$405,250,000
ICG SERVICES, INC.
SENIOR DISCOUNT NOTES DUE 2008
PLACEMENT AGREEMENT
April 22, 1998
April 22, 1998
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
ICG Services, Inc., a Delaware corporation (the
"COMPANY ), proposes to issue and sell to you (the "PLACEMENT
AGENT") $405,250,000 aggregate principal amount at maturity of 9
7/8% Senior Discount Notes due 2008 of the Company (the
"SECURITIES") issued pursuant to the provisions of an Indenture
to be dated as of April 27, 1998 (the "INDENTURE") among the
Company and Norwest Bank Colorado, National Association, trustee
(in such capacity, the "TRUSTEE").
The Securities 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).
The Placement Agent and its direct and indirect
transferees will be entitled to the benefits of a Registration
Rights Agreement to be dated the Closing Date (as defined below)
and to be substantially in the form attached hereto as Exhibit A
(the "REGISTRATION RIGHTS AGREEMENT").
In connection with the sale of the Securities, 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 Securities, the terms of the offering and a
description of the Company.
1. Representations and Warranties of the Company.
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 Placement
Agent to confirm sales and on the Closing Date, 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 the Placement Agent furnished to the
Company in writing by the Placement Agent 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 could not reasonably be expected to have a material
adverse effect on the Company and its subsidiaries, taken as
a whole.
(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 qualified or be in good standing
could not reasonably be expected to 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.
(d) This Agreement has been duly authorized, executed
and delivered by each of the Company and NETCOM On-Line
Communication Services, Inc., a Delaware corporation
("NETCOM").
(e) The Registration Rights Agreement has been duly
authorized by the Company, and when executed and delivered
by the Company will be a valid and binding agreement of the
Company, enforceable against the Company in accordance with
its terms except as (x) the enforceability thereof may be
limited by the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws now
or hereafter in effect relating to or affecting creditors'
rights generally and (y) the availability of equitable
remedies may be limited by equitable principles of general
applicability.
(f) The Securities have been duly authorized by the
Company and, when executed, authenticated and delivered in
accordance with the Indenture and paid for by the Placement
Agent in accordance with the terms of this Agreement, will
(x) be valid and binding obligations of the Company
enforceable against Company in accordance with their terms,
except as (A) the enforceability thereof may be limited by
the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter
in effect relating to or affecting creditors' rights
generally and (B) rights of acceleration, if applicable, and
the availability of equitable remedies may be limited by
equitable principles of general applicability and (y) be
entitled to the benefits of the Indenture.
(g) The Indenture has been duly authorized by the
Company and, when executed and delivered by the Company and
the Trustee, will be a valid and binding agreement of the
Company enforceable against the Company in accordance with
its terms except as (x) the enforceability thereof may be
limited by the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter
in effect relating to or affecting creditors' rights
generally and (y) rights of acceleration, if applicable, and
the availability of equitable remedies may be limited by
equitable principles of general applicability.
(h) The execution and delivery by the Company of, and
the performance by the Company of its obligations under,
this Agreement, the Indenture, the Registration Rights
Agreement and the Securities and the issuance and sale of
the Securities will not contravene any provision of
applicable law or the certificate of incorporation or
by-laws of the Company or any agreement or other instrument
binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a
whole, or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company
or any subsidiary, and no consent, approval, authorization
or order of, or qualification with, any governmental body or
agency is required for the performance by the Company of its
obligations under this Agreement, the Indenture, the
Registration Rights Agreement or the Securities or the
issuance and sale of the Securities, except such as may be
required by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the
Securities.
(i) 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 Preliminary Memorandum.
(j) There are no legal or governmental proceedings
pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of
the Company or any of its subsidiaries is subject other than
proceedings accurately described in all material respects in
each Memorandum and proceedings that could not reasonably be
expected to 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 this
Agreement, the Indenture, the Registration Rights Agreement
or the Securities or to consummate the transactions
contemplated by the Memorandum.
(k) 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.
(l) The Company is not, and after giving effect to the
offering and sale of the Securities and the application of
the proceeds thereof as described in the Final Memorandum,
will not be an "investment company" or an entity
"controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended.
(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 Securities in a manner that
would require the registration under the Securities Act of
the Securities or (ii) engaged in any form of general
solicitation or general advertising in connection with the
offering of the Securities (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) None of the Company, its Affiliates or any person
acting on its or their behalf (other than the Placement
Agent) has engaged or will engage in any directed selling
efforts (within the meaning of Regulation S) with respect to
the Securities and the Company and its Affiliates and any
person acting on its or their behalf (other than the
Placement Agent) have complied and will comply with the
offering restrictions requirement of Regulation S.
