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EXHIBIT 4.1
ALLEGIANCE TELECOM, INC.
PURCHASE AGREEMENT
January 29, 1998
Xxxxxx Xxxxxxx & Co. Incorporated
Salomon Brothers Inc
Bear, Xxxxxxx & Co. Inc.
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Allegiance Telecom, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to Xxxxxx Xxxxxxx & Co. Incorporated,
Salomon Brothers Inc, Bear, Xxxxxxx & Co. Inc. and Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation (collectively, the "Initial Purchasers") 445,000 Units
(the "Units"). Each Unit consists of one 11 3/4% Senior Discount Note due 2008
(a "Note") to be issued pursuant to the provisions of an Indenture to be dated
as of February 3, 1998 (the "Indenture") between the Company and The Bank of New
York (the "Trustee") and one Warrant (a "Warrant") entitling the holder thereof
to purchase .0034224719 shares (collectively, the "Warrant Shares") of Common
Stock, par value $.01 per share, of the Company (collectively, the "Common
Stock"), to be issued pursuant to the provisions of a Warrant Agreement, to be
dated as of February 3, 1998 (the "Warrant Agreement"), between the Company and
The Bank of New York (the "Warrant Agent").
The Units will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), to qualified
institutional buyers in compliance with the exemption from registration provided
by Rule 144A under the Securities Act, in offshore transactions in reliance on
Regulation S under the Securities Act ("Regulation S") and to institutional
accredited investors (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) that deliver a letter in the form annexed to the Final
Memorandum (as defined below).
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The Initial Purchasers and their direct and indirect
transferees will be entitled to the benefits of (i) a registration rights
agreement relating to the Notes (the "Notes Registration Rights Agreement"),
dated the date hereof, between the Company and the Initial Purchasers and (ii) a
registration rights agreement relating to the Warrants (the "Warrant
Registration Rights Agreement"), dated the date hereof, between the Company and
the Initial Purchasers.
In connection with the sale of the Units, the Company has
prepared a preliminary offering memorandum (the "Preliminary Memorandum") and
will prepare a final offering memorandum (the "Final Memorandum" and, with the
Preliminary Memorandum, each a "Memorandum") including a description of the
terms of the Units, the Notes and the Warrants and the Common Stock, the terms
of the offering and a description of the Company.
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, you that:
(a) The Preliminary Memorandum does not contain and the Final
Memorandum, in the form used by the Initial Purchasers to confirm sales and on
the Closing Date (as defined in Section 4), will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set forth
in this paragraph do not apply to statements or omissions in either Memorandum
based upon information relating to any Initial Purchaser furnished to the
Company in writing by such Initial Purchaser through you expressly for use
therein.
(b) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the State of
Delaware, has the corporate power and authority to own its property and to
conduct its business as described in each Memorandum and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole. Schedule A to the form of opinion of Xxxxxxxx &
Xxxxx, attached hereto as Exhibit A, sets forth each jurisdiction in which the
conduct of the Company's business or its ownership or leasing of property
requires it to be qualified to transact business and be in good standing.
(c) Each subsidiary of the Company has been duly incorporated,
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in each Memorandum and is
duly qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
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qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole; all of the issued shares of
capital stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned directly
by the Company, free and clear of all liens, encumbrances, equities or claims.
There are no active subsidiaries of the Company other than those listed on
Schedule A to the form of opinion of Xxxxxxxx & Xxxxx, attached hereto as
Exhibit A and such Schedule A sets forth each jurisdiction in which the conduct
of the Company's business or its ownership or leasing of property requires any
subsidiary of the Company to be qualified to transact business and be in good
standing.
(d) This Agreement has been duly authorized, executed and
delivered by the Company.
(e) The Notes have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Initial Purchasers in accordance with the terms of this
Agreement, will be valid and binding obligations of the Company enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles of
equity, and will be entitled to the benefits of the Indenture and the Notes
Registration Rights Agreement.
(f) The Warrants have been duly authorized and, when executed
and countersigned by the Warrant Agent in accordance with the terms of the
Warrant Agreement and delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, will be valid and binding
obligations of the Company enforceable in accordance with their terms, subject
to applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity and will be entitled to the benefits
of the Warrant Agreement and the Warrant Registration Rights Agreement.
