
respect to matters of fact, upon certificates of officers of the
Company or its subsidiaries);
(v) This Agreement has been duly authorized, executed and
delivered by the Company;
(vi) The issue and sale of the Shares being delivered at
such Time of Delivery to be sold by the Company and the compliance by
the Company with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument
identified as a material contract and filed as a material contract as
an Exhibit to the Registration Statement, nor will such action result
in any violation of the provisions of the Articles of Incorporation or
By-laws of the Company or any Colorado statute, rule or regulation
known to such counsel to be applicable to the Company or its
subsidiaries (other than federal and state securities laws which are
addressed elsewhere herein or any federal, state, local or other
telecommunications laws, statutes, rules or regulations relating to
the area of telecommunications or the provision of telecommunications
services ("Telecommunications Law"));
(vii) To the knowledge of such counsel, no consent, approval,
authorization, order, registration or qualification of or with any
such court or governmental agency or body (other than any of such
items which would be required under any Telecommunications Laws or any
court, agency or body as a result of the Company's telecommunications
services) is required for the issue and sale of the Shares
contemplated by this Agreement, except the registration under the Act
of the Shares, and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters;
(viii) To the knowledge of such counsel, neither the Company
nor any of its subsidiaries is in violation of its Articles of
Incorporation or By-laws;
(ix) The statements set forth in the Prospectus under the
caption "Description of Capital Stock", insofar as they purport
constitute a summary of the terms of the Stock, and under the caption
"Description of Indebtedness", insofar as such statements constitute
summaries of material provisions of documents referred to therein, are
accurate in all material respects;
(x) The Company is not an "investment company", as such
term is defined in the Investment Company Act; and
In addition, such counsel shall state in such counsel's
opinion letter or in a separate letter that such counsel has
participated in the preparation of the Registration Statement and the
Prospectus and in conferences with officers and other representatives
of the Company, the Selling Shareholders, representatives of
14
the independent auditor of the Company and your representatives at
which the contents of the Registration Statement and Prospectus and
related matters were discussed. Because the purpose of such counsel's
professional engagement was not to establish or confirm factual
matters and because the scope of our examination of the affairs of the
Company and the Selling Shareholders did not permit such counsel to
verify the accuracy, completeness or fairness of the statements set
forth in the Registration Statement or Prospectus, such counsel is are
not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or Prospectus, except to the extent set forth
in the last sentence of this paragraph or in clause (ix) above. On the
basis of the foregoing, and except for the financial statements and
schedules and other financial data included therein, as to which such
counsel expresses no opinion or belief, (a) such counsel is of the
opinion that the Registration Statement at the time it became
effective, and the Prospectus as of the date thereof and as of the
date of its letter, appear on their face to be appropriately
responsive in all material respects with the requirements of the Act
and the rules and regulations promulgated thereunder and (b) no facts
have come to such counsel's attention that lead such counsel to
believe that (i) the Registration Statement at the time it became
effective contained an 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, or (ii) the Prospectus as
of its date and as of the date of its letter contained or contains an
untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(d) Dickstein, Shapiro, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, regulatory counsel to
the Company, shall have furnished to you their written opinion a draft of
such opinion is attached as Annex II(c) hereto), dated such Time of
Delivery, in form and substance satisfactory to you, to the effect that:
(i) (A) the execution and delivery of the Underwriting
Agreement by the Company and the consummation of the transactions
contemplated thereby do not violate (1) the Communications Act of
