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EXHIBIT 1.1
12,000,000 SHARES
ALLEGIANCE TELECOM, INC.
COMMON STOCK, PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
[ ], 1998
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[ ], 1998
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxx Xxxxxx Inc.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Xxxxxxx, Sachs & Co.
UBS Securities LLC
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxx Xxxxxx Inc.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Xxxxxxx, Sachs International
UBS Limited
c/o Morgan Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs and Mesdames:
ALLEGIANCE TELECOM, INC., a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the several Underwriters (as defined below)
12,000,000 shares of its Common Stock, par value $.01 per share (the "FIRM
SHARES").
It is understood that, subject to the conditions hereinafter
stated, 9,600,000 Firm Shares (the "U.S. FIRM SHARES") will be sold to the
several U.S. Underwriters named in Schedule I hereto (the "U.S. UNDERWRITERS")
in connection with the offering and sale of such U.S. Firm Shares in the United
States and Canada to United States and Canadian Persons (as such terms are
defined in the Agreement Between U.S. and International Underwriters of even
date herewith), and 2,400,000 Firm Shares (the "INTERNATIONAL SHARES") will be
sold to the several International Underwriters named in Schedule II hereto (the
"INTERNATIONAL UNDERWRITERS") in connection with the offering and sale of such
International Shares outside the United States and Canada to persons other than
United States and Canadian Persons.
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Xxxxxx Xxxxxxx & Co. Incorporated, Xxxxx Xxxxxx Inc., Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation, Xxxxxxx, Sachs & Co. and UBS Securities LLC
shall act as representatives (the "U.S. REPRESENTATIVES") of the several U.S.
Underwriters, and Xxxxxx Xxxxxxx & Co. International Limited, Xxxxx Xxxxxx
Inc., Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation, Xxxxxxx, Sachs
International and UBS Limited shall act as representatives (the "INTERNATIONAL
REPRESENTATIVES") of the several International Underwriters. The U.S.
Underwriters and the International Underwriters are hereinafter collectively
referred to as the "UNDERWRITERS".
The Company also proposes to issue and sell to the several U.S.
Underwriters not more than an additional 1,800,000 shares of its Common Stock,
par value $.01 per share (the "ADDITIONAL SHARES") if and to the extent that
the U.S. Representatives shall have determined to exercise, on behalf of the
U.S. Underwriters, the right to purchase such shares of common stock granted to
the U.S. Underwriters in Section 2 hereof. The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the "SHARES". The shares of
Common Stock, par value $.01 per share, of the Company to be outstanding after
giving effect to the sales contemplated hereby are hereinafter referred to as
the "COMMON STOCK".
Pursuant to an underwriting agreement, dated the date hereof,
among the Company and Xxxxxx Xxxxxxx & Co. Incorporated, Salomon Brothers Inc,
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation and Xxxxxxx, Sachs & Co.,
the Company will issue and sell an aggregate of $200,000,000 million principal
amount of its [ ]% Senior Notes due 2008 (the "NOTES") (the "DEBT OFFERING").
A portion of the proceeds from the Debt Offering will be used to purchase a
portfolio of pledged securities, consisting of U.S. government securities, and
pledged to secure the first six scheduled interest payments on the Notes.
The Company has filed with the Securities and Exchange Commission
(the "COMMISSION") a registration statement relating to the Shares. The
registration statement contains two prospectuses to be used in connection with
the offering and sale of the Shares: the U.S. prospectus, to be used in
connection with the offering and sale of Shares in the United States and Canada
to United States and Canadian Persons, and the international prospectus, to be
used in connection with the offering and sale of Shares outside the United
States and Canada to persons other than United States and Canadian Persons.
The international prospectus is identical to the U.S. prospectus except for the
outside front cover page. The registration statement as amended at the time it
becomes effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the U.S. prospectus and the
international prospectus in the respective forms first used to confirm sales of
Shares are hereinafter collectively referred to as the "PROSPECTUS". If the
Company has filed an abbreviated registration statement to register additional
shares of Common Stock pursuant to Rule 462(b) under the Securities Act (the
"RULE 462 REGISTRATION STATEMENT"), then any reference herein
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to the term "Registration Statement" shall be deemed to include such Rule 462
Registration Statement.
As part of the offering contemplated by this Agreement, the
Underwriters have agreed to reserve up to 600,000 Shares for sale to the
Company's employees, officers, directors and business associates and other
persons having relationships with the Company (collectively, "PARTICIPANTS"),
as set forth in the Prospectus under the heading "Underwriters" (the "DIRECTED
SHARE PROGRAM"). The Shares to be sold pursuant to the Directed Share Program
(the "DIRECTED SHARES") will be sold at the Public Offering Price (as defined
herein). Any Directed Shares not orally confirmed for purchase by any
Participants by the end of the first business day after the date on which this
Agreement is executed will be offered to the public as set forth in the
Prospectus.