(g) The Warrant Shares have been duly authorized and reserved
for issuance upon the exercise of the Warrants and, when issued and delivered
upon exercise of the Warrants in accordance with the terms of the Warrant
Agreement, will be validly issued, fully paid and non-assessable and will not be
subject to any preemptive or similar rights or taxes, liens, charges and
security interests.
(h) Each of the Indenture and the Warrant Agreement has been
duly authorized and, when executed and delivered by the Company, will be a valid
and binding agreement of the Company, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity.
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(i) Each of the Notes Registration Rights Agreement and the
Warrant Registration Rights Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles of
equity and except as rights to indemnification and contribution may be limited
under applicable law.
(j) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement, the
Indenture, the Warrant Agreement, the Notes Registration Rights Agreement, the
Warrant Registration Agreement, the Notes and the Warrants (collectively, the
"Transaction Documents"), and the issuance, sale and delivery of the Units, the
Notes and the Warrants and the issuance of the Warrant Shares upon exercise of
the Warrants, will not contravene any provision of applicable law or the
certificate of incorporation or by-laws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is material
to the Company and its subsidiaries, taken as a whole, or any judgment, order or
decree of any governmental body, agency or court having jurisdiction over the
Company or any subsidiary, and no permit, license, consent, approval,
authorization or order of, or filing, declaration or qualification with, any
governmental body or agency is required for the performance by the Company of
its obligations under the Transaction Documents, except such as may be required
by the securities or Blue Sky laws of the various states in connection with the
offer and sale of the Units, the Notes or the Warrants or the issuance of the
Warrant Shares upon exercise of the Warrants and by Federal and state securities
laws with respect to the Company's obligations under the Notes Registration
Rights Agreement and Warrant Registration Rights Agreement. Schedule B to the
form of opinion of Xxxxxxxx & Xxxxx, attached hereto as Exhibit A, sets forth
all material agreements and instruments to which the Company or any of its
subsidiaries is a party.
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, from that set forth in the Final
Memorandum. Furthermore, except in each case as described in the Final
Memorandum, (i) the Company and its subsidiaries have not incurred any material
liability or obligation, direct or contingent, nor entered into any material
transaction not in the ordinary course of business; (ii) neither the Company nor
any of its subsidiaries has purchased any of the Company's outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on the Company's capital stock; and (iii) there has not been any material
change in the capital stock, short-term debt or long-term debt of the Company
and its subsidiaries, taken as a whole.
(l) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the
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Company or any of its subsidiaries is subject other than proceedings accurately
described in all material respects in each Memorandum and proceedings that would
not have a material adverse effect on the Company and its subsidiaries, taken as
a whole, or on the power or ability of the Company to perform its obligations
under the Transaction Documents or to consummate the transactions contemplated
by the Final Memorandum.
(m) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act, an "Affiliate") of the Company
has directly, or through any agent, (i) sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the sale of the Units, Notes
or Warrants in a manner that would require the registration under the Securities
Act of the Units, the Notes or the Warrants or (ii) engaged in any form of
general solicitation or general advertising in connection with the offering of
the Units (as those terms are used in Regulation D under the Securities Act) or
in any manner involving a public offering within the meaning of Section 4(2) of
the Securities Act.
(n) The Company is not, and after giving effect to the
offering and sale of the Units and the application of the proceeds thereof as
described in the Final Memorandum, will not be an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended.
(o) Assuming the accuracy of the representations and
warranties of the Initial Purchasers in Section 7 below, it is not necessary in
connection with the offer, sale and delivery of the Units to the Initial
Purchasers in the manner contemplated by this Agreement to register the Units,
the Notes or the Warrants under the Securities Act or to qualify the Indenture
under the Trust Indenture Act of 1939, as amended.
(p) The Company and its subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants, including all such laws and regulations concerning electromagnetic
radio frequency emissions ("Environmental Laws"), (ii) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
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(q) 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.
