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EXHIBIT 4.1
IXC Communications, Inc.
Depositary Shares Each Representing 1/20 of a Share of
6 3/4% Cumulative Convertible Preferred Stock
PURCHASE AGREEMENT
March 25, 1998
Xxxxxxx, Xxxxx & Co.,
Credit Suisse First Boston Corporation
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxx Xxxxxxx & Co. Incorporated
As representatives of the several Purchasers
named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
IXC Communications, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Purchasers named in Schedule I hereto (the "Purchasers") an aggregate of
2,700,000 Depositary Shares (the "Firm Shares") representing 135,000 shares of 6
3/4% Cumulative Convertible Preferred Stock of the Company (the "Preferred
Stock") and up to an aggregate of 405,000 Depositary Shares representing 20,250
shares of Preferred Stock (the "Optional Shares," and together with the Firm
Shares, the "Shares") that the Purchasers may elect to purchase pursuant to
Section 2 hereof, each having a liquidation preference equivalent to $50 per
Share, for the aggregate purchase price listed in Schedule I hereto. The
Preferred Stock is convertible into Common Stock ("Stock") of the Company.
The Shares are to be issued pursuant to a deposit agreement (the
"Deposit Agreement") to be dated as of March 30, 1998, among the Company,
BankBoston, N.A. as depositary (the "Depositary"), and holders from time to time
of the Depositary Receipts (the "Depositary Receipts") issued by the Depositary
and evidencing the Shares. Each Share will initially represent the right to
receive 1/20 of a share of Preferred Stock deposited pursuant to the
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Deposit Agreement.
1. The Company represents and warrants to, and agrees with, each of the
Purchasers that:
(a) A preliminary offering circular, dated March 17, 1998 (the
"Preliminary Offering Circular") and an offering circular, dated March
25, 1998 (the "Offering Circular"), and the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997, which is attached
to and made a part of the Preliminary Offering Circular and the Offering
Circular, have been prepared in connection with the offering of the
Shares. Any reference to the Preliminary Offering Circular or the
Offering Circular shall be deemed to refer to and include the Company's
most recent Annual Report on Form 10-K and all subsequent documents
filed with the United States Securities and Exchange Commission (the
"Commission") pursuant to Section 13(a), 13(c) or 15(d) of the United
States Securities Exchange Act of 1934, as amended (the "Exchange Act")
on or prior to the date of the Preliminary Offering Circular or the
Offering Circular, as the case may be, and any reference to the
Preliminary Offering Circular or the Offering Circular, as the case may
be, as amended or supplemented, as of any specified date, shall be
deemed to include (i) any documents filed with the Commission pursuant
to Section 13(a), 13(c) or 15(d) of the Exchange Act after the date of
the Preliminary Offering Circular or the Offering Circular, as the case
may be, and prior to such specified date and (ii) any Additional Issuer
Information (as defined in Section 5(f)) furnished by the Company prior
to the completion of the distribution of the Shares; and all documents
filed under the Exchange Act and so deemed to be included in the
Preliminary Offering Circular or the Offering Circular, as the case may
be, or any amendment or supplement thereto are hereinafter called the
"Exchange Act Reports". The Exchange Act Reports, when they were or are
filed with the Commission, conformed or will conform in all material
respects to the applicable requirements of the Exchange Act and the
applicable rules and regulations of the Commission thereunder. The
Preliminary Offering Circular or the Offering Circular and any
amendments or supplements thereto and the Exchange Act Reports did not
and will not, as of their respective dates, contain an untrue statement
of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that 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 a Purchaser through Xxxxxxx,
Sachs & Co. expressly for use therein;
(b) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in
the Offering Circular 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 Offering Circular; and, since the respective dates as of which
information is given in the Offering Circular, there has not been any
change in the capital stock (other than (i)
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any change in the capital stock resulting from the exercise of stock
options, (ii) the issuance of shares under the Company's stock option or
other benefit or incentive plans, (iii) the conversion of shares of the
Company's 7 1/4% Junior Convertible Preferred Stock (the "Junior
Convertible Preferred Stock") and (iv) the payment of 9,655 shares of 12
1/2% Junior Exchangeable Preferred Stock (the "Junior Exchangeable
Preferred Stock") on February 15, 1998 and the payment of Junior
Convertible Preferred Stock scheduled for March 31, 1998 as
payment-in-kind dividends) 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, otherwise
than as set forth or contemplated in the Offering Circular;
(c) The Company and its subsidiaries have good and marketable
title in fee simple to all material real property and good and
marketable title to all material personal property owned by them, in
each case free and clear of all liens, encumbrances and defects except
such as are described in the Offering Circular 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 material real property and material 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;
(d) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Offering
Circular, 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, or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction; and 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;
(e) The Company has an authorized capitalization as set forth in
the Offering Circular, and all of the issued shares of capital stock of
the Company have been duly and validly authorized and issued and are
fully paid and non-assessable; the shares of Stock initially issuable
upon conversion of the Shares have been duly and validly authorized and
reserved for issuance and, when issued and delivered in accordance with
the provisions of the Shares, will be duly and validly issued, fully
paid and non-assessable and will conform to the description of the Stock
contained in the Offering Circular; and all of the issued shares of
capital stock of each subsidiary of the Company, except for Mutual
Signal Holding Corporation, PSINet Inc., UniDial Communications
Services, LLC, U.S. Advantage Long Distance, Inc., Progress
International L.L.C., Marca-Tel S.A. de C.V. and Telenor S.A., have been
duly and
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validly authorized and issued, are fully paid and non-assessable and
(except for directors' qualifying shares and except as otherwise set
forth in the Offering Circular) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims;
the holders of outstanding shares of capital stock of the Company are
not entitled to preemptive or other rights to acquire the Shares; there
are no outstanding securities, securities convertible into or
exchangeable for, or warrants, rights or options to purchase from the
Company, or obligations of the Company to issue, the Preferred Stock or
any other class of capital stock of the Company (except as set forth in
the Offering Circular under "Description of Capital Stock" and in
connection with the Company's stock option or other benefit or incentive
plans, the conversion of shares of the Junior Convertible Preferred
Stock and the payment of payment-in-kind dividends on the Exchangeable