(o) It is not necessary in connection with the offer,
sale and delivery of the Securities to the Placement Agent
in the manner contemplated by this Agreement to register the
Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended.
(p) The Securities satisfy the requirements set forth
in Rule 144A(d)(3) under the Securities Act.
(q) The Company has complied with all provisions of
Section 517.075, Florida Statutes (Chapter 92-198, Laws of
Florida).
(r) Except as set forth in each Memorandum, the
Company and its subsidiaries have all necessary permits,
licenses, authorizations, consents and approvals and have
made all necessary filings required under any federal,
state, local or foreign supranational, national or regional
law, regulation or rule, and have obtained all necessary
authorizations, consents and approvals from other persons,
material to the conduct of their respective businesses, in
each case except to the extent that the failure to obtain
such permits, licenses, authorizations, consents or
approvals or to make such filings would not, singly or in
the aggregate, have a material adverse effect on the
properties, assets, prospects, condition, financial or
otherwise, business or operations of the Company and its
subsidiaries, taken as a whole; except as set forth in each
Memorandum, the Company and its subsidiaries have not
received any notice of proceedings which remain unresolved
relating to revocation or modification of any such permits,
licenses, authorizations, consents or approvals, nor is the
Company or any of its subsidiaries in violation of, or in
default under, any such license, authorization, consent or
approval or any federal, state, local or foreign
supranational, national or regional law, regulation or rule
or any decree, order or judgment applicable to the Company
or its subsidiaries the effect of which would reasonably be
expected to have a material adverse effect on the
properties, assets, condition, financial or otherwise,
business or operations of the Company and its subsidiaries,
taken as a whole.
(s) (1) The merger of ICG Acquisition, Inc., a
Delaware corporation ("ACQUISITION SUB"), with and into
NETCOM has been consummated pursuant to the Agreement and
Plan of Merger, dated October 12, 1997, as amended (the
"MERGER AGREEMENT"), by and among ICG Communications, Inc.,
a Delaware corporation ("ICG"), Acquisition Sub and NETCOM,
(2) ICG transferred all of the capital stock of NETCOM to
the Company and (3) all required consents, waivers and
agreements in connection with such consummation or transfer,
including any such consents, waivers and agreements from
suppliers, customers and lessors of NETCOM, have been
obtained prior to such consummation or transfer, as the case
may be, except where the failure to obtain such consents,
waivers or agreements would not have a material adverse
effect on the Company and its subsidiaries, taken as a
whole.
2. Representations and Warranties of NETCOM. NETCOM
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 Placement
Agent to confirm sales and on the Closing Date, 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 apply only to
statements or omissions in either Memorandum based upon
information relating to NETCOM and its subsidiaries.
(b) NETCOM 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 could not reasonably be expected to have a material
adverse effect on NETCOM and its subsidiaries, taken as a
whole.
(c) Each subsidiary of NETCOM 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 qualified or be in good standing
could not reasonably be expected to have a material adverse
effect on NETCOM and its subsidiaries, taken as a whole; all
of the issued shares of capital stock of each subsidiary of
NETCOM have been duly and validly authorized and issued, are
fully paid and non-assessable and are owned directly by
NETCOM, free and clear of all liens, encumbrances, equities
or claims.
(d) This Agreement has been duly authorized, executed
and delivered by NETCOM.
(e) The execution and delivery by NETCOM of, and the
performance by NETCOM of its obligations under, this
Agreement will not contravene any provision of applicable
law or the certificate of incorporation or by-laws of NETCOM
or any agreement or other instrument binding upon NETCOM or
any of its subsidiaries that is material to NETCOM and its
subsidiaries, taken as a whole, or any judgment, order or
decree of any governmental body, agency or court having
jurisdiction over NETCOM or any subsidiary, and no consent,
approval, authorization or order of, or qualification with,
any governmental body or agency is required for the
performance by NETCOM of its obligations under this
Agreement.
(f) 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 NETCOM and its
subsidiaries, taken as a whole, from that set forth in the
Preliminary Memorandum.
(g) There are no legal or governmental proceedings
pending or threatened to which NETCOM or any of its
subsidiaries is a party or to which any of the properties of
NETCOM or any of its subsidiaries is subject other than
proceedings accurately described in all material respects in
each Memorandum and proceedings that could not reasonably be
expected to have a material adverse effect on NETCOM and its
subsidiaries, taken as a whole, or on the power or ability
of NETCOM to perform its obligations under this Agreement.