(r) None of the Company, its Affiliates or any person acting
on its or their behalf has engaged or will engage in any directed selling
efforts (within the meaning of Regulation S) with respect to the Units, the
Notes or the Warrants and the Company and its Affiliates and any person acting
on its or their behalf have complied with and will comply with the offering
restrictions requirement of Regulation S, except no representation, warranty or
agreement is made by the Company in this paragraph with respect to the Initial
Purchasers.
(s) Except as described in or contemplated by each Memorandum,
the Company and each of its subsidiaries (i) have all necessary licenses,
consents, authorizations, approvals, orders, certificates and permits of and
from, and have made all declarations and filings with, all federal, state, local
and other governmental, administrative and regulatory authorities, all
self-regulatory organizations and all courts and other tribunals, to own, lease,
license and use its properties and assets and to conduct its business in the
manner described in each Memorandum, except to the extent that the failure to
obtain such licenses, consents, authorizations, approvals, orders, certificates
and permits or make such declarations and filings would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole and (ii)
have not received any notice of proceedings relating to revocation or
modification of any such license, consent, authorization, approval, order,
certificate or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would reasonably be expected to result
in a material adverse change in the condition, financial or otherwise, or in the
earnings, business or operations of the Company and its subsidiaries, taken as a
whole.
(t) 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.
(u) The Company and each of its subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its subsidiaries, taken as a
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whole, in each case free and clear of all liens, encumbrances and defects,
except such as are described in each Memorandum and such other liens as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
materially interfere with the use made and proposed to be made of such property
and buildings by the Company and its subsidiaries, in each case except as
described in or contemplated by each Memorandum.
(v) 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.
(w) No material labor dispute with the employees of the
Company or any of its subsidiaries exists or, to the knowledge of the Company,
is imminent; and the Company is not aware of any existing, threatened or
imminent labor disturbance by the employees of any of its principal suppliers,
manufacturers or contractors that could have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(x) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are customary in the businesses in which they are
engaged; neither the Company nor any of its subsidiaries has been refused any
insurance coverage sought or applied for; and neither the Company nor any of its
subsidiaries has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would have a material and adverse effect on the Company
and its subsidiaries, taken as a whole, except as described in or contemplated
by each Memorandum.
(y) All licenses issued by the Federal Communications
Commission (the "FCC Licenses") required for the operation of the business of
the Company and its subsidiaries are in full force and effect and there are no
pending modifications, amendments or revocation proceedings which would
adversely affect the operations of the Company and its subsidiaries. All fees
due and payable to governmental authorities pursuant to the rules governing FCC
Licenses have been paid and no event has occurred with respect to the FCC
Licenses held by
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the Company and its subsidiaries which, with the giving of notice or the lapse
of time or both, would constitute grounds for revocation thereof. Each of the
Company and its subsidiaries is in compliance in all material respects with the
terms of the FCC Licenses, as applicable, and there is no condition, event or
occurrence existing, nor is there any proceeding being conducted of which the
Company has received notice, nor, to the Company's knowledge, is there any
proceeding threatened, by any governmental authority, which would cause the
termination, suspension, cancellation or nonrenewal of any of the FCC Licenses,
or the imposition of any penalty or fine by any regulatory authority. No
registrations, filings, applications, notices, transfers, consents, approvals,
audits, qualifications, waivers or other action of any kind is required by
virtue of the execution and delivery of the Transaction Documents or of the
consummation of the transactions contemplated hereby, other than as previously
obtained from the FCC (a) to avoid the loss of any such license, permit,
consent, concession or other authorization or any asset, property or right
pursuant to the terms thereof, or the violation or breach of any applicable law
thereto or (b) to enable the Company or any of its subsidiaries to hold and
enjoy the same after the Closing Date (as defined herein) in the conduct of its
business as conducted prior to the Closing Date.
(z) Each of the Company and its subsidiaries is solvent and
has tangible and intangible assets having a fair value in excess of the amount
required to pay its probable liabilities on its existing debts as they become
absolute and matured, and has access to adequate capital for the conduct of its
business and the ability to pay its debts from time to time incurred in
connection therewith as such debts mature. Neither the Company nor any of its
subsidiaries is contemplating either the filing of a petition by it under any
state or federal bankruptcy or insolvency laws or the liquidating of all or a
substantial portion of its property, and neither the Company nor any of its
subsidiaries has any knowledge of any person contemplating the filing of any
such petition against it.