Preferred Stock and the Junior Convertible Preferred Stock); the
Preferred Stock may be freely deposited by the Company with the
Depositary against issuances of Depositary Receipts; the Shares are
freely transferable by the Company to or for the account of the several
Purchasers and (to the extent described in the Offering Circular) the
initial purchasers thereof; and there are no restrictions on subsequent
transfers of the Shares under the laws of the United States except as
described in the Offering Circular under "Notice to Investors";
(f) The Shares, the Preferred Stock and the Stock 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
Shares, the Preferred Stock and the Stock contained in the Offering
Circular;
(g) The Deposit Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid and legally binding
agreement of the Company, enforceable in accordance with its terms,
subject, as to enforceability, to bankruptcy, insolvency, reorganization
and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; upon issuance by the
Depositary of Depositary Receipts evidencing Shares the deposit of
Preferred Stock in respect thereof in accordance with the provisions of
the Deposit Agreement, such Depository Receipts will be duly and validly
issued and the persons in whose names the Depositary Receipts are
registered will be entitled to the rights specified therein and in the
Deposit Agreement; and the Deposit Agreement and the Depositary Receipts
conform in all material respects to the descriptions thereof contained
in the Offering Circular;
(h) Prior to the date hereof, neither the Company nor any of its
affiliates has taken any action which is designed to or which has
constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of the
Company in connection with the offering of the Shares;
(i) The issue and sale of the Shares by the Company and the
compliance by the Company with all of the provisions of the Shares, the
Certificate of Designations,
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the Deposit Agreement and this 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 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 Certificate of
Incorporation or By-laws of the Company or, to the best of the Company's
knowledge, 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, to the best of the
Company's knowledge, no consent, approval, authorization, order,
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
Shares, for the deposit of Preferred Stock being deposited with the
Depositary against issuance of Depositary Receipts evidencing the Shares
to be delivered or the consummation by the Company of the transactions
contemplated by this Agreement or the Certificate of Designations,
except 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 Purchasers;
(j) Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or By-laws or in default
in the performance or observance of any material obligation, 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;
(k) The statements set forth in the Offering Circular under the
caption "Description of Depositary Shares", "Description of Convertible
Preferred Stock" and "Description of Capital Stock", insofar as they
purport to constitute a summary of the terms of the Shares, the
Preferred Stock and the Stock, respectively, under the caption
"Description of Certain Indebtedness" and "Certain U.S. Federal Income
Tax Consequences", insofar as they purport to describe the provisions of
the laws and documents referred to therein, and under the caption
"Underwriting", insofar as it purports to describe the provisions of
this Agreement, are accurate, complete and fair;
(l) Except for Xxxxxx Breed, et. al. vs. U.S. Advantage Long
Distance, Inc., IXC Long Distance, Inc., IXC Communications, Inc., et.
al. In the District Court of Xxxxxx County, Texas, Case No. 9705729 and
IXC Long Distance, Inc. vs. Building Futures in Communications, Inc.
Arbitration, Austin, Texas, or as set forth in the Offering Circular and
the Exchange Act Reports, 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 on the current or future financial
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position, shareholders' equity or results of operations of the Company
and its subsidiaries; and, to the best of the Company's knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(m) When the Shares are issued and delivered pursuant to this
Agreement, the Shares will not be of the same class (within the meaning
of Rule 144A under the United States Securities Act of 1933, as amended
(the "Act")), as securities which are listed on a national securities
exchange registered under Section 6 of the Exchange Act, or quoted in a
U.S. automated inter-dealer quotation system;
(n) The Company is subject to Section 13 or 15(d) of the Exchange
Act;
(o) The Company is not, and after giving effect to the offering
and sale of the Shares, will not be an "investment company", or, except
for Grumman Hill Associates, L.P., Grumman Hill Associates, Inc. and
General Electric Pension Trust, an entity "controlled" by an "investment
company", as such terms are defined in the United States Investment
Company Act of 1940, as amended (the "Investment Company Act");
(p) Neither the Company, nor any person acting on its behalf has
offered or sold the Shares by means of any general solicitation or
general advertising within the meaning of Rule 502(c) under the Act by
means of any directed selling efforts within the meaning of Rule 902
under the Act and the Company, any affiliate of the Company and any
person acting on its or their behalf has complied with and will
implement the "offering restriction" within the meaning of such Rule
902; provided, however, that the Company makes no representation,
warranty or agreement with respect to the activities of any of the
Purchasers;
(q) Within the preceding six months, neither the Company nor any
other person acting on behalf of the Company has offered or sold to any
person any Shares, or any securities of the same or a similar class as
the Shares, other than Shares offered or sold to the Purchasers
hereunder. The Company will take reasonable precautions designed to
insure that any offer or sale, direct or indirect, in the United States
or to any U.S. person (as defined in Rule 902 under the Act) of any
Shares or any substantially similar security issued by the Company,
within six months subsequent to the date on which the distribution of
the Shares has been completed (as notified to the Company by Xxxxxxx,
Sachs & Co.), is made under restrictions and other circumstances
reasonably designed not to affect the status of the offer and sale of
the Shares in the United States and to U.S. persons contemplated by this
Agreement as transactions exempt from the registration provisions of the
Act;
(r) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Section 517.075, Florida Statutes;
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(s) Ernst & Young LLP, 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;
(t) The Company and its subsidiaries (i) are in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are
in compliance with all terms and conditions of any such permit, license
or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a
whole;
(u) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole;
(v) The Company has obtained the written agreement described in
Section 7(m) of this Agreement from trustees of the General Electric
Pension Trust, the EMS 1994 Trust, the RJS 1994 Trust, the Xxxxx Family
Limited Partnership, the Xxxxx Family Limited Partnership #2, the Xxxxx
Family Limited Partnership #3, Xxxxxxxx Xxxxx Charitable Remainder
Unitrust Ltd, Grumman Hill Investments, L.P., Xxxxxxx & XxXxxxxx Profit
Sharing and Savings Plan for the benefit of Xxxx X. XxXxxxxx, Xxxxxx and
Xxxx Xxxxxxxx Living Trust and certain of its directors and executive
officers.