(h) NETCOM and its subsidiaries (i) are in compliance
with 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 NETCOM and its
subsidiaries, taken as a whole.
(i) NETCOM is not, and after giving effect to the
offering and sale of the Securities and the application of
the proceeds thereof as described in the Final Memorandum,
will not be an "investment company" or an entity
"controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended.
(j) NETCOM has complied with all provisions of Section
517.075, Florida statutes (Chapter 92-198, Laws of Florida).
(k) Except as set forth in each Memorandum, NETCOM and
its subsidiaries have all necessary permits, licenses,
authorizations, consents and approvals and have made all
necessary filings required under any federal, state, local
or foreign supranational, national or regional law,
regulation or rule, and have obtained all necessary
authorizations, consents and approvals from other persons,
material to the conduct of their respective businesses, in
each case except to the extent that the failure to obtain
such permits, licenses, authorizations, consents or
approvals or to make such filings would not, singly or in
the aggregate, have a material adverse effect on the
properties, assets, prospects, condition, financial or
otherwise, business or operations of NETCOM and its
subsidiaries, taken as a whole; except as set forth in each
Memorandum, NETCOM and its subsidiaries have not received
any notice of proceedings which remain unresolved relating
to revocation or modification of any such permits, licenses,
authorizations, consents or approvals, nor is NETCOM or any
of its subsidiaries in violation of, or in default under,
any such license, authorization, consent or approval or any
federal, state, local or foreign supranational, national or
regional law, regulation or rule or any decree, order or
judgment applicable to NETCOM or its subsidiaries the effect
of which would reasonably be expected to have a material
adverse effect on the properties, assets, condition,
financial or otherwise, business or operations of NETCOM and
its subsidiaries, taken as a whole.
(l) Subsequent to the date as of which information is
given in the Preliminary Memorandum, (1) NETCOM 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;
and (2) there has not been any material change in short-term
debt or long-term debt of NETCOM and its subsidiaries,
except in each case as described in the Final Memorandum.
(m) NETCOM and 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 NETCOM and its
subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in
each Memorandum 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 NETCOM and
its subsidiaries; and any real property and buildings held
under lease by NETCOM 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 NETCOM and its subsidiaries, in each case
except as described in each Memorandum.
(n) NETCOM 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 NETCOM 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 affect on NETCOM and its
subsidiaries, taken as a whole.
(o) No material labor dispute with the employees of
NETCOM or any of its subsidiaries exists, except as
described in each Memorandum, or, to the knowledge of
NETCOM, is imminent; and NETCOM 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
NETCOM and its subsidiaries, taken as a whole.
(p) NETCOM and its subsidiaries are insured by the
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 NETCOM nor any of its subsidiaries has been refused
any insurance coverage sought or applied for; and neither
NETCOM 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 NETCOM and its subsidiaries,
taken as a whole, except as described in each Memorandum.
(q) NETCOM and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide
reasonable assurance that (1) transactions are executed in
accordance with management's general or specific
authorizations; (2) transactions are recorded as necessary
to permit preparation of financial statements in conformity
with generally accepted accounting principles and to
maintain asset accountability; (3) access to assets is
permitted only in accordance with management's general or
specific authorization; and (4) the recorded accountability
for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with
respect to any differences.
(r) (1) The merger of Acquisition Sub with and into
NETCOM has been consummated pursuant to the Merger
Agreement, (2) ICG transferred all of the capital stock of
NETCOM to the Company and (3) all required consents, waivers
and agreements in connection with such consummation or
transfer, including any such consents, waivers and
agreements from suppliers, customers and lessors of NETCOM,
have been obtained prior to such consummation or transfer,
as the case may be, except where the failure to obtain such
consents, waivers or agreements would not have a material
adverse effect on the Company and its subsidiaries, taken as
a whole.
3. Agreements to Sell and Purchase. The Company
hereby agrees to sell to the Placement Agent, and the Placement
Agent, upon the basis of the representations and warranties
herein contained, but subject to the conditions hereinafter
stated, agrees to purchase from the Company the Securities at a
purchase price of $242,502,694.20 for the Securities plus accrued
original issue discount, if any, from April 27, 1998 to the date
of payment and delivery.
4. Terms of Offering. The Placement Agent has
advised the Company that it will make an offering of the
Securities purchased by it hereunder on the terms set forth in
the Final Memorandum, as soon as practicable after this Agreement
is entered into as in its judgment is advisable.