(aa) The Units, Notes and Warrants satisfy the requirements
set forth in Rule 144A(d)(3) under the Securities Act.
2. Agreement to Sell and Purchase. The Company hereby agrees
to sell to the several Initial Purchasers, and each Initial Purchaser, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to purchase
from the Company the respective amount of Units set forth in Schedule I hereto
opposite its name at a purchase price of $543.16955 per Unit, for an aggregate
purchase price of $241,710,449.75.
The Company hereby agrees that, without the prior written
consent of Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the Initial
Purchasers, it will not, during the period beginning on the date hereof and
continuing to and including the Closing Date, offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company or warrants to
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purchase debt securities of the Company substantially similar to the Notes or
Common Stock of the Company or warrants to purchase Common Stock of the Company
(other than the sale of the Units, Notes and Warrants under this Agreement and
commercial paper issued in the ordinary course of business).
3. Terms of Offering. You have advised the Company that the
Initial Purchasers will make an offering of the Units purchased by the Initial
Purchasers hereunder on the terms to be set forth in the Final Memorandum, as
soon as practicable after this Agreement is entered into as in your judgment is
advisable.
4. Payment and Delivery. Payment for the Units shall be made
to the Company in Federal or other funds immediately available in New York City
against delivery of such Units for the respective accounts of the several
Initial Purchasers at 10:00 a.m., New York City time, on February 3, 1998 or at
such other time on the same or such other date, not later than February 17,
1998, as shall be designated in writing by you. The time and date of such
payment are hereinafter referred to as the "Closing Date."
Certificates for the Notes and the Warrants shall be in
definitive form or global form, as specified by you, and registered in such
names and in such denominations as you shall request in writing not later than
one full business day prior to the Closing Date. The certificates evidencing the
Notes and the Warrants shall be delivered to you on the Closing Date for the
respective accounts of the Initial Purchasers, with any transfer taxes payable
in connection with the transfer of the Units, Notes or the Warrants to the
Initial Purchasers duly paid, against payment of the purchase price therefor
plus accrued amortization of original issue discount, if any, to the date of
payment and delivery.
5. Conditions to the Initial Purchasers' Obligations. The
several obligations of the Initial Purchasers to purchase and pay for the Units
on the Closing Date are subject to the following conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
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(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial
or otherwise, or in the earnings, business or operations, of the
Company and its subsidiaries, taken as a whole, from that set forth in
the Final Memorandum (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Units on the terms and in the manner
contemplated in the Final Memorandum.
(b) The Initial Purchasers shall have received on the Closing
Date a certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in Section 5(a)(i) above and to the effect
that the representations and warranties of the Company contained in this
Agreement are true and correct as of the Closing Date and that the Company has
complied with all of the agreements and satisfied all of the conditions on its
part to be performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely
upon the best of his or her knowledge as to proceedings threatened.
(c) The Initial Purchasers shall have received on the Closing
Date an opinion of Xxxxxxxx & Xxxxx, outside counsel for the Company, dated the
Closing Date, to the effect set forth in Exhibit A.
(d) The Initial Purchasers shall have received on the Closing
Date an opinion of Xxxxxxx & Berlin, Chartered, regulatory counsel for the
Company, dated the Closing Date, to the effect set forth in Exhibit B.
The opinions of Xxxxxxxx & Xxxxx and Xxxxxxx & Berlin,
Chartered, shall be rendered to you at the request of the Company and shall so
state therein.
(e) The Initial Purchasers shall have received on the Closing
Date an opinion of Shearman & Sterling, counsel for the Initial Purchasers,
dated the Closing Date, in form and substance reasonably satisfactory to you.
(f) The Initial Purchasers shall have received on each of the
date hereof and the Closing Date a letter, dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to the Initial
Purchasers, from Xxxxxx Xxxxxxxx & Co., the Company's independent public
accountants, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into each Memorandum; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than the
date hereof.
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(g) The Initial Purchasers shall have received such other
certificates and documents as they or their counsel may reasonably request.