1934, as amended, or any rules or regulations of the Federal
Communications Commission ("FCC") (collectively, the "Communications
Act") applicable to the Company, (2) any state telecommunications law,
rules or regulations ("State Telecommunications Law") applicable to
the Company, and (3) to the best of such counsel's knowledge, after
due inquiry of the Company, any decree from any court or tribunal, and
(B) other than those consents, approvals, authorizations or orders
which have been obtained or those filings which have been made, no
consent, approval, authorization or order of or filing with the FCC or
any state regulatory authority regulating telecommunications services
provided by the Company or any of its subsidiaries, including public
utility commissions ("State Authorities"), is necessary for the
execution and delivery of the Underwriting Agreement by the Company
except to the extent that the failure to obtain such consents,
approvals, authorizations or orders or to make filings with, the FCC
or any State Authority would not, individually or in the aggregate,
have a Material Adverse Effect;
15
(ii) Convergent Communications Services, Inc. (the
"Operating Company") is a nondominant carrier authorized by the FCC to
provide interstate interexchange telecommunications services. The
Operating Company has been granted Section 214 authority by the FCC to
provide international telecommunications services through the resale
of international switched voice and private line services and the
Operating Company has on file with the FCC tariffs applicable to its
interstate and international services. No further FCC authority is
required by the Company or any of its subsidiaries to conduct its
business as described in the Prospectus;
(iii) The Operating Company is certified and/or registered to
resell intrastate interexchange telecommunications services in the
states listed in Exhibit B attached hereto and is, except to the
extent that the failure to obtain such authorization would not,
individually or in the aggregate, have a Material Adverse Effect, not
required to be certified or registered, to resell intrastate
interexchange telecommunications services in the states listed in
Exhibit C attached hereto. The Operating Company has a tariff on file
in each state in which it resells telecommunications services that
requires the filing of such a tariff. No further authority is required
from any of the State Authorities in the states listed in Exhibits B
and C by the Company or any of its subsidiaries to conduct its
business as described in the Prospectus;
(iv) (A) The Operating Company has made all reports and
filings, and paid all fees, required by the FCC and the State
Authorities, 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 State Authorities
necessary for the Company and its subsidiaries to own, lease, license
and use their properties and assets and to conduct their respective
business in the manner described in the Prospectus, except for those
reports, filings, fees, certificates, orders, permits, licenses,
authorizations, consents and approvals the failure to obtain or file
of which would not have Material Adverse Effect; and to the best of
such counsel's knowledge after due inquiry of the Company, (B) the
Operating Company has not 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 and (C), based upon the information contained in the
Prospectus and the reviewed filings and the pertinent representations
of the officers and employees of the Company and the Operating
Company, to our knowledge the Operating Company is not in violation
of, or in default under the Communications Act or State
Telecommunications Law, the effect of which, singly or in the
aggregate, would have a Material Adverse Effect;
(v) to the best of such counsel's knowledge after due
inquiry of the Company (A) no adverse judgment, decree or order of the
FCC or any State Authority has been issued against the Operating
Company
16
before or by the FCC or any State Authority that, if decided adversely
to the interests of the Company or any of its subsidiaries would have
a Material Adverse Effect; and
(vi) the statements in the Prospectus under the captions
"Risk Factors - We Face Competition From Many Sources," "Risk
Factors - We are Subject to FCC and State Public Utility Commission
Regulations," "Business --Regulatory Environment" and "Business -
Competition" insofar as such statements constitute a summary of the
legal matters, documents or proceedings of the FCC and State
Authorities with respect to telecommunications regulation referred to
therein, fairly summarize the matters referred to therein.