(w) Each of the Company and its subsidiaries has all necessary
licenses, consents, authorizations, approvals, orders, certificates and
permits of and from, and has made all declarations and filings with, all
federal, state, local, supranational, foreign and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals, to own, lease, license and use its properties and assets and
to conduct its business in the manner described in the Offering
Circular, the failure of which to obtain would have a material adverse
effect on the Company; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification, or non-renewal of any such license, consent,
authorization, approval, order, certificate or permit which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the Company and its
subsidiaries, taken as a whole, except as described in the Offering
Circular;
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(x) The Company and its subsidiaries own or possess, or can
acquire on reasonable terms, all material patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and trade
names currently employed by them in connection with the business now
operated by them, and neither the Company nor any of its subsidiaries
has received any notice of infringement of or conflict with asserted
rights of others with respect to any of the foregoing which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(y) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which
they are engaged; neither the Company nor any of its subsidiaries has
been refused any insurance coverage sought or applied for; and neither
the Company nor any of its subsidiaries has any reason to believe that
it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, except as described in the Offering
Circular; and
(z) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to
any differences.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to each of the Purchasers, and each of the Purchasers
agrees, severally and not jointly, to purchase from the Company, at a purchase
price per share of $50.00, the number of Shares set forth opposite the name of
such Purchasers in Schedule I hereto and (b) in the event and to the extent that
the Purchasers shall exercise the election to purchase Optional Shares as
provided below, the Company agrees to issue and sell to each of the Purchasers,
and each of the Purchasers 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 Purchaser is entitled to purchase as set forth opposite the name of such
Purchaser in Schedule I hereto and the denominator of which is the maximum
number of Optional Shares that all of the
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Purchasers are entitled to purchase hereunder.
The Company hereby grants to the Purchasers the right to purchase at
their election up to 405,000 Optional Shares, in the aggregate, at the purchase
price per share set forth in the paragraph above, for the sole purpose of
covering over allotments 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 Time of Delivery (as defined in
Section 4 hereof) or, unless you and the Company otherwise agree in writing, no
earlier than two or later than ten business days after the date of such notice.
As compensation to the Purchasers for their commitments hereunder, the
Company at each Time of Delivery (as defined in Section 4 hereof) will pay to
Xxxxxxx, Xxxxx & Co., for the accounts of the several Purchasers, an amount
equal to $1.75 per share for the Shares to be delivered by the Company hereunder
at such Time of Delivery.
3. Upon the authorization by you of the release of the Firm Shares the
several Purchasers propose to offer the Firm Shares for sale upon the terms and
conditions set forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with the Company that:
(a) It will offer and sell the Shares only to persons who it
reasonably believes are "qualified institutional buyers" ("QIBs") within
the meaning of Rule 144A under the Act in transactions meeting the
requirements of Rule 144A;
(b) It is an Institutional Accredited Investor; and
(c) It will not offer or sell the Shares by any form of general
solicitation or general advertising, including but not limited to the
methods described in Rule 502(c) under the Act.
4. (a) The Shares to be purchased by each Purchaser hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Xxxxxxx, Sachs & Co. may request upon at least forty-eight hours' prior
notice to the Company, shall be delivered by or on behalf of the Company to
Xxxxxxx, Xxxxx & Co., through the facilities of The Depository Trust Company
("DTC"), for the account of such Purchaser, against payment by or on behalf of
such Purchaser of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified by the Company to Xxxxxxx, Sachs & 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 (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 time, on March 30, 1998 or such other
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time and date as Xxxxxxx, Xxxxx & Co. and the Company may agree upon in writing,
and, with respect to the Optional Shares, 9:30 a.m., New York time, on the date
specified by Xxxxxxx, Sachs & Co. in the written notice given by Xxxxxxx, Xxxxx
& Co. of the Purchasers' election to purchase such Optional Shares, or such
other time and date as Xxxxxxx, 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".
At each Time of Delivery, the Company will pay, or cause to be paid, the
commission payable at Time of Delivery to the Purchasers under Section 2 hereof
by wire transfer of Federal (same-day) funds to the account specified by
Xxxxxxx, Xxxxx & Co. at least forty-eight hours in advance.
(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 documents requested by the
Purchasers pursuant to Section 7(o) hereof, will be delivered at such time and
date at the offices of Shearman & Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (the "Closing Location"), and the Shares will be delivered at the
Designated Office, all at the 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
which 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 Purchasers:
(a) To prepare the Offering Circular in a form approved by you;
to make no amendment or any supplement to the Offering Circular which
shall be disapproved by you promptly after reasonable notice thereof;
and to furnish you with copies thereof;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares and the shares of Stock
issuable upon conversion of 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
complete 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) To furnish the Purchasers with four copies of the Offering
Circular and each amendment or supplement thereto signed by an
authorized officer of the Company
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with the independent accountants' report in the Offering Circular, and
any amendment or supplement containing amendments to the financial
statements covered by such report, signed by the accountants, and
additional copies thereof in such quantities as you may from time to
time reasonably request, and if, at any time prior to the expiration of
nine months after the date of the Offering Circular, any event shall
have occurred as a result of which the Offering Circular 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 light of the circumstances under which they
were made when such Offering Circular is delivered, not misleading, or,
if for any other reason it shall be necessary or desirable during such
same period to amend or supplement the Offering Circular, to notify you
and upon your request to prepare and furnish without charge to each
Purchaser and to any dealer in securities as many copies as you may from
time to time reasonably request of an amended Offering Circular or a
supplement to the Offering Circular which will correct such statement or
omission or effect such compliance;
(d) During the period beginning from the date hereof and
continuing until the date 90 days after the First Time of Delivery, the
Company will not, directly or indirectly, sell, offer to sell, solicit
an offer to buy, contract to sell, grant any option to purchase, or
otherwise transfer or dispose of, or register or announce the sale or
offering of any shares of capital stock of the Company, or any
securities that are convertible into or exercisable or exchangeable for
capital stock of the Company, without the prior written consent of
Xxxxxxx, Xxxxx & Co. Notwithstanding the foregoing, the Company may,
without the prior written consent of Xxxxxxx, Sachs & Co. (1) grant new
stock options or warrants (i) to employees, directors or consultants of
the Company or (ii) in exchange for any existing options or warrants to
purchase any capital stock of Network Long Distance, Inc. ("NLD") and
(2) issue new shares of the Company's capital stock (i) upon the
exercise of stock options or warrants, (ii) in connection with the
acquisition of NLD, (iii) under the earnout provisions associated with
the acquisition of Telecom One, Inc. by the Company (iv) as
consideration in any merger with any company or business or acquisition
of controlling or non-controlling interest in any company or business
