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EXHIBIT 1.1
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GLOBAL TELESYSTEMS GROUP, INC.
(a Delaware corporation)
6,274,800 Shares of Common Stock
U.S. PURCHASE AGREEMENT
Dated: [ ], 1998
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TABLE OF CONTENTS
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U.S. PURCHASE AGREEMENT.......................................................................................1
SECTION 1. Representations and Warranties.....................................................................4
(a) Representations and Warranties by the Company......................................4
(i) Compliance with Registration Requirements...............................................4
(ii) Independent Accountants................................................................5
(iii) Financial Statements..................................................................6
(iv) No Material Adverse Change in Business.................................................6
(v) Good Standing of the Company............................................................6
(vi) Good Standing of Subsidiaries..........................................................7
(vii) Capitalization 8
(viii) Authorization of Agreement...........................................................8
(ix) Authorization and Description of Securities............................................8
(x) Absence of Defaults and Conflicts.......................................................8
(xi) Absence of Labor Dispute...............................................................9
(xii) Absence of Proceedings...............................................................10
(xiii) Accuracy of Exhibits................................................................10
(xiv) Possession of Intellectual Property..................................................10
(xv) Absence of Further Requirements.......................................................11
(xvi) Possession of Licenses and Permits...................................................11
(xvii) Title to Property...................................................................11
(xviii) Compliance with Cuba Act...........................................................12
(xix) Investment Company Act...............................................................12
(xx) Environmental Laws....................................................................12
(xxi) Registration Rights..................................................................13
(b) Representations and Warranties by the Selling Shareholders........................13
(i) Accurate Disclosure....................................................................13
(ii) Authorization of Agreements...........................................................14
(iii) Valid and Marketable Title...........................................................15
(iv) Due Execution of Power of Attorney and Custody Agreement..............................15
(v) Absence of Manipulation................................................................16
(vi) Absence of Further Requirements.......................................................16
(vii) Restriction on Sale of Securities....................................................16
(viii) Certificates Suitable for Transfer..................................................16
(c) Officer's Certificates............................................................17
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing...................................................17
(a) Initial Securities................................................................17
(b) Option Securities.................................................................17
(c) Payment...........................................................................18
(d) Denominations; Registration.......................................................19
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SECTION 3. Covenants of the Company..........................................................................19
(a) Compliance with Securities Regulations and Commission Requests....................19
(b) Filing of Amendments..............................................................20
(c) Delivery of Registration Statements...............................................20
(d) Delivery of Prospectuses..........................................................21
(e) Continued Compliance with Securities Laws.........................................21
(f) Rule 158..........................................................................21
(g) Use of Proceeds...................................................................22
(h) Listing...........................................................................22
(i) Restriction on Sale of Securities.................................................22
(j) Reporting Requirements............................................................22
SECTION 4. Payment of Expenses...............................................................................23
(a) Expenses..........................................................................23
(b) Expenses of the Selling Shareholders..............................................23
(c) Termination of Agreement..........................................................24
(d) Allocation of Expenses............................................................24
SECTION 5. Conditions of U.S. Underwriters' Obligations......................................................24
(a) Effectiveness of Registration Statement...........................................24
(b) Opinion of Counsel for Company....................................................25
(c) Opinion of Counsel for the Selling Shareholders...................................25
(d) Opinion of Counsel for U.S. Underwriters..........................................25
(e) Officers' Certificate.............................................................25