6. Covenants of the Company. In further consideration of the
agreements of the Initial Purchasers contained in this Agreement, the Company
covenants with each Initial Purchaser as follows:
(a) To furnish to you in New York City, without charge, prior
to 10:00 a.m. New York City time on the business day next succeeding
the date of this Agreement and during the period mentioned in Section
6(c), as many copies of the Final Memorandum and any supplements or
amendments thereto as you may reasonably request.
(b) Before amending or supplementing either Memorandum, to
furnish to you a copy of each such proposed amendment or supplement and
not to use any such proposed amendment or supplement to which you
reasonably object.
(c) If, during such period after the date hereof and prior to
the date on which all of the Units, Notes or Warrants shall have been
sold by the Initial Purchasers, any event shall occur or condition
exist as a result of which it is necessary to amend or supplement the
Final Memorandum in order to make the statements therein, in the light
of the circumstances when the Final Memorandum is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the
Initial Purchasers, it is necessary to amend or supplement the Final
Memorandum to comply with applicable law, forthwith to prepare and
furnish, at its own expense, to the Initial Purchasers, either
amendments or supplements to the Final Memorandum so that the
statements in the Final Memorandum as so amended or supplemented will
not, in the light of the circumstances when the Final Memorandum is
delivered to a purchaser, be misleading or so that the Final
Memorandum, as amended or supplemented, will comply with applicable
law.
(d) To use its best effort to register or qualify the Units,
the Notes and the Warrants for offer and sale under all applicable
state securities or "blue sky" laws of such jurisdictions as you shall
reasonably request; provided, however, that the Company shall not be
required to (i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be required
to qualify but for this Section 6(d), (ii) file any general consent to
service of process or (iii) subject itself to taxation in any such
jurisdiction if it is not so subject.
(e) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the
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fees, disbursements and expenses of the Company's counsel and the
Company's accountants in connection with the issuance and sale of the
Units and all other fees or expenses in connection with the preparation
of each Memorandum and all amendments and supplements thereto,
including all printing costs associated therewith, and the delivering
of copies thereof to the Initial Purchasers, in the quantities herein
above specified, (ii) all costs and expenses related to the transfer
and delivery of the Notes and the Warrants to the Initial Purchasers,
including any transfer or other taxes payable thereon, (iii) the cost
of printing or producing any Blue Sky or legal investment memorandum in
connection with the offer and sale of the Units, the Notes and the
Warrants under state securities laws and all expenses in connection
with the qualification of the Units, the Notes and the Warrants for
offer and sale under state securities laws as provided in Section 6(d)
hereof, including filing fees and the reasonable fees and disbursements
of counsel for the Initial Purchasers in connection with such
qualification and in connection with the Blue Sky or legal investment
memorandum, (iv) any fees charged by rating agencies for the rating of
the Notes, (v) all document production charges and expenses of counsel
to the Initial Purchasers (but not including their fees for
professional services) in connection with the preparation of this
Agreement, (vi) the fees and expenses, if any, incurred in connection
with the admission of the Units, the Notes and the Warrants for trading
in PORTAL or any appropriate market system, (vii) the costs and charges
of the Trustee, the Warrant Agent and any transfer agent, registrar or
depositary, (viii) the cost of the preparation, issuance and delivery
of the Notes and the Warrants, (ix) fifty percent of the costs and
expenses relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the
Units, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with
the prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company, the Initial Purchasers and
any such consultants, but excluding the cost of any aircraft chartered
in connection with the road show which will be paid for by the Company,
and (x) all other costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not
otherwise made in this Section. It is understood, however, that except
as provided in this Section, Section 8, and the last paragraph of
Section 10, the Initial Purchasers will pay all of their costs and
expenses, including fees and disbursements of their counsel, transfer
taxes payable on resale of any of the Units by them and any advertising
expenses connected with any offers they may make.
(f) Neither the Company nor any Affiliate will sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) which could be integrated
with the sale of the Units, the Notes or the
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Warrants in a manner which would require the registration under the
Securities Act of the Units, the Notes or the Warrants.
(g) Not to solicit any offer to buy or offer or sell the
Units, the Notes or the Warrants by means of any form of general
solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities
Act.