(e) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, counsel for the Company, shall have
furnished to you such counsel's written opinion (a draft of such opinion is
attached as Annex II(d) hereto), dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company (including the Shares being delivered at such Time of
Delivery) have been duly and validly authorized and issued and are
fully paid and non-assessable; and the Shares conform to the
description of the Stock contained in the Prospectus;
(ii) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation; and all of the
issued shares of capital stock of each such subsidiary have been duly
and validly authorized and issued, are fully paid and non-assessable,
and are owned, directly or indirectly, by the Company, free and clear
of all liens, encumbrances, equities or claims, other than liens
securing the credit facility with NationsCredit Capital Corp. as
described in the Prospectus and the restrictions on transfer of these
shares contained in the indenture for the Company's 13% Senior Notes
due 2008;
(iii) Based on certificates from government officials, each
of the Company and its subsidiaries has been duly qualified as a
foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification or is subject to no material liability or disability by
reason of failure to be so qualified in any such jurisdiction (such
counsel being entitled to rely in respect of matters of fact upon
certification of officers of the Company);
(iv) The issuance, sale and delivery of the Shares by the
Company and compliance by the Company with all of the provisions of
this Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the Company or
any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries
17
is subject, nor will such action result in any violation of the
provisions of the Articles of Incorporation or By-laws of the Company
or any statute or any order, rule or regulation known to such counsel
of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties
(other than Federal or state securities or telecommunications laws as
to which such counsel need express no opinion);
(v) 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 interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries;
(vi) To such counsel's knowledge and except as described in
the Prospectus, the Company and each of its subsidiaries have all
Authorizations that are necessary to conduct their businesses as
described in the Prospectus, except insofar as the failure to obtain
any such Authorization would not result in a Material Adverse Effect;
and to the best of such counsel's knowledge neither the Company nor
any of its subsidiaries has received any notice of proceedings
relating to the revocation, suspension or modification of any such
Authorization. All such Authorizations are valid and in full force and
effect and the Company and its subsidiaries are in compliance in all
material respects with the terms and conditions of all such
Authorizations and with the rules and regulations of the regulatory
authorities having jurisdiction with respect thereto, except where the
failure to be in full force and effect or be in compliance would not
result in a Material Adverse Effect;
(vii) The Company and its subsidiaries own or have had
licensed to them or otherwise have the benefit or use under the
authority of the owners thereof of, all Intellectual Property Rights
that are reasonably necessary for the conduct of the business of the
Company and its subsidiaries as described in the Prospectus, except
where the failure to own, have licensed to them or otherwise have the
benefit or use under the authority of the owners thereof would not
result in a Material Adverse Effect; and, to the best knowledge of
such counsel, except as set forth or contemplated in the Prospectus,
there are no unresolved assertions that the Company or any of its
subsidiaries has infringed the Intellectual Property Rights of others,
except where such assertions if resolved unfavorably against the
Company and its subsidiaries would not result in a Material Adverse
Effect;
(viii) No material labor dispute with the employees of the
Company or any of its subsidiaries exists, except as described in or
contemplated by the Prospectus, or to the best of such counsel's
knowledge, is imminent;
(ix) To such counsel's knowledge and other than as set forth
in the Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party
which, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect; and, to such counsel's knowledge, no such proceedings
18
are threatened or contemplated by governmental authorities or
threatened by others;
(x) Neither the Company nor any of its subsidiaries is in
violation of its Articles of Incorporation or By-laws or, to such
counsel's knowledge and other than as set forth in the Prospectus, in
default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument
to which it is a party or by which it or any of its properties may be
bound, except for such defaults which would not result in a Material
Adverse Effect;
(xi) The statements set forth in the Prospectus under the
caption "Shares Eligible for Future Sale" and in the Registration
Statement under Items 14 and 15 thereof, insofar as such statements
constitute summaries of legal matters, documents or proceedings
referred to therein, such statements fairly present the information
called for with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein in
all material repsects; and
In addition, such counsel shall state in such counsel's opinion letter
or in a separate letter that such counsel has participated in the
preparation of the Registration Statement and the Prospectus and in
conferences with other officers and representatives of the Company, the
Selling Shareholders, representatives of the independent auditor of the
Company and your representatives at which the contents of the Registration
Statement and Prospectus and related matters were discussed. Except for the
financial statements and schedules and other financial data included
therein, as to which such counsel expresses no opinion or belief, (a) such
counsel is of the opinion that the Registration Statement at the time it
became effective, and the Prospectus as of the date thereof and as of the
date of its letter, appear on their face to be appropriately responsive in
all material respects with the requirements of the Act and the rules and
regulations promulgated thereunder and (b) no facts have come to such
counsel's attention that lead such counsel to believe that (i) the
Registration Statement at the time it became effective contained an 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, or (ii) the Prospectus as of its date and as of the date of its
letter contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and such counsel is not aware
of any contracts or other documents of a character required to be filed as
an exhibit to the Registration Statement or required to be described in the
Registration Statement or the Prospectus which are not filed or described
as required;
(f) The respective counsel for each of the Selling Shareholders,
as described below and as more specifically indicated in Schedule II
hereto, each shall have furnished to you their written opinion with respect
to each of the Selling Shareholders for whom they
19
are acting as counsel (a draft of each such opinion is attached as Annex
II(e) hereto), dated the First Time of Delivery, in form and substance
satisfactory to you, to the effect that:
[▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ will give the opinion set forth in clause
(iv) as to all shares sold by the Selling Shareholders. ▇▇▇▇▇▇▇▇ &
▇▇▇▇ will give the opinions in clauses (i), (ii) and (iii), for those
Selling Shareholders who are selling 15,000 (pre-split) or more shares
in the offering.]