subsequent to the date of this Agreement, (v) upon the conversion of any
of the Shares or of any shares of the Junior Convertible Preferred Stock
by holders thereof, (vi) as payment -in-kind dividends on the Shares,
the shares of the Junior Convertible Preferred Stock or the shares of
the Junior Exchangeable Preferred Stock, or (vii) in connection with a
stock split;
(e) Not to be or become, at any time prior to the expiration of
three years after the Time of Delivery, an open-end investment company,
unit investment trust, closed-end investment company or face-amount
certificate company that is or is required to be registered under
Section 8 of the Investment Company Act;
(f) At any time when the Company is not subject to Section 13 or
15(d) of the Exchange Act, for the benefit of holders from time to time
of Shares, to furnish at its expense, upon request, to holders of Shares
and prospective purchasers of securities
12
information (the "Additional Issuer Information") satisfying the
requirements of subsection (d)(4)(i) of Rule 144A under the Act;
(g) If requested by you, to use its best efforts to cause the
Shares to be eligible for the PORTAL trading system of the National
Association of Securities Dealers, Inc.;
(h) To furnish to the holders of the Shares 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 flows 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 date of the Offering
Circular), upon written request to the Company, consolidated summary
financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
(i) During a period of three years from the date of the Offering
Circular, to furnish to you, upon written request to the Company, copies
of all reports or other communications (financial or other) furnished to
holders of Shares, Preferred Stock or shares of Stock issuable as
dividends thereon or upon conversion thereof, and to deliver to you (i)
as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any securities
exchange on which the Shares, or any class of securities of the Company
is listed; 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);
(k) During the period of two years after the Time of Delivery,
the Company will not, and will not permit any of its "affiliates" (as
defined in Rule 144 under the Act) to, resell any of the Shares which
constitute "restricted securities" under Rule 144 that have been
reacquired by any of them;
(l) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the
Offering Circular under the caption "Use of Proceeds";
(m) Prior to each Time of Delivery to deposit the Preferred Stock
with the Depositary in accordance with the provisions of the Deposit
Agreement and otherwise to comply with the Deposit Agreement so that
Depositary Receipts evidencing Shares will be executed (and, if
applicable, countersigned) and issued by the Depositary against receipt
of such Preferred Stock and delivered to the Purchasers at such Time of
Delivery; and
(n) To reserve and keep available at all times, free of
preemptive rights,
13
shares of Stock for the purpose of enabling the Company to satisfy any
obligations to issue shares of its Stock upon conversion of the Shares.
6. The Company covenants and agrees with the several Purchasers that 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
issue of the Shares and all other expenses in connection with the preparation
and printing of the Preliminary Offering Circular and the Offering Circular and
any amendments and supplements thereto and the mailing and delivering of copies
thereof to the Purchasers and dealers; (ii) the cost of printing or producing
any Agreement among Purchasers, the Deposit Agreement, this Agreement, the
Certificate of Designations, the Blue Sky and Legal Investment Memoranda,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Shares
(excluding fees of counsel except as allowed by (iii) below); (iii) all
reasonable 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 fees and disbursements of counsel for the Purchasers in
connection with such qualification and in connection with the Blue Sky and legal
investment surveys; (iv) any fees charged by securities rating services for
rating the Shares; (v) the cost of preparing the Shares; (vi) the fees and
expenses in connection with the Certificate of Designations and the Shares;
(vii) any cost incurred in connection with the designation of the Shares for
trading in PORTAL and the listing of the shares of Stock issuable upon
conversion of the Shares and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, and Sections 8 and 11 hereof, the Purchasers will pay
all of their own costs and expenses, including the fees of their counsel,
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 Purchasers 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 herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) Shearman & Sterling, counsel for the Purchasers, shall have
furnished to you such opinion or opinions, dated such Time of Delivery,
with respect to the matters covered in paragraphs (i), (ii), (iii),
(viii), (ix), (xiii), (xv) and (xvi) of subsection (b) 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;
(b) Xxxxxxx & XxXxxxxx, counsel for the Company, shall have
furnished to you their written opinion, dated such Time of Delivery, in
form and substance satisfactory to you, to the effect that:
14
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, with corporate power and authority to own its
properties and conduct its business as described in the Offering
Circular;
(ii) The Deposit Agreement has been duly executed and
delivered by the Company and, assuming due authorization,
execution and delivery of the Deposit Agreement by the Depositary
and that each of the Depositary and the Company has full power,
authority and legal right to enter into and perform its
obligations thereunder, constitutes a valid and legally binding
agreement of the Company, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, reorganization and
similar laws of general applicability relating or affecting
creditors' rights generally and to general principles of equity;
and the statements set forth under the heading "Description of
Depositary Shares" in the Offering Circular, insofar as such
statements purport to summarize certain provisions of the Deposit
Agreement, fairly summarize, in all material respects, such
provisions;
(iii) Upon due issuance by the Depositary of the Master
Depositary Receipts evidencing Shares being delivered at such
Time of Delivery against the deposit of Preferred Stock to be
deposited by the Company in respect thereof in accordance with
the provisions of the Deposit Agreement, such Master Depositary
Receipt will be duly and validly issued and the person in whose
name the Master Depositary Receipt is registered will be entitled
to the rights specified therein and in the Deposit Agreement;
(iv) The Company has an authorized capitalization as set
forth in the Offering Circular, and all of the issued shares of
capital stock of the Company (including the Preferred Stock 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 of Stock initially issuable upon conversion of the
Shares have been duly and validly authorized and reserved for
issuance and, when issued and delivered in accordance with the
provisions of the Preferred Stock and the Certificate of
Designations, will be duly and validly issued and fully paid and
non-assessable, and will conform to the description of the Stock
contained in the Offering Circular;
(v) The Company 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 so
qualify or remain in good standing would not in the aggregate
have a material adverse effect on the current or future
consolidated financial position, shareholders' equity or results
of operations of the Company and its subsidiaries taken as a
15
whole (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel and in
respect of matters of fact upon certificates of officers of the
Company, provided that such counsel shall state that they believe
that both you and they are justified in relying upon such
opinions and certificates);
(vi) 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, except for Mutual Signal Holding Corporation, PSINet
Inc., UniDial Communications Services, LLC, U.S. Advantage Long
Distance, Inc., Progress International L.L.C., Marca-Tel S.A. de
C.V. and Telenor S.A., have been duly and validly authorized and
issued, are fully paid and non-assessable, and (except for
directors' qualifying shares and except as otherwise set forth in
the Offering Circular) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or
claims (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel and in
respect of matters of fact upon certificates of officers of the
Company or its subsidiaries, provided that such counsel shall
state that they believe that both you and they are justified in
relying upon such opinions and certificates);
(vii) To the best of such counsel's knowledge and except
for Xxxxxx Breed, et. al. vs. U.S. Advantage Long Distance, Inc.,
IXC Long Distance, Inc., IXC Communications, Inc., et. al. In the
District Court of Xxxxxx County, Texas, Case No. 9705729 and IXC
Long Distance, Inc. vs. Building Futures in Communications, Inc.