1. Representations and Warranties. The Company represents and
warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no
stop order suspending the effectiveness of the Registration Statement is
in effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) (i) The Registration Statement, when it became
effective, did not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, (ii) the Registration
Statement and the Prospectus comply and, as amended or supplemented, if
applicable, will comply in all material respects with the Securities Act
and the applicable rules and regulations of the Commission thereunder
and (iii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and
warranties set forth in this paragraph do not apply to statements or
omissions in the Registration Statement or the Prospectus based upon
information relating to any Underwriter furnished to the Company in
writing by such Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the State
of Delaware, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole. Schedule A to the form of opinion of Xxxxxxxx &
Xxxxx,
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attached hereto as Exhibit B, sets forth each jurisdiction in which the
conduct of the Company's business or its ownership or leasing of
property requires it to be qualified to transact business and be in good
standing.
(d) Each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be
so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole; all of the
issued shares of capital stock of each subsidiary of the Company have
been duly and validly authorized and issued, are fully paid and non-
assessable and are owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims. There are no active
subsidiaries of the Company other than those listed on Schedule A to the
form of opinion of Xxxxxxxx & Xxxxx, attached hereto as Exhibit B and
such Schedule A sets forth each jurisdiction in which the conduct of the
Company's business or its ownership or leasing of property requires any
subsidiary of the Company to be qualified to transact business and be in
good standing.
(e) This Agreement has been duly authorized, executed
and delivered by the Company.
(f) The authorized capital stock of the Company
conforms as to legal matters to the description thereof contained in the
Prospectus.
(g) The shares of Common Stock outstanding prior to the
issuance of the Shares have been duly authorized and are validly issued,
fully paid and nonassessable.
(h) The Shares have been duly authorized and, when
issued and delivered against payment therefor in accordance with the
terms of this Agreement, will be validly issued, fully paid and
nonassessable, and the issuance of such Shares will not be subject to
any preemptive or similar rights.
(i) The execution and delivery by the Company of, and
the performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the certificate
of incorporation or bylaws 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,
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consent, approval, authorization or order of, or filing, declaration or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement,
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 Shares.
Schedule B to the form of opinion of Xxxxxxxx & Xxxxx, attached hereto
as Exhibit B, sets forth all material agreements and instruments to
which the Company or any of its subsidiaries is a party.
(j) There has not occurred any material adverse change,
or any development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
Furthermore, except in each case as described in the Prospectus, (i) the
Company and its subsidiaries have not incurred any material liability or
obligation, direct or contingent, nor entered into any material
transaction not in the ordinary course of business; (ii) neither the
Company nor any of its subsidiaries has purchased any of the Company's
outstanding capital stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on the Company's capital stock; and
(iii) there has not been any material change in the capital stock,
short-term debt or long-term debt of the Company and its subsidiaries,
taken as a whole.
(k) There are no legal or governmental proceedings
pending or threatened to which the Company or any of its subsidiaries is
a party or to which any of the properties of the Company or any of its
subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to
be described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not described
or filed as required.
(l) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act
and the applicable rules and regulations of the Commission thereunder.
(m) The Company is not and, after giving effect to the
offering and sale of the Shares and the Notes and the application of the
proceeds thereof as described in the Prospectus, will not be an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended.
(n) 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
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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.
(o) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for cleanup, 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.
(p) Except as described in or contemplated by the
Prospectus, the Company and each of its subsidiaries (i) have all
necessary licenses, consents, authorizations, approvals, orders,
certificates and permits of and from, and have made all declarations and
filings with, all federal, state, local and other governmental,
administrative and regulatory authorities, all self-regulatory
organizations and all courts and other tribunals, to own, lease, license
and use its properties and assets and to conduct its business in the
manner described in the Prospectus, except to the extent that the
failure to obtain such licenses, consents, authorizations, approvals,
orders, certificates and permits or make such declarations and filings
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole and (ii) have not received any 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.
(q) 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.
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(r) The Company and each of its subsidiaries have good
and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is
material to the business of the Company and its subsidiaries, taken as a
whole, in each case free and clear of all liens, encumbrances and
defects, except such as are described in the Prospectus and such other
liens as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by
the Company and its subsidiaries; and any real property and buildings
held under lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as
are not material and do not materially interfere with the use made and
proposed to be made of such property and buildings by the Company and
its subsidiaries, in each case except as described in or contemplated by
the Prospectus.
(s) 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.
(t) 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.
(u) The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are customary in the businesses
in which they are engaged; neither the Company nor any of its
subsidiaries has been refused any insurance coverage sought or applied
for; and neither the Company nor any of its subsidiaries has any reason
to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business at a
cost that would have a material and adverse effect on the Company and
its subsidiaries, taken as a whole, except as described in or
contemplated by the Prospectus.