(h) While any of the Units, the Notes or the Warrants remain
"restricted securities" within the meaning of the Securities Act, to
make available, upon request, to any seller of such Units, the Notes or
the Warrants the information specified in Rule 144A(d)(4) under the
Securities Act, unless the Company is then subject to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(i) None of the Company, its Affiliates or any person acting
on its or their behalf (other than the Initial Purchasers) will engage
in any directed selling efforts (as that term is defined in Regulation
S) with respect to the Units, the Notes or the Warrants, and the
Company and its Affiliates and each person acting on its or their
behalf (other than the Initial Purchasers) will comply with the
offering restrictions requirement of Regulation S.
(j) The Company will not, and will not permit any of its
affiliates (as defined in Rule 144A under the Securities Act) to resell
any of the Registrable Securities (as such term is defined in the Notes
Registration Rights Agreement) that have been reacquired by any of
them.
(k) If requested by you, to use its best efforts to permit the
Units, the Notes and the Warrants to be designated PORTAL securities in
accordance with the rules and regulations adopted by the National
Association of Securities Dealers, Inc.
relating to trading in the PORTAL Market.
(l) The Company will, and will cause the Warrant Agent (with
respect to the Warrants) and the Transfer Agent and Registrar (with
respect to the Warrant Shares) to, refuse any transfer of Warrants or
Warrant Shares, as applicable, sold pursuant to Regulation S if such
transfer is not made in accordance with the provisions of Regulation S.
7. Offering of Units; Restrictions on Transfer. (a) Each
Initial Purchaser, severally and not jointly, represents and warrants that such
Initial Purchaser is a qualified institutional buyer as defined in Rule 144A
under the Securities Act (a "QIB"). Each Initial
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Purchaser, severally and not jointly, agrees with the Company that (i) it will
not solicit offers for, or offer or sell, any Units by any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Securities Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act and (ii) it will solicit
offers for such Units only from, and will offer such Units only to, persons that
it reasonably believes to be (A) in the case of offers inside the United States,
(1) QIBs or (2) other institutional accredited investors (as defined in Rule
501(a) (1), (2), (3) or (7) under the Securities Act) ("institutional accredited
investors") that, prior to their purchase of the Units, deliver to such Initial
Purchaser a letter containing the representations and agreements set forth in
Appendix A to the Memorandum and (B) in the case of offers outside the United
States, to persons other than U.S. persons ("foreign purchasers," which term
shall include dealers or other professional fiduciaries in the United States
acting on a discretionary basis for foreign beneficial owners (other than an
estate or trust)) in reliance upon Regulation S under the Securities Act that,
in each case, in purchasing such Units are deemed to have represented and agreed
as provided in the Final Memorandum under the caption "Transfer Restrictions."
(b) Each Initial Purchaser, severally and not jointly,
represents, warrants, and agrees with respect to offers and sales outside the
United States that:
(i) such Initial Purchaser understands that no action has been
or will be taken in any jurisdiction by the Company that would permit a
public offering of the Units, the Notes or the Warrants, or possession
or distribution of either Memorandum or any other offering or publicity
material relating to the Units, the Notes or the Warrants, in any
country or jurisdiction where action for that purpose is required;
(ii) such Initial Purchaser will comply with all applicable
laws and regulations in each jurisdiction in which it acquires, offers,
sells or delivers the Units, the Notes or the Warrants or has in its
possession or distributes either Memorandum or any such other material,
in all cases at its own expense;
(iii) the Units, the Notes and the Warrants have not been
registered under the Securities Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S.
persons except in accordance with Rule 144A or Regulation S under the
Securities Act or pursuant to another exemption from the registration
requirements of the Securities Act;
(iv) such Initial Purchaser has offered the Units and will
offer and sell the Units (A) as part of their distribution at any time
and (B) otherwise until 40 days after the Closing Date with respect to
the Notes (or if after such date, the date the Notes and Warrants
become separately transferable), and one year after the Closing Date
with respect to the Warrants, only in accordance with Rule 903 of
Regulation S or another
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exemption from the registration requirements of the Securities Act.