Arbitration, Austin, Texas, or as set forth in the Offering
Circular and the Exchange Act Reports, 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 on the current or future consolidated financial position,
shareholders' equity or results of operations of the Company and
its subsidiaries taken as a whole; and, to the best of such
counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by
others;
(viii) This Agreement has been duly authorized, executed
and delivered by the Company;
(ix) The Certificate of Designations has been duly
authorized and executed by the parties thereto and constitutes a
valid and legally binding instrument, enforceable in accordance
with its terms;
(x) The issue and sale of the Shares and Preferred Stock
being
16
delivered at such Time of Delivery to be sold by the Company,
the deposit of the Preferred Stock being deposited by the
Company with the Depositary against issuance of the Shares
evidencing the Depositary Receipts to be delivered at such Time
of Delivery by the Company and the compliance by the Company
with all of the provisions of the Certificate of Designations,
the Deposit Agreement and this Agreement and the consummation of
the transactions herein and therein contemplated will not (i)
result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company, or (ii) to the best of
such counsel's knowledge, result in a breach or violation of any
of the terms and provisions of, or constitute a default under,
any statute, rule or regulation or any order of any governmental
agency or body or any court having jurisdiction over the Company
or any of its subsidiaries or any of their properties (other
than federal, state, local or foreign communications laws or
rules, regulations or policies of the Federal Communications
Commission ("FCC"), as to which no opinion is expressed), or any
agreement or instrument filed with the Commission as an exhibit
to any registration statement filed by the Company under the Act
prior to the date hereof, or as an exhibit to any Exchange Act
Report, to which the Company or any such subsidiary is a party
or by which either the Company or any such subsidiary is bound
or to which any of the property or assets of the Company or any
of its subsidiaries is subject, except where such breach,
violation or default would not in the aggregate have a material
adverse effect on the current or future consolidated financial
position, shareholders' equity or results of operations of the
Company and its subsidiaries taken as a whole;
(xi) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale
of the Shares, the deposit of the Preferred Stock being
deposited by the Company with the Depositary against issuance of
Shares evidencing the Depositary Receipts to be delivered at
such Time of Delivery by the Company or the consummation by the
Company of the transactions contemplated by this Agreement,
except such as may be required under the Act in connection with
the shares of Stock issuable upon conversion 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 Purchasers or as may be required by federal,
state, local or foreign communication laws or rules, regulation
or policies of the FCC;
(xii) Neither the Company nor any of its subsidiaries is
in violation of its Certificate of Incorporation or By-laws or
in default in the performance or observance of any material
obligation, 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 the effect of which would
cause a material adverse effect;
17
(xiii) The statements set forth in the Offering Circular
under the caption "Description of Depositary Shares",
"Description of Convertible Preferred Stock" and "Description of
Capital Stock", insofar as they purport to constitute a summary
of the terms of the Shares and the Stock, respectively, under the
caption "Description of Certain Indebtedness" and "Certain U.S.
Federal Income Tax Consequences", insofar as they purport to
describe the provisions of the laws and documents referred to
therein, and under the caption "Underwriting" insofar as it
purports to describe the provisions of this Agreement, fairly
summarize, in all material respects, such provisions;
(xiv) In the course of the preparation of the Exchange Act
Reports (other than the financial statements and related
schedules therein, as to which such counsel need express no
opinion), we have participated in conferences with officers and
representatives of the Company and with the Company's independent
public accountants and you and your counsel, at which conferences
the contents of the Exchange Act Reports were discussed. Although
we have not independently verified the accuracy, completeness or
fairness of the statements made in the Exchange Act Reports, and
do not assume any responsibility for the accuracy, completeness
or fairness of such statements, on the basis of the foregoing,
relying as to materiality largely upon facts provided to us by,
and opinions as to factual matters of, officers and
representatives of the Company and its subsidiaries and without
independent verification, no facts came to our attention that
caused us to believe that: the Exchange Act Reports, when filed
with the Commission, contained any untrue statement of a
material fact or omitted to state any material fact necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading (except that we express no
opinion or belief with respect to the financial statements or
the notes and schedules thereto, pro forma or other financial or
statistical data included in the Exchange Act Reports);
(xv) Assuming the accuracy of the representations of the
Purchasers contained in Section 3 hereof, no registration of the
Shares under the Act is required for the offer, sale and initial
resale of the Shares by the Purchasers in the manner contemplated
by this Agreement;
(xvi) In the course of the preparation of the Offering
Circular, we have participated in conferences with officers and
representatives of the Company and with the Company's independent
public accountants and you and your counsel, at which conferences
the contents of the Offering Circular were discussed. Although we
have not independently verified the accuracy, completeness or
fairness of the statements made in the Offering Circular, and do
not assume any responsibility for the accuracy, completeness or
fairness of such statements, on the basis of the foregoing,
relying as to materiality largely upon facts provided to us by,
and opinions as to factual matters of, officers and
18
representatives of the Company and its subsidiaries and without
independent verification, no facts came to our attention that
caused us to believe that: the Offering Circular, as amended or
supplemented by the Company prior to the Time of Delivery, as of
the date hereof contains any untrue statement of a material fact
or omitted to state any material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading (except that we express no opinion
or belief with respect to the financial statements or the notes
and schedules thereto, pro forma or other financial or
statistical data included in the Offering Circular);
(xvii) The Company is not an "investment company" or,
except for Grumman Hill Investments, L.P., Grumman Hill
Associates, Inc. and General Electric Pension Trust, an entity
"controlled" by an "investment company", as such terms are
defined in the Investment Company Act; and
(xviii)To the best of counsel's knowledge, the Company and
its subsidiaries possess and are in compliance with all patents,
trademarks, franchises, permits, licenses (including without
limitation all software licenses) and similar items as well as
electronic data processing, electronic funds transfer and other
contracts, agreements, leases and arrangements necessary or
material to the conduct of its business as presently conducted
or proposed to be conducted and as described in the Offering
Circular, except where failure to possess any of the foregoing
would not, singly or in the aggregate, have a material adverse
effect upon the business, prospects, properties, operations,
condition (financial or otherwise) or results of operations of
the Company and its subsidiaries taken as a whole; to the best
of counsel's knowledge, the Company has not received any notice
of infringement of or conflict with (and knows of no such
infringement of or conflict with) asserted rights of others with
respect to any patents, trademarks, service marks, trade names,
copyrights or know-how which could result in any material
adverse effect on the Company and its subsidiaries taken as a
whole; and, to the best of counsel's knowledge, except as
otherwise described in the Offering Circular, neither the
Company nor any of its subsidiaries has received any notice of
cancellation of the same or any notice of proceedings relating
to the revocation, suspension or modification of any of the
foregoing which, singly or in the aggregate, would result in a
material adverse change in the business, prospects, properties,
operations, condition (financial or otherwise) or results of
operations of the Company and its subsidiaries taken as a whole,
or which is required to be disclosed in the Offering Circular.