(v) 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
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the Company and its subsidiaries. All fees due and payable to
governmental authorities pursuant to the rules governing FCC Licenses
have been paid and no event has occurred with respect to the FCC
Licenses held by the Company and its subsidiaries which, with the giving
of notice or the lapse of time or both, would constitute grounds for
revocation thereof. Each of the Company and its subsidiaries is in
compliance in all material respects with the terms of the FCC Licenses,
as applicable, and there is no condition, event or occurrence existing,
nor is there any proceeding being conducted of which the Company has
received notice, nor, to the Company's knowledge, is there any
proceeding threatened, by any governmental authority, which would cause
the termination, suspension, cancellation or nonrenewal of any of the
FCC Licenses, or the imposition of any penalty or fine by any regulatory
authority. No registrations, filings, applications, notices, transfers,
consents, approvals, audits, qualifications, waivers or other action of
any kind is required by virtue of the execution and delivery of this
Agreement 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.
(w) 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.
(x) Except as described in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company or to require the Company to include such
securities with the Shares registered pursuant to the Registration
Statement.
(y) The Company has not offered, or caused the
Underwriters to offer, Shares to any person pursuant to the Directed
Share Program with the specific intent to unlawfully influence (i) a
customer or supplier of the Company to alter the customer's or
supplier's level or type of business with the Company, or (ii) a trade
journalist or publication to write or publish favorable information
about the Company or its products.
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Furthermore, the Company represents and warrants to the
Underwriters that (i) the Registration Statement, the Prospectus and any
preliminary prospectus comply, and any further amendments or supplements
thereto will comply, in all material respects, with any applicable laws or
regulations of foreign jurisdictions in which the Prospectus or any preliminary
prospectus, as amended or supplemented, if applicable, is distributed in
connection with the Directed Share Program, and that (ii) no authorization,
approval, consent, license, order, registration or qualification of or with any
government, governmental instrumentality or court, other than such as have been
obtained, is necessary under the securities laws and regulations of foreign
jurisdictions in which the Directed Shares are offered outside the United
States.
2. Agreements to Sell and Purchase. The Company hereby agrees
to sell to the several Underwriters, and each Underwriter, upon the basis of
the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to purchase
from the Company the respective numbers of Firm Shares set forth in Schedules I
and II hereto opposite its names at U.S.$[ ] a share ("PURCHASE PRICE").
On the basis of the representations and warranties contained in
this Agreement, and subject to its terms and conditions, the Company agrees to
sell to the U.S. Underwriters the Additional Shares, and the U.S. Underwriters
shall have a onetime right to purchase, severally and not jointly, up to
1,800,000 Additional Shares at the Purchase Price. If the U.S.
Representatives, on behalf of the U.S. Underwriters, elect to exercise such
option, the U.S. Representatives shall so notify the Company in writing not
later than 30 days after the date of this Agreement, which notice shall specify
the number of Additional Shares to be purchased by the U.S. Underwriters and
the date on which such shares are to be purchased (which date of purchase, if
other than the Closing Date (as defined below), shall be at least two business
days after such notice is delivered, unless the Company consents otherwise).
Such date may be the same as the Closing Date but not earlier than the Closing
Date nor later than ten business days after the date of such notice.
Additional Shares may be purchased as provided in Section 4 hereof solely for
the purpose of covering overallotments made in connection with the offering of
the Firm Shares. If any Additional Shares are to be purchased, each U.S.
Underwriter agrees, severally and not jointly, to purchase the number of
Additional Shares (subject to such adjustments to eliminate fractional shares
as the U.S. Representatives may determine) that bears the same proportion to
the total number of Additional Shares to be purchased as the number of U.S.
Firm Shares set forth in Schedule I hereto opposite the name of such U.S.
Underwriter bears to the total number of U.S. Firm Shares.
The Company hereby agrees that, without the prior written consent
of Xxxxxx Xxxxxxx & Co. Incorporated and Xxxxx Xxxxxx Inc. on behalf of the
Underwriters, it will not, during the period ending 180 days after the date of
the Prospectus, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer or dispose
of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or
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exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to (A) the Shares to be sold hereunder, (B) the issuance by the
Company of shares of Common Stock upon the exercise of an option or warrant or
the conversion of a security outstanding on the date hereof and as described in
the Prospectus, (C) the issuance by the Company of additional options to
purchase Common Stock pursuant to the Company's 1997 Nonqualified Stock Option
Plan or 1998 Stock Incentive Plan, (D) the issuance by the Company of shares of
Common Stock pursuant to the Company's Employee Stock Discount Purchase Plan or
1998 Stock Incentive Plan or (E) transactions relating to shares of Common
Stock or other securities acquired in open market transactions after completion
of the offering contemplated by the Prospectus.
3. Terms of Public Offering. The Company is advised by you that
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement has become effective and
this Agreement has been executed as in your judgment is advisable. The Company
is further advised by you that the Shares are to be offered to the public
initially at U.S.$[ ] a share (the "PUBLIC OFFERING PRICE") and to certain
dealers selected by you at a price that represents a concession not in excess
of U.S.$[ ] a share under the Public Offering Price, and that any
Underwriter may allow, and such dealers may reallow, a concession, not in
excess of U.S.$[ ] a share, to any Underwriter or to certain other
dealers.