(i) The Power-of-Attorney and the Custody Agreement have
been duly executed and delivered by each Selling Shareholder and this
Agreement has been duly executed and delivered on behalf of [such]
Selling Shareholder;
(ii) The Power-of-Attorney and Custody Agreement constitute
valid and binding agreements of each Selling Shareholder in accordance
with their terms;
(iii) [Such] Selling Shareholders has the legal right and
power to enter into this Agreement, the Power of Attorney and the
Custody Agreement and to sell, transfer and deliver the Shares to be
sold by such Selling Shareholders pursuant to this Agreement; and
(iv) [Assuming that (a) the securities to be sold by each
Selling Shareholder are not held in any securities account or by or
through a securities intermediary within the meaning of the NYUCC and
(b) the certificate or certificates representing the Shares to be sold
by the Selling Shareholders pursuant to this Agreement have been
effectively indorsed in blank in accordance with the NYUCC, then,]
upon the Underwriters' acquiring possession of such certificate or
certificates for the Shares and paying the purchase price therefor
pursuant to this Agreement, each Underwriter will be a "protected
purchaser" of the Shares to be purchased by it (within the meaning of
Section 8-303 of the NYUCC) and will acquire its interest in such
Shares (including, without limitation, all rights that the Selling
Shareholder had or has the power to transfer in such Securities) free
of any adverse claim (assuming that the Underwriters are without
notice of any adverse claim to the Shares).
(g) On the date of the Prospectus at a time prior to the execution
of this Agreement, at 9:30 a.m., New York City time, on the effective date
of any post-effective amendment to the Registration Statement filed
subsequent to the date of this Agreement and also at each Time of Delivery,
PricewaterhouseCoopers, LLP shall have furnished to you a letter or
letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to you, to the effect set forth in Annex I hereto
(the executed copy of the letter delivered prior to the execution of this
Agreement is attached as Annex I(a) hereto and a draft of the form of
letter to be delivered on the effective date of any post-effective
amendment to the Registration Statement and as of each Time of Delivery is
attached as Annex I(b) hereto);
(h) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not
20
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Prospectus, and (ii) since the respective dates as of which information is
given in the Prospectus there shall not have been any change in the capital
stock or long-term debt of the Company or any of its subsidiaries or any
change, or any development involving a prospective change, in or affecting
the general affairs, management, financial position, shareholders' equity,
business or results of operations of the Company and its subsidiaries,
otherwise than as set forth or contemplated in the Prospectus, the effect
of which, in any such case described in clause (i) or (ii), is in the
judgment of the Representatives so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the
terms and in the manner contemplated in the Prospectus;
(i) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the Act, and
(ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of
any of the Company's debt securities;
(j) On or after the date hereof there shall not have occurred any
of the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or NASDAQ; (ii) a
suspension or material limitation in trading in the Company's securities on
NASDAQ; (iii) a general moratorium on commercial banking activities
declared by either Federal or New York State authorities; or (iv) the
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if the
effect of any such event specified in this clause (iv) in the judgment of
the Representatives makes it impracticable or inadvisable to proceed with
the public offering or the delivery of the Shares being delivered at such
Time of Delivery on the terms and in the manner contemplated in the
Prospectus;
(k) The Shares to be sold at such Time of Delivery shall have been
duly listed for quotation on NASDAQ;
(l) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from all of the executive officers and
directors of the Company and its subsidiaries and each of the holders of
Stock, options or warrants listed on Schedule III, each in the form
previously provided to you;
(m) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement; and
(n) The Company and the Selling Shareholders shall have furnished
or caused to be furnished to you at such Time of Delivery certificates of
officers of the Company and of the Selling Shareholders, respectively,
satisfactory to you as to the accuracy of the representations and
warranties of the Company and of the Selling Shareholders, respectively,
herein at and as of such Time of Delivery, as to the performance by the
21
Company and the Selling Shareholders of all of their respective obligations
hereunder to be performed at or prior to such Time of Delivery, as to the
matters set forth in subsections (a) and (h) of this Section and, in the
case of the Company only, as to such other matters as you may reasonably
request.