Accordingly, neither such Initial Purchaser, its Affiliates nor any
persons acting on its or their behalf have engaged or will engage in
any directed selling efforts (within the meaning of Regulation S) with
respect to the Units, the Notes or the Warrants, and any such Initial
Purchaser, its Affiliates and any such persons have complied and will
comply with the offering restrictions requirement of Regulation S;
(v) such Initial Purchaser has (A) not offered or sold and,
prior to the date six months after the Closing Date, will not offer or
sell any Units, Notes or Warrants to persons in the United Kingdom
except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public
in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (B) complied and will comply with all
applicable provisions of the Financial Services Xxx 0000 with respect
to anything done by it in relation to the Units, the Notes or the
Warrants in, from or otherwise involving the United Kingdom; and (C)
only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the
Units, the Notes or the Warrants to a person who is of a kind described
in Article 11(3) of the Financial Services Xxx 0000 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise lawfully be issued or passed on;
(vi) such Initial Purchaser understands that the Units, the
Notes and the Warrants have not been and will not be registered under
the Securities and Exchange Law of Japan, and represents that it has
not offered or sold, and agrees not to offer or sell, directly or
indirectly, any Units, Notes or Warrants in Japan or for the account of
any resident thereof except pursuant to any exemption from the
registration requirements of the Securities and Exchange Law of Japan
and otherwise in compliance with applicable provisions of Japanese law;
and
(vii) such Initial Purchaser agrees that, at or prior to
confirmation of sales of the Units, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases Units from it during the restricted
period a confirmation or notice to substantially the following effect:
"The Units, the Notes and the Warrants covered hereby have not been
registered under the U.S. Securities Act of 1933 (the "Securities Act")
and may not be offered and sold within the United States or to, or for
the account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after the
closing date with respect to the Notes (or if after such date, the date
the Notes and Warrants become
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separately transferable) and one year after the closing date with
respect to the Warrants, except in either case in accordance with
Regulation S (or Rule 144A, if available) under the Securities Act.
Terms used above have the meaning given to them by Regulation S."
Terms used in this Section 7(b) have the meanings given to them by Regulation S.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Initial Purchaser, and each person, if any, who
controls any Initial Purchaser within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in either Memorandum (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Initial Purchaser furnished to the Company in
writing by such Initial Purchaser through you expressly for use therein.
(b) Each Initial Purchaser agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, its officers and each
person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Initial Purchaser, but only
with reference to information relating to such Initial Purchaser furnished to
the Company in writing by such Initial Purchaser through you expressly for use
in either Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 8(a) or 8(b), such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to
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any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the indemnifying party shall not,
in respect of the legal expenses of any indemnified party in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all such indemnified parties and that all such fees and expenses
shall be reimbursed as they are incurred. Such firm shall be designated in
writing by Xxxxxx Xxxxxxx & Co. Incorporated, in the case of parties indemnified
pursuant to Section 8(a) above, and by the Company, in the case of parties
indemnified pursuant to Section 8(b). The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 60 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) To the extent the indemnification provided for in Section
8(a) or 8(b) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Initial Purchasers on
the other hand from the offering of the Notes or (ii) if the allocation provided
by clause 8(d)(i) above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause 8(d)(i) above but also the relative fault of the Company on the one hand
and of the Initial Purchasers on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Initial
Purchasers on the other hand in connection with the offering of the Units shall
be deemed to be in the same
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respective proportions as the net proceeds from the offering of the Units
(before deducting expenses) received by the Company and the total discounts and
commissions received by the Initial Purchasers in respect thereof bear to the
aggregate offering price of the Units. The relative fault of the Company on the
one hand and of the Initial Purchasers on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Initial Purchasers and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Initial Purchasers'
respective obligations to contribute pursuant to this Section 8 are several in
proportion to the respective number of Units they have purchased hereunder, and
not joint.
(e) The Company and the Initial Purchasers agree that it would
not be just or equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in Section 8(d).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in Section 8(d) shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8, no Initial Purchaser shall be required to contribute any amount in
excess of the amount by which the total price at which the Units resold by it in
the initial placement of such Units were offered to investors exceeds the amount
of any damages that such Initial Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 8 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
(f) The indemnity and contribution provisions contained in
this Section 8 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Initial Purchasers or any person
controlling any Initial Purchasers or by or on behalf of the Company, its
officers or directors or any person controlling the Company and (iii) acceptance
of and payment for any of the Units.