4. Payment and Delivery. Payment for the Firm Shares shall be
made to the Company in Federal or other funds immediately available in New York
City against delivery of such Firm Shares for the respective accounts of the
several Underwriters at 9:00 a.m., New York City time, on [ ], 1998,
or at such other time on the same or such other date, not later than [
], 1998, as shall be designated in writing by you. The time and date of such
payment are hereinafter referred to as the "CLOSING DATE".
Payment for any Additional Shares shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at 9:00 a.m., New York City time, on the date specified in the
notice described in Section 2 or at such other time on the same or on such
other later date, in any event not later than [ ], 1998, as shall be
designated in writing by the U.S. Representatives. The time and date of such
payment are hereinafter referred to as the "OPTION CLOSING DATE".
Certificates for the Firm Shares and Additional Shares shall be
in definitive form 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 or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts
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of the several Underwriters, with any transfer taxes payable in connection with
the transfer of the Shares to the Underwriters duly paid, against payment of
the Purchase Price therefor.
5. Conditions to the Underwriters' Obligations. The obligations
of the Company to sell the Shares to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date are subject to the condition that the Registration Statement shall
have become effective not later than [ ] (New York City time) on the
date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date:
(i) there shall not have occurred any
downgrading, nor shall any notice have been given of any intended
or potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change, in
the rating accorded any of the Company's securities by any
"nationally recognized statistical rating organization," as such
term is defined for purposes of Rule 436(g)(2) under the
Securities Act; and
(ii) there shall not have occurred any change, or
any development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole,
from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement) that, in your judgment, is material and adverse and
that makes it, in your judgment, impracticable to market the
Shares on the terms and in the manner contemplated in the
Prospectus.
(b) The Underwriters shall have received on the Closing
Date a certificate, dated the Closing Date and signed by an executive
officer of the Company, to the effect set forth in Section 5(a)(i) above
and to the effect that the representations and warranties 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.
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(c) The Underwriters shall have received on the Closing
Date an opinion of Xxxxxxxx & Xxxxx, outside counsel for the Company,
dated the Closing Date, to the effect set forth in Exhibit B.
(d) The Underwriters shall have received on the Closing
Date an opinion of Xxxxxxx & Berlin, Chartered, regulatory counsel for
the Company, dated the Closing Date, to the effect set forth in Exhibit
C.
The opinions of Xxxxxxxx & Xxxxx and Xxxxxxx & Berlin,
Chartered, shall be rendered to the Underwriters at the request of the
Company and shall so state therein.
(e) The Underwriters shall have received on the Closing
Date an opinion of Shearman & Sterling, counsel for the Underwriters,
dated the Closing Date, in form and substance reasonably satisfactory to
you.
(f) The Underwriters shall have received, on each of
the date hereof and the Closing Date, a letter dated the date hereof or
the Closing Date, as the case may be, in form and substance satisfactory
to the Underwriters, from Xxxxxx Xxxxxxxx LLP, independent public
accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus;
provided that the letter delivered on the Closing Date shall use a
"cut-off date" not earlier than the date hereof.
(g) The "lockup" agreements, each substantially in the
form of Exhibit A hereto, between (i) you and the Fund Investors (as
defined in the Prospectus) (effective for 180 days from the date of the
Prospectus) and (ii) you and the Management Investors (as defined in the
Prospectus) (effective for 1 year from the date of the Prospectus), and
the "lockup" agreements between the Company and other stockholders of
the Company, relating to sales and certain other dispositions of shares
of Common Stock or certain other securities, delivered to you on or
before the date hereof, shall be in full force and effect on the Closing
Date.
(h) Concurrently with the closing of the sale of the
Shares on the Closing Date, (i) Allegiance LLC will be dissolved in
accordance with the LLC Agreement (as defined in the Prospectus) and
(ii) all outstanding shares of the Company's 12% Cumulative Convertible
Preferred Stock, par value $.01 per share, will be converted into Common
Stock.
(i) The Underwriters shall have received such other
certificates and documents as they or their counsel may reasonably
request.
(j) The several obligations of the U.S. Underwriters to
purchase Additional Shares hereunder are subject to the delivery to the
U.S. Representatives on the
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Option Closing Date of such documents as they may reasonably request
with respect to the good standing of the Company, the due authorization
and issuance of the Additional Shares and other matters related to the
Company and the issuance of the Additional Shares.
6. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with
each Underwriter as follows:
(a) To furnish to you, without charge, eleven signed
copies of the Registration Statement (including exhibits thereto) and
for delivery to each other Underwriter a conformed copy of the
Registration Statement (without exhibits thereto) and to furnish to you
in New York City, without charge, prior to 10:00 a.m. New York City time
on the business day next succeeding the date of this Agreement and
during the period mentioned in Section 6(c) below, as many copies of the
Prospectus and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object, and to file with
the Commission within the applicable period specified in Rule 424(b)
under the Securities Act any prospectus required to be filed pursuant to
such Rule.