8. (a) The Company will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each Underwriter for
any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through ▇▇▇▇▇▇▇, Sachs & Co. expressly for use
therein.
(b) Each of the Selling Shareholders will indemnify and hold
harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by
such Selling Shareholder expressly for use therein; and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action
or claim as such expenses are incurred; provided, however, that such
Selling Shareholder shall not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter through ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use therein.
(c) Each Underwriter will indemnify and hold harmless the Company
and each Selling Shareholder against any losses, claims, damages or
liabilities to which the Company or such Selling Shareholder may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material
fact contained in any Preliminary
22
Prospectus, the Registration Statement or the Prospectus, or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through
▇▇▇▇▇▇▇, Sachs & Co. expressly for use therein; and will reimburse the
Company and each Selling Shareholder for any legal or other expenses
reasonably incurred by the Company or such Selling Shareholder in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to
be made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party under such subsection
for any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry of
any judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to
such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all
liability arising out of such action 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.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages
or liabilities (or actions in respect thereof) referred to therein, then
each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company and
the Selling Shareholders on the one hand and the Underwriters on the other
from the offering of the Shares. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under subsection
(d) above, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the
relative fault (including the failure to notify) of the Company and the
Selling Shareholders on the one hand and the Underwriters on the other in
connection with the statements or omissions
23
which resulted in such losses, claims, damages or liabilities (or actions
in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total net proceeds from
the offering (before deducting expenses) received by the Company and the
Selling Shareholders bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault 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 the Selling Shareholders on the one hand or the Underwriters on
the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company, each of the Selling Shareholders and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (e) 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 which does not take account of the
equitable considerations referred to above in this subsection (e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this subsection (e) shall be deemed to include 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 subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which 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
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations in this
subsection (e) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(f) The obligations of the Company and the Selling Shareholders under
this Section 8 shall be in addition to any liability which the Company and
the respective Selling Shareholders may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend, upon
the same terms and conditions, to each officer and director of the Company
[(including any person who, with his or her consent, is named in the
Registration Statement as about to become a director of the Company)] and
to each person, if any, who controls the Company or any Selling Shareholder
within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at a Time of
Delivery, you may in your discretion arrange for you or another party or other
parties to purchase such Shares on the terms contained herein. If within thirty-
six hours after such default by any Underwriter you do not arrange for the
purchase of such Shares, then the Company and the Selling Shareholders shall be
entitled to a further period of thirty-six hours within which to procure another
party or other parties reasonably satisfactory to you to purchase such Shares on
such terms. In the event that, within the respective prescribed periods, you
notify the Company and the Selling Shareholders that you have so
24
arranged for the purchase of such Shares, or the Company or the Selling
Shareholders notifies you that it has so arranged for the purchase of such
Shares, you or the Company and the Selling Shareholders shall have the right to
postpone such Time of Delivery for a period of not more than seven days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your reasonable opinion may
thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by you