(c) Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol, U.S. regulatory
counsel for the Company, shall have furnished to you their written
opinion in the form attached hereto as Annex II, dated such Time of
Delivery;
(d) Counsel for the Depositary shall have furnished to you their
written
19
opinion, dated such Time of Delivery, in form and substance satisfactory
to you, to the effect that:
(i) The Deposit Agreement has been duly authorized,
executed and delivered by the Depositary and constitutes a valid
and legally binding obligation of the Depositary, enforceable in
accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization and similar laws of
general applicability relating to or affecting creditors' rights
and to general equity principles.
(e) On the date of the Offering Circular prior to the execution
of this Agreement and also at each Time of Delivery, Ernst & Young 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;
(f) On the date of the Offering Circular prior to the execution
of this Agreement and also at each Time of Delivery, Xxxxxx Xxxxxxxx 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;
(g) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial statements
included in the Offering Circular any 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 Offering Circular, and (ii) since the respective dates as of which
information is given in the Offering Circular there shall not have been
any change in the capital stock or long-term debt of the Company or any
of its subsidiaries (other than any change in the capital stock
resulting from the exercise of stock options, the issuance of shares
under the Company's stock option or other benefit or incentive plans or
the conversion of shares of the Junior Convertible Preferred Stock) or
any change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Offering Circular, the effect of which, in any such case described in
Clause (i) or (ii), is in the judgment of the Purchasers 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 this
Agreement and in the Offering Circular;
(h) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities or
preferred stock 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
20
implications, its rating of any of the Company's debt securities or
preferred stock;
(i) 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 on the Nasdaq
National Market; (ii) a suspension or material limitation in trading in
the Company's securities on the Nasdaq National Market; (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 Purchasers makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares on the terms and in the manner contemplated in
the Offering Circular;
(j) The Shares have been designated for trading on PORTAL;
(k) On or before the 14th calendar day following the First Time
of Delivery, the shares of Stock issuable upon conversion of the Shares
shall have been duly listed for quotation on the Nasdaq National Market;
(l) The Company shall have furnished or caused to be furnished to
you at the Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery, as
to the performance by the Company of all of its 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 as to such other
matters as you may reasonably request;
(m) The trustee of each of the General Electric Pension Trust,
the EMS 1994 Trust, the RJS 1994 Trust, the Xxxxx Family Limited
Partnership, the Xxxxx Family Limited Partnership #2, the Xxxxx Family
Limited Partnership #3, Xxxxxxxx Xxxxx Charitable Remainder Unitrust
Ltd, Grumman Hill Investments, L.P., Xxxxxxx & XxXxxxxx Profit Sharing
and Savings Plan for the benefit of Xxxx X. XxXxxxxx, Xxxxxx and Xxxx
Xxxxxxxx Living Trust and certain of the directors, and executive
officers of the Company shall have furnished to Xxxxxxx, Sachs & Co. a
written agreement, prior to the date hereof, to the effect set forth in
Annex III hereto;
(n) Grumman Hill Associates Inc. shall have furnished to Xxxxxxx,
Sachs & Co. a written agreement, prior to the First Time of Delivery, to
the effect set forth in Annex III hereto; and
(o) The Depositary shall have furnished or caused to be furnished
to you at such Time of Delivery certificates satisfactory to you
evidencing the deposit with it of the Preferred Stock being so deposited
against issuance of Depositary Receipts evidencing the Shares to be
delivered by the Company at such Time of Delivery, and
21
the execution, countersignature (if applicable), issuance and delivery
of Depositary Receipts evidencing such Shares pursuant to the Deposit
Agreement.
8. (a) The Company will indemnify and hold harmless each Purchaser
against any losses, claims, damages or liabilities, joint or several, to which
such Purchaser 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 Offering Circular or the Offering
Circular, 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 necessary
to make the statements therein not misleading, and will reimburse each Purchaser
for any legal or other expenses reasonably incurred by such Purchaser 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 Offering Circular or the
Offering Circular or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Purchaser
through Xxxxxxx, Xxxxx & Co. expressly for use therein.
(b) Each Purchaser will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company 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 Offering Circular or the Offering Circular, 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 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 Offering Circular or the Offering Circular
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such Purchaser through Xxxxxxx,
Sachs & Co. expressly for use therein; and will reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) 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
22
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.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) 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 on the one hand and the Purchasers 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 (c) 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 of the Company on the one hand and the Purchasers on
the other in connection with the statements or omissions 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 on the one hand and the Purchasers 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 bear to the total underwriting
discounts and commissions received by the Purchasers, in each case as set forth
in the Offering Circular. 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 on the one hand or the Purchasers
on the other and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Purchasers agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Purchasers 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 (d). 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 (d) 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
23
subsection (d), no Purchaser 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 investors were offered to investors exceeds the amount
of any damages which such Purchaser has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. The
Purchasers' obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Purchaser within the meaning of the Act; and the obligations of the Purchasers
under this Section 8 shall be in addition to any liability which the respective
Purchasers may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company within the meaning of the Act.