(c) If, during such period after the first date of the
public offering of the Shares as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall occur
or condition exist as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the
Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company)
to which Shares may have been sold by you on behalf of the Underwriters
and to any other dealers upon request, either amendments or supplements
to the Prospectus so that the statements in the Prospectus as so amended
or supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with applicable law.
(d) To use its best effort to register or qualify the
Shares 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
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consent to service of process or (iii) subject itself to taxation in any
such jurisdiction if it is not so subject.
(e) To make generally available to the Company's
security holders and to you as soon as practicable an earning statement
covering the twelve-month period beginning after the effective date of
the Registration Statement (as defined in Rule 158(c) of the Securities
Act) that satisfies the provisions of Section 11(a) of the Securities
Act and the rules and regulations of the Commission thereunder.
(f) Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, to pay
or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel and the Company's
accountants in connection with the registration and delivery of the
Shares under the Securities Act and all other fees or expenses in
connection with the preparation and filing of the Registration
Statement, any preliminary prospectus, the Prospectus and amendments and
supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof
to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and
delivery of the Shares to the Underwriters, including any transfer or
other taxes payable thereon, (iii) the cost of printing or producing any
Blue Sky or legal investment memorandum in connection with the offer and
sale of the Shares under state securities laws and all expenses in
connection with the qualification of the Shares for offer and sale under
state securities laws as provided in Section 6(d) hereof, including
filing fees and the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection
with the Blue Sky or legal investment memorandum, (iv) all filing fees
and the reasonable fees and disbursements of counsel to the Underwriters
incurred in connection with the review and qualification of the offering
of the Shares by the National Association of Securities Dealers, Inc.
("NASD"), (v) all fees and expenses in connection with the preparation
and filing of the registration statement on Form 8-A relating to the
Common Stock and all costs and expenses incident to listing the Shares
on the Nasdaq National Market, (vi) the cost of printing certificates
representing the Shares, (vii) the costs and charges of any transfer
agent, registrar or depositary, (viii) the costs and expenses of the
Company relating to investor presentations on any "road show" undertaken
in connection with the marketing of the offering of the Shares,
including, without limitation, expenses associated with the production
of road show slides and graphics, fees and expenses of any consultants
engaged in connection with the road show presentations with the prior
approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants,
and the cost of any aircraft chartered in connection with the road show,
and (ix) all other costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not
otherwise made in this Section. It is understood, however, that except
as provided in this Section, Section 7 entitled "Indemnity and
Contribution", and the last paragraph of Section 9 below, the
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Underwriters will pay all of their costs and expenses, including fees
and disbursements of their counsel, transfer and income taxes payable on
resale of any of the Shares by them and any advertising expenses
connected with any offers they may make.
(g) The Company will not, without the prior consent of
Xxxxxx Xxxxxxx & Co. Incorporated and Xxxxx Xxxxxx Inc., release any
securityholder from the terms of any "lockup" arrangements between the
Company and such securityholder.
(h) That in connection with the Directed Share Program,
the Company will ensure that the Directed Shares will be restricted to
the extent required by the National Association of Securities Dealers,
Inc. (the "NASD") or the NASD rules from sale, transfer, assignment,
pledge or hypothecation for a period of three months following the date
of the effectiveness of the Registration Statement. The Underwriters
will notify the Company as to which Participants will need to be so
restricted. The Company will direct the transfer agent to place stop
transfer restrictions upon such securities for such period of time.
(i) To pay all fees and disbursements of counsel
reasonably incurred by the Underwriters in connection with the Directed
Share Program and stamp duties, similar taxes or duties or other taxes
(excluding income taxes), if any, incurred by the Underwriters in
connection with the Directed Share Program.
Furthermore, the Company covenants with the Underwriters that the
Company will comply with all applicable securities and other applicable laws,
rules and regulations in each foreign jurisdiction in which the Directed Shares
are offered in connection with the Directed Share Program.
7. Indemnity and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein; provided, however, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses,
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claims, damages or liabilities purchased Shares, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) was not
sent or given by or on behalf of such Underwriter to such person, if required
by law so to have been delivered, at or prior to the written confirmation of
the sale of the Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such losses, claims,
damages or liabilities, unless such failure is the result of noncompliance by
the Company with Section 6(a) hereof.
The Company agrees to indemnify and hold harmless any Underwriter
participating in the Directed Share Program and each person, if any, who
controls such Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act ("UNDERWRITER ENTITIES"), 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) (i) caused
by any untrue statement or alleged untrue statement of a material fact
contained in the prospectus wrapper or other materials prepared by or with the
consent of the Company for distribution in foreign jurisdictions in connection
with the Directed Share Program attached to the Prospectus or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
therein, when considered in conjunction with the Prospectus or any applicable
preliminary prospectus, not misleading; (ii) caused by the failure of any
Participant to pay for and accept delivery of the shares which, immediately
following the effectiveness of the Registration Statement, were subject to a
properly confirmed agreement to purchase; or (iii) related to, arising out of,
or in connection with the Directed Share Program, provided that, the Company
shall not be responsible under this subparagraph (iii) for any losses, claim,
damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted from the bad faith or gross negligence
of the Underwriter Entities.