5. Payment and Delivery. Payment for the Securities
shall be made against delivery of the Securities at a closing
(the "CLOSING") to be held at the office of Shearman & Sterling,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at 9:00 A.M., New York
City time, on April 27, 1998 or at such other time on the same or
such other date, not later than May 11, 1998, as shall be
designated in writing by you. The time and date of such payment
are herein referred to as the "CLOSING DATE". Payment for the
Securities shall be made by wire transfer to an account
previously designated to the Placement Agent by the Company in
immediately available funds.
Certificates for the Securities shall be in definitive
form or global form, as specified by you, and registered in such
names and in such denominations as you shall request in writing
not later than one full business day prior to the Closing Date.
The certificates evidencing the Securities shall be delivered to
you on the Closing Date, with any transfer taxes payable in
connection with the transfer of the Securities to the Placement
Agent duly paid, against payment of the purchase price therefor.
6. Conditions to the Placement Agent's Obligations.
The obligations of the Placement Agent to purchase and pay for
the Securities 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, 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 Preliminary Memorandum that, in your
reasonable judgment, is material and adverse and that makes
it, in your reasonable judgment, impracticable to market the
Securities on the terms and in the manner contemplated in
the Final Memorandum.
(b) You shall have received on the Closing Date
certificates dated the Closing Date and signed,
respectively, by an executive officer of the Company and
NETCOM to the effect that the representations and warranties
of the Company and NETCOM contained in this Agreement are
true and correct as of the Closing Date and that each of the
Company and NETCOM has complied with all of the agreements
and satisfied all of the conditions on its part to be
performed or satisfied pursuant to the transactions
contemplated hereby or by the Memorandum on or before the
Closing Date.
The officers signing and delivering such certificates
may rely upon the best of their knowledge as to proceedings
threatened.
(c) You shall have received on the Closing Date an
opinion of Xxxx & Priest LLP, independent counsel for the
Company and special counsel for NETCOM, dated the Closing
Date, to the effect set forth in Exhibit B. Such opinion
shall be rendered to you at the request of the Company and
shall so state therein.
(d) You shall have received on the Closing Date an
opinion of Xxxxxxxxx, Madison & Sutro LLP, independent
counsel for NETCOM, dated the Closing Date, to the effect
set forth in Exhibit C. Such opinion shall be rendered to
you at the request of NETCOM or the Company and shall so
state therein.
(e) You shall have received on the Closing Date an
opinion of Xxxxxxxx & Xxxxxxxx, counsel for the Placement
Agent, dated the Closing Date, with respect to such matters
as you may request.
(f) You 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 you from Ernst & Young LLP, independent
public accountants, containing statements and information of
the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial
statements and certain financial information contained in
the Final Memorandum; provided that the letters delivered on
the Closing Date shall use a "cut-off date" not earlier than
the date hereof.
(g) You 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 you from KPMG Peat Marwick LLP, independent
public accountants, containing statements and information of
the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to certain financial
information contained in the Final Memorandum.
(h) The Placement Agent and its counsel shall have
been furnished with such other documents and certificates as
they shall reasonably request.
7. Covenants of the Company. In further consideration
of the agreements of the Placement Agent contained in this
Agreement, the Company covenants and agrees as follows:
(a) To furnish to you in New York City, without
charge, prior to 5:00 P.M. New York City time on the
business day next succeeding the date of this Agreement and
during the period mentioned in Section 7(c), as many copies
of the Final Memorandum and any supplements and 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 Securities shall have
been sold by the Placement Agent, any event shall occur or
condition exist as a result of which it is necessary in your
judgment 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 Placement Agent, 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 Placement Agent, 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 endeavor to qualify the Securities for offer
and sale under the securities or Blue Sky laws of such
jurisdictions as you shall reasonably request.