9. Termination. This Agreement shall be subject to termination
by notice given by you to the Company, if (a) after the execution and delivery
of this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited
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on or by, as the case may be, any of the New York Stock Exchange, the American
Stock Exchange, the National Association of Securities Dealers, Inc., the
Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any securities of the Company shall have
been suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall have been
declared by either Federal or New York State authorities or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in your judgment, is material
and adverse and (b) in the case of any of the events specified in clauses
9(a)(i) through 9(a)(iv), such event singly or together with any other such
event makes it, in your judgment, impracticable to market the Units on the terms
and in the manner contemplated in the Final Memorandum.
10. Effectiveness; Defaulting Initial Purchasers. This
Agreement shall become effective upon the execution and delivery hereof by the
parties hereto.
If, on the Closing Date, any one or more of the Initial
Purchasers shall fail or refuse to purchase Units that it or they have agreed to
purchase hereunder on such date, and the aggregate number of Units which such
defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused
to purchase is not more than one-tenth of the aggregate number of Units to be
purchased on such date, the other Initial Purchasers shall be obligated
severally in the proportions that the number of Units set forth opposite their
respective names in Schedule I bears to the aggregate number of Units set forth
opposite the names of all such non-defaulting Initial Purchasers, or in such
other proportions as you may specify, to purchase the Units which such
defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused
to purchase on such date; provided that in no event shall the number of Units
that any Initial Purchaser has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 10 by an amount in excess of one-ninth of
such number of Units without the written consent of such Initial Purchaser. If,
on the Closing Date any Initial Purchaser or Initial Purchasers shall fail or
refuse to purchase Units which it or they have agreed to purchase hereunder on
such date and the aggregate number of Units with respect to which such default
occurs is more than one-tenth of the aggregate number of Units to be purchased
on such date and arrangements satisfactory to you and the Company for the
purchase of such Units are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any non-defaulting
Initial Purchaser or of the Company. In any such case either you or the Company
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Final
Memorandum or in any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Initial Purchaser
from liability in respect of any default of such Initial Purchaser under this
Agreement.
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If this Agreement shall be terminated by the Initial
Purchasers, or any of them, because of any failure or refusal on the part of the
Company to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Company shall be unable to perform its
obligations under this Agreement, the Company will reimburse the Initial
Purchasers or such Initial Purchasers as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
fees and disbursements of their counsel) reasonably incurred by such Initial
Purchasers in connection with this Agreement or the offering contemplated
hereunder.
11. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
13. Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
14. Notice. All notices and other communications under this
Agreement shall be in writing, and, if sent to the Initial Purchasers, be
mailed, delivered or sent by facsimile transmission to:
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: High Yield New Issue Group
Facsimile Number: (000) 000-0000
or, if sent to the Company, will be mailed, delivered or sent by facsimile
transmission to the Company at:
Allegiance Telecom, Inc.
0000 Xxxxxxxx Xxxx.
Xxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Facsimile Number: (000) 000-0000
21
Very truly yours,
ALLEGIANCE TELECOM, INC.
By /s/ XXXXX X. XXXXXXX
-----------------------
Name: Xxxxx X. Xxxxxxx
Title: Chairman and
Chief Executive
Officer
Agreed, as of the first date written above
Xxxxxx Xxxxxxx & Co.
Incorporated
Salomon Brothers Inc
Bear, Xxxxxxx & Co. Inc.
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation
By Xxxxxx Xxxxxxx & Co.
Incorporated
By /s/ XXXXX X. XXXXX
-----------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
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SCHEDULE I
Number of Units
Initial Purchaser To Be Purchased
----------------- ---------------
Xxxxxx Xxxxxxx & Co. Incorporated 222,500
Salomon Brothers Inc 135,500
Bear, Xxxxxxx & Co. Inc. 44,500
Xxxxxxxxx, Lufkin & Xxxxxxxx 44,500
Securities Corporation
-------
Total......................... 445,000
=======
23
EXHIBIT A
24
EXHIBIT B