(b) Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, its officers who
sign the Registration Statement and each person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to such Underwriter, but only with reference to information
relating to such Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements
thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 7(a) or 7(b), such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the
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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 respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all such indemnified
parties and that all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by Xxxxxx Xxxxxxx & Co.
Incorporated, in the case of parties indemnified pursuant to Section 7(a), and
by the Company, in the case of parties indemnified pursuant to Section 7(b).
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 60 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) To the extent the indemnification provided for in
Section 7(a) or 7(b) is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation provided
by clause 7(d)(i) above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause 7(d)(i) above but also the relative fault of the Company on the one hand
and of the Underwriters on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other hand in
connection with the
17
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offering of the Shares shall be deemed to be in the same respective proportions
as the net proceeds from the offering of the Shares (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public Offering Price of the
Shares. The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it
would not be just or equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in Section 7(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 7 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained
in this Section 7 and the representations, warranties and other statements of
the Company contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or by or on behalf of the Company, its officers or directors or
any person controlling the Company and (iii) acceptance of and payment for any
of the Shares.
8. Termination. This Agreement shall be subject to termination
by notice given by you to the Company, if (a) after the execution and delivery
of this Agreement and prior to the Closing Date (i) trading generally shall
have been suspended or materially limited on or by, as the case may be, any of
the New York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board of Options Exchange,
the
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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 8(a)(i) through 8(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable
to market the Shares on the terms and in the manner contemplated in the
Prospectus.
9. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case
may be, any one or more of the Underwriters shall fail or refuse to purchase
Shares that it has or they have agreed to purchase hereunder on such date, and
the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-
tenth of the aggregate number of the Shares to be purchased on such date, the
other Underwriters shall be obligated severally in the proportions that the
number of Firm Shares set forth opposite their respective names in Schedule I
or Schedule II bears to the aggregate number of Firm Shares set forth opposite
the names of all such nondefaulting Underwriters, or in such other proportions
as you may specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 9 by
an amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares and the aggregate
number of Firm Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Firm Shares to be purchased, and
arrangements satisfactory to you and the Company for the purchase of such Firm
Shares are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any nondefaulting Underwriter or the
Company. In any such case either you or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. If, on
the Option Closing Date, any Underwriter or Underwriters shall fail or refuse
to purchase Additional Shares and the aggregate number of Additional Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Additional Shares to be purchased, the non-defaulting
Underwriters shall have the option to (i) terminate their obligation hereunder
to purchase Additional Shares or (ii) purchase not less than the number of
Additional Shares that such non-defaulting Underwriters would have been
obligated to purchase in the absence of such default. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
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If this Agreement shall be terminated by the Underwriters, or any
of them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for
all out-of-pocket expenses (including the fees and disbursements of their
counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering contemplated hereunder.
10. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
11. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
12. 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.
13. Notice. All notices and other communications under this
Agreement shall be in writing, and, if sent to the Underwriters, be mailed,
delivered or sent by facsimile transmission to:
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: [ ]
Facsimile Number: (212) 761-[ ]
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
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Very truly yours,
ALLEGIANCE TELECOM, INC.
By: _______________________
Name:
Title:
Accepted as of the date hereof
XXXXXX XXXXXXX & CO. INCORPORATED
XXXXX XXXXXX INC.
XXXXXXXXX, XXXXXX & XXXXXXXX SECURITIES CORPORATION
XXXXXXX, SACHS & CO.
UBS SECURITIES LLC
Acting severally on behalf of themselves
and the several U.S. Underwriters
named in Schedule I hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By: ___________________________
Name:
Title:
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
XXXXX XXXXXX INC.
XXXXXXXXX, XXXXXX & XXXXXXXX SECURITIES CORPORATION
XXXXXXX, SACHS INTERNATIONAL
UBS LIMITED
Acting severally on behalf of themselves
and the several International Underwriters
named in Schedule II hereto.
By: Xxxxxx Xxxxxxx & Co. International Limited
By: ____________________________
Name:
Title:
23
SCHEDULE I
U.S. UNDERWRITERS
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxx Xxxxxx Inc.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Xxxxxxx, Sachs & Co.
UBS Securities LLC
---------
Total U.S. Firm Shares 9,600,000
=========
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SCHEDULE II
INTERNATIONAL UNDERWRITERS
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxx Xxxxxx Inc.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Xxxxxxx, Sachs International
UBS Limited
---------
Total International Firm Shares 2,400,000
=========
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EXHIBIT A
[FORM OF LOCK-UP LETTER]
____________, 1998
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxx Xxxxxx Inc.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Xxxxxxx, Sachs & Co.
UBS Securities LLC
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxx Xxxxxx Inc.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Xxxxxxx, Sachs International
UBS Limited
c/o Morgan Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co.