9. (a) If any Purchaser 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 Purchaser you do not arrange for the purchase of such Shares,
then the Company shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to you to
purchase such Shares on such terms. In the event that, within the respective
prescribed periods, you notify the Company that you have so arranged for the
purchase of such Shares, or the Company notifies you that it has so arranged for
the purchase of such Shares, you or the Company 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 Offering Circular,
or in any other documents or arrangements, and the Company agrees to prepare
promptly any amendments to the Offering Circular which in your opinion may
thereby be made necessary. The term "Purchaser" 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 Purchaser or Purchasers by you and the Company 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 shall have
the right to require each non-defaulting Purchaser to purchase the number of
Shares which such Purchaser agreed to purchase hereunder and, in addition, to
require each non-defaulting Purchaser to purchase its pro rata share (based on
the number of Shares which such
Purchaser agreed to purchase hereunder) of the Shares of such defaulting
Purchaser or Purchasers for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Purchaser from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a)
24
above, the aggregate number of 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 shall not exercise the right described in
subsection (b) above to require non-defaulting Purchasers to purchase Shares of
a defaulting Purchaser or Purchasers, then this Agreement (or, with respect to
the Second Time of Delivery, the obligations of the Purchasers to purchase and
of the Company to sell the Optional Shares) shall thereupon terminate, without
liability on the part of any non-defaulting Purchaser or the Company, except for
the expenses to be borne by the Company and the Purchasers as provided in
Section 6 hereof and the indemnity and contribution agreements in Section 8
hereof; but nothing herein shall relieve a defaulting Purchaser from liability
for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Purchasers, 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 Purchaser or any controlling person of any Purchaser, or the Company, or
any officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Purchaser 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 as provided herein, the Company
will reimburse the Purchasers through you for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Purchasers in making preparations for the purchase,
sale and delivery of the Shares not so delivered, but the Company shall then be
under no further liability to any Purchaser except as provided in Sections 6 and
8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or given
by you jointly or by Xxxxxxx, Xxxxx & Co. on behalf of you as the
representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Xxxxxxx, Sachs &
Co., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the Offering
Circular, Attention: Secretary; provided, however, that any notice to a
Purchaser pursuant to Section 8(c) hereof shall be delivered or sent by mail,
telex or facsimile transmission to such Purchaser at its address set forth in
its Purchasers' 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
25
Purchasers, the Company 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 or any Purchaser, 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
Purchaser shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement.
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 respective 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 Purchasers plus one for
each counsel counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Purchasers, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Purchasers and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Purchasers is pursuant to the authority set forth in a form of Agreement among
Purchasers, the form of which shall be submitted to the Company for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.
26
Very truly yours,
IXC COMMUNICATIONS, INC.
By: /s/ XXXXXX X. XXXXXXX
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Accounting Officer
Accepted as of the date hereof:
Xxxxxxx, Xxxxx & Co.
Credit Suisse First Boston Corporation
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxx Xxxxxxx & Co. Incorporated
By: /s/ XXXXXXX, SACHS & CO.
------------------------------------------
(Xxxxxxx, Xxxxx & Co.)
On behalf of each of the Purchasers
27
SCHEDULE I
AGGREGATE
LIQUIDATION
AGGREGATE AMOUNT OF
LIQUIDATION OPTIONAL SHARES
AMOUNT OF TO BE PURCHASED
FIRM SHARES IF MAXIMUM
TO BE OPTION
PURCHASED EXERCISED
--------- ---------
PURCHASER
---------
Xxxxxxx, Sachs & Co $67,500,000 $10,125,000
Credit Suisse First Boston Corporation 27,000,000 4,050,000
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated 13,500,000 2,025,000
Xxxxxx Xxxxxxx & Co. Incorporated 27,000,000 4,050,000
Total $135,000,000 $20,250,000
============= ===========
28
ANNEX I
Pursuant to Section 7(e) and (f) of the Purchase Agreement, the
accountants shall furnish letters to the Purchasers to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Securities Exchange Act of 1934 (the "Exchange Act") and the applicable
published rules and regulations thereunder,
(ii) In their opinion, the consolidated financial statements and
financial statement schedules audited by them and included in the
Offering Circular comply as to form in all material respects with the
applicable requirements of the Exchange Act and the related published
rules and regulations;
(iii) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the Offering
Circular agrees with the corresponding amounts (after restatements where
applicable) in the audited consolidated financial statements for such
five fiscal years;
(iv) On the basis of limited procedures not constituting an audit
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 Offering Circular,
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) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash
flows included in the Offering Circular are not in conformity
with generally accepted accounting principles applied on the
basis substantially consistent with the basis for the audited
condensed consolidated statements of income, consolidated balance
sheets and consolidated statements of cash flows included in the
Offering Circular;
(B) any other unaudited income statement data and balance
sheet items included in the Offering Circular 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
29
in the Offering Circular;
(C) the unaudited financial statements which were not
included in the Offering Circular 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 Offering Circular 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 Offering Circular;
(D) any unaudited pro forma consolidated condensed
financial statements included in the Offering Circular do not
comply as to form in all material respects with the applicable
accounting requirements 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 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
Offering Circular) or any increase in the consolidated long-term
debt of the Company and its subsidiaries, or any decreases in
consolidated net current assets or stockholders' equity or other
items specified by the Purchasers, or any increases in any items
specified by the Purchasers, in each case as compared with
amounts shown in the latest balance sheet included in the
Offering Circular except in each case for changes, increases or
decreases which the Offering Circular 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 Offering Circular to the specified
date referred to in Clause (E) there were any decreases in
consolidated net revenues or operating profit or the total
consolidated net income or other items specified by the
Purchasers, or any increases in any items specified by the
Purchasers, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Purchasers, except in each case for
decreases or increases which the Offering Circular discloses have
occurred or may occur or which are described in such letter; and
(v) In addition to the examination referred to in their report(s)
included in the Offering Circular and the limited procedures, inspection
of minute books, inquiries and other procedures referred to in
paragraphs (iii) and (iv) above, they have carried out certain specified
procedures, not constituting an audit in accordance with generally
accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Purchasers, which
are derived from the general accounting
30
records of the Company and its subsidiaries, which appear in the
Offering Circular, 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.