and the Company and the Selling Shareholders as provided in subsection (a)
above, the aggregate number of such Shares which remains unpurchased does
not exceed one-eleventh of the aggregate number of all the Shares to be
purchased at such Time of Delivery, then the Company and the Selling
Shareholders shall have the right to require each non-defaulting
Underwriter to purchase the number of shares which such Underwriter agreed
to purchase hereunder at such Time of Delivery and, in addition, to require
each non-defaulting Underwriter to purchase its pro rata share (based on
the number of Shares which such Underwriter agreed to purchase hereunder)
of the Shares of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by you
and the Company and the Selling Shareholders as provided in subsection (a)
above, the aggregate number of such Shares which remains unpurchased
exceeds one-eleventh of the aggregate number of all the Shares to be
purchased at such Time of Delivery, or if the Company and the Selling
Shareholders shall not exercise the right described in subsection (b) above
to require non-defaulting Underwriters to purchase Shares of a defaulting
Underwriter or Underwriters, then this Agreement (or, with respect to the
Second Time of Delivery, the obligations of the Underwriters to purchase
and of the Company to sell the Optional Shares) shall thereupon terminate,
without liability on the part of any non-defaulting Underwriter or the
Company, except for the expenses to be borne by the Company and the
Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall
relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements,
representations, warranties and other statements of the Company, the Selling
Shareholders and the several Underwriters, as set forth in this Agreement or
made by or on behalf of them, respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation (or any
statement as to the results thereof) made by or on behalf of any Underwriter or
any controlling person of any Underwriter, or the Company, or any Selling
Shareholder or, any officer or director or controlling person of the Company, or
any controlling person of any Selling Shareholder and shall survive delivery of
and payment for the Shares.
11. (a) If this Agreement shall be terminated pursuant to
Section 9 hereof, neither the Company nor the Selling Shareholders shall then be
under any liability to any Underwriter except as provided in Sections 6 and 8
hereof; but, if for any other reason, any Shares are not delivered by or on
behalf of the Company and the Selling Shareholders as provided herein,
25
the Company and each of the Selling Shareholders pro rata (based on the number
of Shares to be sold by the Company and the Selling Shareholders hereunder) will
reimburse the Underwriters through you for all out-of-pocket expenses approved
in writing by you, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of the Shares not so delivered, but the Company and the Selling
Shareholders shall then be under no further liability to any Underwriter in
respect of the shares not so delivered except as provided in Sections 6 and 8
hereof. Notwithstanding the foregoing, in the event that certain Selling
Shareholders fail to deliver their Shares to the Underwriters in accordance with
this Agreement, the Company shall be obligated to cure such failure and issue
and deliver additional Shares to cover such non-delivered Shares at the same
purchase price described in Section 2 hereof.
(b) In addition, with respect to the Shares that are being
delivered by those Selling Shareholders for whom the opinions of counsel
described in clauses (i), (ii) and (iii) of Section 7(f) are not being
given pursuant to this agreement because such Selling Shareholders are not
selling an amount of Shares above the threshold amount described in Section
7(f), and the sale of such Shares ("Invalid Shares") by any such Selling
Shareholder pursuant to this Agreement is not valid because (A) the Power-
of-Attorney or the Custody Agreement was not duly executed and delivered by
such Selling Shareholder, or this Agreement was not duly executed and
delivered on behalf of such Selling Shareholder, (B) the Power-of-Attorney
or the Custody Agreement did not a constitute valid and binding agreement
of such Selling Shareholder or (C) such Selling Shareholder did not have
the legal right and power to enter into this Agreement, the Power-of-
Attorney or the Custody Agreement, the Company shall issue and deliver to
the Underwriters a number of additional Shares ("Replacement Shares") equal
to the number of Invalid Shares upon receipt of same day funds in an amount
equal to the purchase price of the Invalid Shares paid by the Underwriters
to such Shareholders pursuant to this Agreement. At the time of delivery of
any Replacement Shares to the Underwriters, the Company shall make the
representations and warranties set forth in clauses (vii) and (xi) of
Section 1 of this Agreement and shall deliver an opinion of counsel to the
effect of the opinions described in clauses (i) and (ii) of Section 6(c) of
this Agreement.