Incorporated ("XXXXXX XXXXXXX") and Xxxxxx Xxxxxxx & Co. International Limited
("MSIL") propose to enter into an Underwriting Agreement (the "UNDERWRITING
AGREEMENT") with Allegiance Telecom, Inc., a Delaware corporation (the
"COMPANY"), providing for the public offering (the "PUBLIC OFFERING") by the
several Underwriters, including Xxxxxx Xxxxxxx and MSIL (the "UNDERWRITERS"),
of shares (the "SHARES") of the Common Stock, par value $.01 per share of the
Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public
Offering to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Xxxxxx
Xxxxxxx and Xxxxx Xxxxxx Inc. on behalf of the Underwriters, it will not,
during the period commencing on the date hereof and ending [180 days/1 year]
after the
26
date of the final prospectus relating to the Public Offering (the
"PROSPECTUS"), (1) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer or dispose
of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or (2) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) transactions relating
to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering, (b) any transfer for
estate planning purposes of shares of Common Stock (i) to a trust or
partnership for the benefit of such transferor or such transferor's parents,
siblings, spouse, descendants (whether or not adopted) or stepchildren
(collectively, the "Family Group") or (ii) by gift, will or intestate
succession to such transferor's Family Group or (c) transfers of not more than
an aggregate of 20% of the undersigned's shares of Common Stock for the purpose
of making a charitable contribution to a not-for-profit organization; provided,
that, with respect to any transfers pursuant to clauses (b) or (c), as a
condition precedent to such transfer, the transferee of any such transfer, or
the trustee or legal guardian on behalf of any such transferee, duly executes
and delivers this Agreement. In addition, the undersigned agrees that, without
the prior written consent of Xxxxxx Xxxxxxx and Xxxxx Xxxxxx Inc. on behalf of
the Underwriters, it will not, during the period commencing on the date hereof
and ending [180 days/1 year] after the date of the Prospectus, make any demand
for or exercise any right with respect to, the registration of any shares of
Common Stock or any security convertible into or exercisable or exchangeable
for Common Stock that would result in a registration statement relating to such
Common Stock or security being filed prior to the date [180 days/1 year] after
the date of the Prospectus.
Whether or not the Public Offering actually occurs depends on a
number of factors, including market conditions. Any Public Offering will only
be made pursuant to an Underwriting Agreement, the terms of which are subject
to negotiation between the Company and the Underwriters.
Very truly yours,
---------------------------
(Name)
---------------------------
(Address)
A-2
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EXHIBIT B
Opinion of Xxxxxxxx & Xxxxx
[Attach draft opinion of Xxxxxxxx & Xxxxx to be delivered pursuant to Section
4(c) of the Underwriting Agreement to the effect that:]
1. Each of the Company and each subsidiary of the Company listed on
Schedule A attached hereto (each, a "Subsidiary") is a corporation
validly existing and in good standing under the laws of Delaware, has
the corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction set forth
opposite its name on such Schedule A.
2. All of the issued shares of capital stock of each Subsidiary have been
duly and validly authorized and issued and are fully paid and
non-assessable.
3. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
4. The shares of Common Stock outstanding prior to the issuance of the
Shares have been duly authorized and are validly issued, fully paid and
nonassessable.
5. The Shares have been duly authorized and, when issued and delivered in
accordance with the terms of the Underwriting Agreement, will be validly
issued, fully paid and nonassessable, and the issuance of such Shares
will not be subject to any preemptive or similar rights.
6. The execution and delivery by the Company of, and the performance by the
Company of its obligations under, the Underwriting Agreement will not
(i) violate the Company's Certificate of Incorporation or Bylaws or (ii)
constitute a violation by the Company of any applicable provision of any
law, statute or regulation (except that we express no opinion in this
paragraph as to compliance with any disclosure requirement or any
prohibition against fraud or misrepresentation or as to whether
performance of any indemnification or contribution provisions would be
permitted) or (iii) breach, or result in a default under, any existing
obligation of the Company under any of the agreements listed on Schedule
B hereto (provided that we express no opinion as to compliance with any
financial test or cross default provision that may be contained in any
such agreement, if any).
7. The Company is not required to obtain any consent, approval,
authorization or order of, or qualify with, any governmental body, court
or agency for the performance by the Company of its obligations under
the Underwriting Agreement, except for any such consent, approval,
authorization or order which may be required under the so-called
28
"Blue Sky" or securities laws of any states (as to which we express no
opinion or advice) in connection with the offer and sale of the Shares
by the U.S. Underwriters.
8. To our knowledge, there is no action, suit, proceeding or investigation
before or by any court or governmental agency or body, domestic or
foreign, pending or threatened against, the Company or any Subsidiary
that is required to be described in the Registration Statement or the
Prospectus that is not so described nor are there any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed
as exhibits to the Registration Statement that are not described or
filed as required.
9. The Company is not, and after giving effect to the offering and sale of
the Shares and the Notes and the application of the proceeds thereof as
described in the Prospectus will not be, an "investment company" as
defined in the Investment Company Act of 1940, as amended.