31
ANNEX II
OPINION OF U.S. REGULATORY COUNSEL FOR THE COMPANY
Attach opinion of U.S. regulatory counsel for the Company, to be
delivered pursuant to Section 7(c) of the Purchase Agreement to the effect that:
(i) (A) the execution and delivery by the Company of, and
performance of its obligations under, the Purchase Agreement, the
Certificate of Designations and the Shares do not violate (1) the
Federal Communications Act of 1934, as amended (the "Communications
Act"), any rules or regulations of the Federal Communications Commission
("FCC") applicable to the Company, (2) any state or local law, rule or
regulation relating to telecommunications applicable to the Company
("State Law") or (3) to the best of such counsel's knowledge after due
inquiry, any decree from any court or tribunal, and (B) no authorization
of or filing with the FCC or any state or local authority regulating
telecommunications services provided by the Company or any of its
subsidiaries, including state public utility commissions ("State
Authorities") is necessary for the execution and delivery by the Company
of, or the performance of its obligations under the Purchase Agreement,
Certificate of Designations or the Shares;
(ii) The Company and its subsidiaries are nondominant carriers
authorized by the FCC to provide interstate interexchange
telecommunications services. The Company and its subsidiaries have 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 each of the Company and its
subsidiaries has on file with the FCC tariffs applicable to its domestic
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 Offering Circular;
(iii) The Company and its subsidiaries are certified and/or
registered to resell intrastate interexchange telecommunications
services in New York and ________ and are authorized but not required to
be certified or registered, to resell intrastate interexchange
telecommunications services in Michigan and Washington D.C. Each of the
Company and its subsidiaries has a tariff on file in each state in which
it resells telecommunications services. No further authority is required
from any of the State Authorities by the Company or any of its
subsidiaries to conduct its business as described in the Offering
Circular;
(iv) (A) each of the Company and its subsidiaries (1) has paid
all fees required by the FCC and the State Authorities; and (2) has all
certificates, orders, permits, licenses, authorizations, consents and
approvals of and from, and has made all reports, filings and
registrations, with the FCC and the State Authorities, all self
regulatory organizations and all courts and tribunals necessary to own,
lease, license and use its properties and assets and to conduct its
business in the manner described in
32
the Offering Circular and is conducting its business in accordance
therewith; and (B) to the best of such counsel's knowledge after due
inquiry, neither the Company nor any of its subsidiaries has received
any notice of proceedings relating to the revocation, modification or
non-renewal of any such certificates, orders, permits, licenses,
authorizations, consents or approvals, or the qualification or rejection
of any such report, filing or registration, the effect of which, singly
or in the aggregate, would have a material adverse effect on the Company
and its subsidiaries, taken as a whole;
(v) neither the Company nor any of its subsidiaries is in
violation of, or in default under, the Communications Act, the
telecommunications rules or regulations of the FCC, or State Law the
effect of which, singly or in the aggregate, would have a material
adverse effect on the Company and its subsidiaries, taken as a whole;
(vi) to the best of such counsel's knowledge after due inquiry,
(A) no decree or order of the FCC or any State Authority has been issued
against the Company or any of its subsidiaries and (B) no litigation,
proceeding, inquiry or investigation has been commenced or threatened,
and no notice of violation or order to show cause has been issued,
against the Company or any of its subsidiaries before or by the FCC or
any State Authority. To the best of such counsel's knowledge after due
inquiry, there are no rulemakings or other administrative proceedings
pending before the FCC or any State Authority which (A) are generally
applicable to telecommunications services or the resale thereof and (B)
if decided adversely to the interests of the Company or any of its
subsidiaries, would have a material adverse effect on the Company and
its subsidiaries, taken as a whole; and
(vii) the statements in the Offering Circular under the captions
"Risk Factors--Regulation" and "Business--Regulatory Environment" and in
"Item 1--Business--Regulation" of the Company's most recent annual
report on Form 10-K, insofar as such statements constitute a summary of
the legal matters, documents or proceedings referred to therein, are
accurate in all material respects and fairly summarize all matters
referred to therein.
33
ANNEX III
March 24, 1998
Xxxxxxx, Xxxxx & Co.
Credit Suisse First Boston Corporation
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxx Xxxxxxx & Co. Incorporated
As representatives of the several
Purchasers
c/o Goldman, Sachs & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
IXC Communications, Inc.
Ladies and Gentlemen:
In connection with the proposed offering of 2,500,000 Depositary
Shares (the "Shares") each representing 1/20 of a share of Cumulative
Convertible Preferred Stock, par value $.01 per share of IXC Communications,
Inc., a Delaware corporation (the "Company"), pursuant to a Purchase Agreement
(the "Purchase Agreement") to be entered into by and among the Company and each
of you, as representatives of the several purchasers named therein (the
"Purchasers"), the undersigned hereby agrees that without the prior written
consent of Xxxxxxx, Xxxxx & Co. the undersigned will not, directly or
indirectly, sell, offer to sell, solicit an offer to buy, pledge, contract to
sell, grant any option to purchase, or otherwise transfer or dispose of, or
register or announce the sale or offering of any shares of capital stock of the
Company, or any securities that are convertible into or exercisable or
exchangeable for capital stock of the Company beneficially owned by them
beginning on the date of the Purchase Agreement and continuing for a period of
90 days following the date of such agreement or, if applicable, until the date
on which the Company notifies the undersigned that it no longer intends to
proceed with the proposed offering of Shares; provided, however, that the
undersigned may without such consent (i) exercise any outstanding stock options
granted pursuant to existing employee benefit plans of the Company referred to
in the Offering Circular (as defined in the Purchase Agreement), and (ii) with
prior notice to Xxxxxxx, Xxxxx & Co., make (x) bona fide gifts to persons, or
(y) transfers or sales to affiliates of the undersigned, in each case who agree
in writing with Xxxxxxx, Sachs & Co. to be bound by the provisions of this
letter. If for any reason the Purchase Agreement shall be terminated prior to
the First Time of Delivery (as defined in the Purchase Agreement), this letter
agreement shall likewise be terminated.
34
This letter is being executed as an inducement for the Purchasers
to execute the Purchase Agreement and is solely for the benefit of the
Purchasers and their respective successors, assigns, heirs and personal
representatives, and no other person shall acquire any right by virtue of this
letter. This letter shall be governed by and construed in accordance with the
laws of the State of New York. This letter may be amended, modified or
supplemented only by written instrument signed by the undersigned and Xxxxxxx,
Xxxxx & Co.
Very truly yours,