12. In all dealings hereunder, you shall act on behalf of
each of the Underwriters, and the parties hereto shall be entitled to act and
rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by you jointly or by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. on behalf of
you as the Representatives; and in all dealings with any Selling Shareholder
hereunder, you and the Company shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of such Selling Shareholder
made or given by any or all of the Attorneys-in-Fact for such Selling
Shareholder.
All statements, requests, notices and agreements hereunder
shall be in writing, and if to the Underwriters shall be delivered or sent by
mail, telex or facsimile transmission to you as the representatives in care of
▇▇▇▇▇▇▇, Sachs & Co., ▇▇ ▇▇▇ ▇▇▇▇, ▇/▇▇/ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Registration Department; if to any Selling Shareholder shall be
delivered or sent by mail, telex or facsimile transmission to counsel for such
Selling Shareholder at its address set forth in Schedule II hereto; and if to
the Company shall be delivered or sent by mail to the address of the Company set
forth in the Registration Statement, Attention: General Counsel; provided,
however, that any notice to an Underwriter pursuant to Section 8(c) hereof shall
be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its
26
Underwriters' Questionnaire, or telex constituting such Questionnaire, which
address will be supplied to the Company by you upon request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement shall be binding upon, and inure solely
to the benefit of, the Underwriters, the Company and the Selling Shareholders
and, to the extent provided in Sections 8 and 10 hereof, the officers and
directors of the Company and each person who controls the Company, any Selling
Shareholders or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of this Agreement. As used
herein, except in Section 4 hereof, the term "business day" shall mean any day
when the Commission's office in Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. This Agreement may be executed by any one or more of
the parties hereto in any number of counterparts, each of which shall be deemed
to be an original, but all such counterparts shall together constitute one and
the same instrument.
If the foregoing is in accordance with your understanding,
please sign and return to us one for the Company and each of the Representatives
plus one for each counsel and the Custodian, if any, counterparts hereof, and
upon the acceptance hereof by you, on behalf of each of the Underwriters, this
letter and such acceptance hereof shall constitute a binding agreement between
each of the Underwriters, the Company and each of the Selling Shareholders. It
is understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company and the
Selling Shareholders for examination upon request, but without warranty on your
part as to the authority of the signers thereof.
27
Any person executing and delivering this Agreement as Attorney-in-Fact for a
Selling Shareholder represents by so doing that he has been duly appointed as
Attorney-in-Fact by such Selling Shareholder pursuant to a validly existing and
binding Power-of-Attorney which authorizes such Attorney-in-Fact to take such
action.
Very truly yours,
Convergent Communications, Inc.
By:
--------------------------------------
Name:
Title:
[Names of Selling Shareholders]
By:
--------------------------------
Name:
Title:
As Attorney-in-Fact acting on behalf of
each of the Selling Shareholders named
in Schedule II to this Agreement.
Accepted as of the date hereof:
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
▇.▇. ▇▇▇▇▇▇ & Co. Inc.
Warburg Dillon Read LLC
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
By:
--------------------------------
(Gold, Sachs & Co.)
On behalf of each of the Underwriters
28
SCHEDULE I
Number of Optional
Shares to be
Total Number of Purchased if
Firm Shares Maximum Option
Underwriter to be Purchased Exercised
----------- --------------- ------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co..................
▇. ▇. ▇▇▇▇▇▇ & Co., Inc..............
Warburg ▇▇▇▇▇▇ ▇▇▇▇▇ LLC.............
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.......
[Names of other Underwriters]
Total................................
SCHEDULE II
Number of Optional
Shares to be
Total Number of Sold if
Firm Shares Maximum Option
to be Sold Exercised
The Company...................................................
The Selling Shareholder(s):..............................
[Name of Selling Shareholder](a)....................
[Name of Selling Shareholder](b)....................
[Name of Selling Shareholder](c)....................
[Name of Selling Shareholder](d)....................
[Name of Selling Shareholder](e)....................