10. The statements in the Prospectus under the captions "Certain
Relationships and Related Transactions," "Description of Certain
Indebtedness," "Certain United States Federal Tax Consequences,"
"Description of Capital Stock" and "Underwriters," and the statements in
Item 14 and item 15 of the Registration Statement, in each case insofar
as such statements constitute summaries of the legal matters, documents
and proceedings referred to therein, in all material respects fairly
present the information with respect to such legal matters, documents
and proceedings and fairly summarize the matters referred to therein.
11. The authorized capital stock of the Company conforms in all material
respects to the description thereof set forth in the Prospectus under
the caption "Description of Capital Stock."
12. We (A) are of the opinion that the Registration Statement and Prospectus
(except for financial statements and schedules and other financial and
statistical data included therein as to which such counsel need not
express any opinion) comply as to form in all material respects with the
Securities Act and the applicable rules and regulations of the
Commission thereunder, (B) have no reason to believe that (except for
financial statements and schedules and other financial and statistical
data as to which such counsel need not express any belief) the
Registration Statement and the prospectus included therein at the time
the Registration Statement became effective contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and (C) have no reason to believe that (except
for financial statements and schedules and other financial and
statistical data as to which such counsel need not express any belief)
the Prospectus contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
B-2
29
With respect to (12) above, Xxxxxxxx and Xxxxx may state that
their opinion and belief are based upon their participation in the
preparation of the Registration Statement and Prospectus and any
amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification,
except as specified.
B-3
30
EXHIBIT C
Opinion of Xxxxxxx & Berlin
[Attach draft opinion of Xxxxxxx & Berlin to be delivered pursuant to Section
4(c) of the Underwriting Agreement to the effect that:]
(A) (1) the execution and delivery of the Underwriting
Agreement by the Company and the consummation of the transactions
contemplated thereby do not violate (i) the Communications Act, (ii) any
Federal Communications Law applicable to the Company and/or
Subsidiaries, (iii) any State Communications Law applicable to the
Company and/or Subsidiaries, and (iv) to the best of our knowledge, any
decree from any court; and (2) no authorization of the FCC or any PUC
that has not already been received from, or prior filing that has not
already been made with, such agency is necessary for the execution and
delivery of the Underwriting Agreement by the Company and the
consummation of the transactions contemplated thereby in accordance with
the terms thereof, except where the failure to obtain such authorization
or make such filling would not have a material adverse effect on the
prospects, condition, financial or otherwise, or on the earnings,
business or operations of the Company and its Subsidiaries, taken as a
whole;
(B) to the best of our knowledge and relying on the factual
representations in the Certificate: (1) each of the Company and its
Subsidiaries has made all reports and filings, and paid all fees,
required by the FCC and the PUCs, and has all certificates, orders,
permits, licenses, authorizations, consents, and approvals of and from,
and has made all filings and registrations, with the FCC and the PUCs
necessary to own, lease, license and use its properties and assets and
to conduct its business in the manner described in the Prospectus; and
(2) none of the Company or any of its Subsidiaries has received any
notice of proceedings relating to the violation, revocation or
modification of any such certificates, orders, permits, licenses,
authorizations, consents, or approvals, or the qualification or
rejection of any such filing or registration, the effect of which,
singly or in the aggregate, would have a material adverse effect on the
prospects, condition, financial or otherwise, or on the earnings,
business or operations of the Company and its Subsidiaries, taken as a
whole;
(C) to the best of our knowledge, neither the Company nor any
of its subsidiaries is in violation of, or in default under, any
provision of Federal Communications Law or State Communications Law, the
effect of which, singly or in the aggregate, would have a material
adverse effect on the prospects, condition, financial or otherwise, or
on the earnings, business or operations of the Company and its
Subsidiaries, taken as a whole;
31
(D) to the best of our knowledge after due inquiry and relying
on the factual representations of the Certificate: (i) no adverse
judgment, decree or order of the FCC or any PUC has been issued against
the Company or any of its Subsidiaries and (ii) no litigation,
proceeding (other than certification applications initiated by the
Company or its Subsidiaries), inquiry or investigation has been
commenced or threatened against the Company or any of its Subsidiaries
before or by the FCC or any PUC which, if decided adversely to the
Company's interest, would have a material adverse effect on the Company
and its Subsidiaries, taken as a whole;
(E) the statements in the Prospectus under the captions "Risk
Factors -- Difficulties in Implementing Local and Enhanced Services,"
"Risk Factors -- Competition," "Risk Factors --Government Regulation,"
"Business -- Regulation," "Business -- Market Opportunity," and
"Business -- Competition," exclusive of cross references therein to
other sections of the Prospectus, to the extent that they discuss
international and U.S. federal, state, and local statutes, regulations
and proceedings with respect to telecommunications regulatory matters,
fairly summarize the matters referred to therein; and
(F) all of the issued shares of capital stock of each
Subsidiary are owned directly of record by the Company, free and clear
of all perfected liens, encumbrances, equities or claims; and to the
best of our knowledge, are owned beneficially by the Company.
C-2