(e) Whether or not any sale of the Securities is
consummated, to pay all expenses incident to the performance
of its obligations under this Agreement, including: (i) the
preparation of each Memorandum and all amendments and
supplements thereto, (ii) the preparation, issuance and
delivery of the Securities, (iii) the fees and disbursements
of the Company's and NETCOM's counsel and accountants and
the Trustee and its counsel, (iv) the qualification of the
Securities under securities or Blue Sky laws in accordance
with the provisions of Section 7(d), including filing fees
and the fees and disbursements of counsel for the Placement
Agent in connection therewith and in connection with the
preparation of any Blue Sky or legal investment memoranda,
(v) the printing and delivery to the Placement Agent in
quantities as hereinabove stated of copies of the Memorandum
and any amendments or supplements thereto, (vi) any fees
charged by rating agencies for the rating of the Securities,
(vii) the fees and expenses incurred in connection with the
admission of the Securities for trading in PORTAL or any
other market system, (viii) the costs and expenses incurred
by the Company and NETCOM relating to investor presentations
on any "road show" undertaken in connection with the
marketing of the Securities, including, without limitation,
expenses associated with the production of road show slides
and graphics, fees and expenses of any consultants engaged
in connection with the road show presentations with the
prior approval of the Company, travel and lodging expense of
the representatives and officers of the Company and NETCOM
and any such consultants, and the cost of any aircraft
chartered in connection with the road show, and (ix) all
other costs and expenses incident to the performance of the
obligations of the Company and NETCOM hereunder for which
provision is not otherwise made in this Section.
(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 Securities in a manner which would require the
registration under the Securities Act of the Securities.
(g) Not to solicit any offer to buy or offer or sell
the Securities 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 Securities remain "restricted
securities" within the meaning of the Securities Act, to
make available, upon request, to any seller of such
Securities, 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) To use its best efforts to permit the Securities
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.
(j) None of the Company, its Affiliates or any person
acting on its or their behalf (other than the Placement
Agent) will engage in any directed selling efforts (as that
term is defined in Regulation S) with respect to the
Securities, and the Company and its Affiliates and each
person acting on its or their behalf (other than the
Placement Agent) will comply with the offering restrictions
requirement of Regulation S.
(k) During the period of two years after the Closing
Date, 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 Securities which constitute
"restricted securities" under Rule 144A that have been
reacquired by any of them.
8. Offering of Securities; Restrictions on Transfer.
(a) The Placement Agent represents and warrants that it is a
qualified institutional buyer as defined in Rule 144A under the
Securities Act (a "QIB"). The Placement Agent agrees with the
Company that (i) it will not solicit offers for, or offer or
sell, such Securities 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 Securities only from,
and will offer such Securities 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 Securities, deliver to the
Placement Agent a letter containing the representations and
agreements set forth in Exhibit A to the Final 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
Securities are deemed to have represented and agreed as provided
in the Final Memorandum under the caption "Transfer
Restrictions".
(b) The Placement Agent represents, warrants, and
agrees with respect to offers and sales outside the United States
that:
(i) it understands that no action has been or will be
taken in any jurisdiction by the Company that would permit a
public offering of the Securities, or possession or
distribution of either Memorandum or any other offering or
publicity material relating to the Securities, in any
country or jurisdiction where action for that purpose is
required;
(ii) it will comply with all applicable laws and
regulations in each jurisdiction in which it acquires,
offers, sells or delivers Securities or has in its
possession or distributes either Memorandum or any such
other material, in all cases at its own expense;
(iii) the Securities 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) it has offered the Securities and will offer and
sell the Securities (A) as part of its distribution at any
time and (B) otherwise until 40 days after the later of the
commencement of the offering and the Closing Date, only in
accordance with Rule 903 of Regulation S or as otherwise
permitted in Section 8(a); accordingly, neither the
Placement Agent, 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 Securities, and any Placement Agent,
its Affiliates and any such persons have complied and will
comply with the offering restrictions requirement of
Regulation S;
(v) it has (A) not offered or sold and, prior to the
date six months after the Closing Date, will not offer or
sell any Securities 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 Act 1986
with respect to anything done by it in relation to the
Securities 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 Securities to a
person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document
may otherwise lawfully be issued or passed on;
(vi) it understands that the Securities 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 Securities 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) it agrees that, at or prior to confirmation
of sales of the Securities, it will have sent to each
distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases
Securities from it during the restricted period a
confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered
under the U.S. Securities Act of 1933, as amended (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 later of the
commencement of the offering and the closing date, 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 8(b) have the meanings given to them
by Regulation S.
9. Indemnity and Contribution. (a) Each of the
Company and NETCOM jointly and severally agrees to indemnify and
hold harmless the Placement Agent, and each person, if any, who
controls the Placement Agent within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange
Act, or is under common control with, or is controlled by, the
Placement Agent, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal
or other expenses reasonably incurred by the Placement Agent or
any such controlling or affiliated person 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 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 the Placement Agent furnished to the Company in
writing by the Placement Agent expressly for use therein.