Total....................................................
(a) This Selling Shareholder is represented by [Name and Address of Counsel]
and has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Shareholder.
(b) This Selling Shareholder is represented by [Name and Address of Counsel]
and has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Shareholder.
(c) This Selling Shareholder is represented by [Name and Address of Counsel]
and has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Shareholder.
(d) This Selling Shareholder is represented by [Name and Address of Counsel]
and has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Shareholder.
(e) This Selling Shareholder is represented by [Name and Address of Counsel]
and has appointed [Names of Attorneys-in-Fact (not less than two)], and each of
them, as the Attorneys-in-Fact for such Selling Shareholder.
An. I-2
SCHEDULE III
Parties to Lock-Up Agreements
(to be supplied by Company)
No. of Warrants,
Options or Other No. of Shares of
Securities Stock represented by
Convertible into Warrants, Options or
Security Holder: No. of Shares of Stock Stock other Securities
---------------- ---------------------- ---------------- --------------------
Executive Officers:
Directors:
Other Holders:
An. I-3
ANNEX I
DESCRIPTION OF COMFORT LETTER
Pursuant to Section 7(g) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included in the Prospectus or the Registration Statement comply as
to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance with
standards established by the American Institute of Certified Public
Accountants of the unaudited consolidated interim financial statements,
selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such
letter, as indicated in their reports thereon, copies of which have been
[separately] furnished to the representatives of the Underwriters (the
"Representatives")[and are attached hereto];
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus as indicated in their reports thereon copies of which [have been
separately furnished to the Representatives] [and are attached hereto] and
on the basis of specified procedures including inquiries of officials of
the Company who have responsibility for financial and accounting matters
regarding whether the unaudited condensed consolidated financial statements
referred to in paragraph (vi)(A)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations, nothing came to their attention
that cause them to believe that the unaudited condensed consolidated
financial statements do not comply as to form in all material respects with
the applicable accounting requirements of the Act and the related published
rules and regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the [___] fiscal years included in the Prospectus agrees with
the corresponding amounts (after restatements where applicable) in the
audited consolidated financial statements for such fiscal years which were
included or incorporated by reference in the Company's Annual Reports on
Form 10-K for such fiscal years;
An. I-4
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
with the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included in the Prospectus, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial statements
from which such data and items were derived, and any such unaudited
data and items were not determined on a basis substantially consistent
with the basis for the corresponding amounts in the audited
consolidated financial statements included in the Prospectus;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived any unaudited
condensed financial statements referred to in Clause (A) and any
unaudited income statement data and balance sheet items included in
the Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed
financial statements included in the Prospectus do not comply as to
form in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations
thereunder or the pro forma adjustments have not been properly applied
to the historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
consolidated capital stock (other
An.I-5
than issuances of capital stock upon exercise of options and stock
appreciation rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which were
outstanding on the date of the latest financial statements included in
the Prospectus) or any increase in the consolidated long-term debt of
the Company and its subsidiaries, or any decreases in consolidated net
current assets or shareholders' equity or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with amounts shown in the
latest balance sheet included in the Prospectus, except in each case
for changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in Clause (E) there were any decreases in consolidated net revenues
or operating profit or the total or per share amounts of consolidated
net income or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each case
as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the
Representatives, except in each case for decreases or increases which
the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and
(vi) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from the
general accounting records of the Company and its subsidiaries, which
appear in the Prospectus, or in Part II of, or in exhibits and schedules
to, the Registration Statement specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Company and its subsidiaries and have
found them to be in agreement.
An. I-6
ANNEX II(a)
Form of Opinion of Shearman & Sterling
____________________________________________________________________________
ANNEX II(b)
Form of Opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇
____________________________________________________________________________
ANNEX II(c)
Form of Opinion of Regulatory Counsel
___________________________________________________________________________
ANNEX II(d)
Form of Opinion of General Counsel
___________________________________________________________________________
ANNEX II(e)
Form of Opinion of Counsel for Selling Shareholders
An. I-7