(b) The Placement Agent agrees to indemnify and hold
harmless the Company and NETCOM, their directors, their officers
and each person, if any, who controls the Company or NETCOM
within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act or is under common control with,
or is controlled by, the Company or NETCOM to the same extent as
the foregoing indemnity from the Company and NETCOM to the
Placement Agent, but only with reference to information relating
to the Placement Agent furnished to the Company in writing by the
Placement Agent 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 either
paragraph (a) or (b) of this Section 9, 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 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 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 the Placement Agent in the case of parties indemnified
pursuant to paragraph (a) above and by the Company in the case of
parties indemnified pursuant to paragraph (b) above. 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 30 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
paragraph (a) or (b) of this Section 9 is unavailable to an
indemnified party or insufficient in respect of any losses,
claims, damages or liabilities, 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 and
NETCOM, on the one hand, and the Placement Agent, on the other
hand, from the offering of the Securities or (ii) if the
allocation provided by clause (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 (i) above
but also the relative fault of the Company and NETCOM on the one
hand and the Placement Agent 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
and NETCOM on the one hand and the Placement Agent on the other
hand in connection with the offering of the Securities shall be
deemed to be in the same respective proportions as the net
proceeds from the offering of the Securities (before deducting
expenses) received by the Company and NETCOM and the total
discounts and commissions received by the Placement Agent in
respect thereof bear to the aggregate offering price of the
Securities. The relative fault of the Company and NETCOM on the
one hand and of the Placement Agent 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 NETCOM or by the Placement
Agent and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement
or omission.
(e) The Company, NETCOM and the Placement Agent agree
that it would not be just or equitable if contribution pursuant
to this Section 9 were determined by pro rata allocation or by
any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) of this
Section 9. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages and liabilities referred
to in paragraph (d) of this Section 9 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 9, the
Placement Agent shall not be required to contribute any amount in
excess of the amount by which the total price at which the
Securities resold by it in the initial placement of the
Securities were offered to investors exceeds the amount of any
damages that the Placement Agent 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
indemnity and contribution provisions contained in this Section 9
and the representations and warranties of the Company and NETCOM
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 the
Placement Agent or any person controlling the Placement Agent or
by or on behalf of the Company or NETCOM, their officers or
directors or any person controlling the Company or NETCOM and
(iii) acceptance of and payment for any of the Securities. The
remedies provided for in this Section 9 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.
10. Termination. This Agreement shall be subject to
termination by notice given by you to the Company, if (a) after
the execution and delivery of this Agreement and prior to the
Closing Date (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board of
Options Exchange, the Chicago Mercantile Exchange or the Chicago
Board of Trade, (ii) trading of any securities of the Company or
ICG 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 10(a)(i) through 10(a)(iv), such
event, singly or together with any other such event, makes it, in
your judgment, impracticable to market the Securities on the
terms and in the manner contemplated in the Final Memorandum.
11. Effectiveness. This Agreement shall become
effective upon the execution and delivery hereof by the parties
hereto.
If this Agreement shall be terminated by the Placement
Agent because of any failure or refusal on the part of the
Company or NETCOM to comply with the terms or to fulfill any of
the conditions of this Agreement, or if for any reason the
Company or NETCOM shall be unable to perform its obligations
under this Agreement, the Company will reimburse the Placement
Agent for all out-of-pocket expenses (including the reasonable
fees and disbursements of its counsel) reasonably incurred by the
Placement Agent in connection with this Agreement or the offering
contemplated hereunder.
12. Counterparts. This Agreement may be signed
manually or by facsimile in any number of counterparts, each of
which shall be deemed to be an original, with the same effect as
if the signatures thereto and hereto were upon the same
instrument.
13. Applicable Law; Submission to Jurisdiction. This
Agreement shall be governed by and construed in accordance with
the laws of the State of New York. Each of the Company and
NETCOM agrees to submit to the jurisdiction of any federal or
state court located in The City of New York in any suit, action
or proceeding with respect to this Agreement and for actions
brought under the U.S. federal or state securities laws brought
in any such court.
14. 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.
Very truly yours,
ICG SERVICES, INC.
By: /s/ Xxx Xxxxxx
---------------------------
Name: X. Xxx Xxxxxx
Title: Executive Vice President,
General Counsel and
Secretary
NETCOM ON-LINE COMMUNICATION
SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Executive Vice President
and Chief Financial
Officer
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
By: /s/ Xxxxx X. Xxxxx
---------------------------
Name: Xxxxx X. Xxxxx
Title: Principal
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