(f) Certificates of Selling Shareholders..............................................26
(g) Accountant's Comfort Letter.......................................................26
(h) Bring-down Comfort Letter.........................................................26
(i) Approval of Listing...............................................................26
(j) No Objection......................................................................27
(k) Lock-up Agreements................................................................27
(l) Purchase of Initial International Securities......................................27
(m) Conditions to Purchase of U.S. Option Securities..................................27
(n) Additional Documents..............................................................29
(o) Termination of Agreement..........................................................29
SECTION 6. Indemnification...................................................................................29
(a) Indemnification of U.S. Underwriters..............................................29
(b) Indemnification of Company, Directors and Officers and Selling
Shareholders..................................................................31
(c) Actions Against Parties; Notification.............................................32
(d) Settlement Without Consent if Failure to Reimburse................................32
(e) Other Agreements with Respect to Indemnification..................................33
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SECTION 7. Contribution......................................................................................33
SECTION 8. Representations, Warranties and Agreements to Survive Delivery....................................35
SECTION 9. Termination of Agreement..........................................................................35
(a) Termination; General..............................................................35
(b) Liabilities.......................................................................36
SECTION 10. Default by One or More of the U.S. Underwriters..................................................36
SECTION 11. Default by One or More of the Selling Shareholders or the Company................................37
SECTION 12. Notices .........................................................................................38
SECTION 13. Parties .........................................................................................38
SECTION 14. GOVERNING LAW AND TIME...........................................................................38
SECTION 15. Effect of Headings...............................................................................39
SCHEDULES
Schedule A - List of Underwriters..............................................................Sch A-1
Schedule B - List of Company and Selling Shareholders..........................................Sch B-1
Schedule C - Pricing Information...............................................................Sch C-1
EXHIBITS
Exhibit A-1 - Form of Opinion of Shearman & Sterling.................................A-1-1
Exhibit A-2 - Form of Opinion of Xxxxx Xxxxxx........................................A-2-1
Exhibit A-3 - Form of Opinion of Coudert Brothers....................................A-3-1
Exhibit A-4 - Form of Opinion of Shevchenko Didkovskiy & Partners....................A-4-1
Exhibit A-5 - Form of Opinion of Somodeco............................................A-5-1
Exhibit A-6 - Form of Opinion of Loeff Xxxxxx Xxxxxxx................................A-6-1
Exhibit A-7 - Form of Opinion of Counsel for the Selling Shareholders................A-7-1
Exhibit B - Form of Lock-up Letter...................................................B-1
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GLOBAL TELESYSTEMS GROUP, INC.
(a Delaware corporation)
6,274,800 Shares of Common Stock
(Par Value $.10 Per Share)
U.S. PURCHASE AGREEMENT
[ ], 1998
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Bear, Xxxxxxx & Co. Inc.
BT Alex. Xxxxx Incorporated
Xxxxxx Brothers Inc.
Prudential Securities Incorporated
Xxxxxxx and X. Xxxxxxxxxxxx, Inc.
as U.S. Representatives of the several U.S. Underwriters
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
GLOBAL TELESYSTEMS GROUP, INC., a Delaware corporation (the "Company"),
and the other persons listed in Schedule B hereto (the "Selling Shareholders")
confirm their agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx
& Xxxxx Incorporated ("Xxxxxxx Xxxxx") and each of the other U.S. Underwriters
named in Schedule A hereto (collectively, the "U.S. Underwriters", which term
shall also include any underwriter substituted as hereinafter provided in
Section 10 hereof), for whom Xxxxxxx Lynch, Donaldson, Lufkin & Xxxxxxxx
Securities Corporation, Bear, Xxxxxxx & Co., Inc., BT Alex. Xxxxx Incorporated,
Xxxxxx Brothers Inc., Prudential Securities Incorporated and Xxxxxxx and X.
Xxxxxxxxxxxx, Inc. are acting as representatives (in such capacity, the "U.S.
Representatives"), with respect to the issue and sale by the Company and the
sale by the Selling Shareholders, acting severally and not jointly, and the
purchase by the U.S. Underwriters, acting severally and not
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jointly, of the respective numbers of shares of Common Stock, par value $.10 per
share, of the Company ("Common Stock") set forth in said Schedule A, and with
respect to the grant by the Company to the U.S. Underwriters, acting severally
and not jointly, of the option described in Section 2(b) hereof to purchase all
or any part of 941,220 additional shares of Common Stock to cover
over-allotments, if any. The aforesaid 6,274,800 shares of Common Stock (the
"Initial U.S. Securities") to be purchased by the U.S. Underwriters and all or
any part of the 941,220 shares of Common Stock subject to the option described
in Section 2(b) hereof (the "U.S. Option Securities") are hereinafter called,
collectively, the "U.S. Securities."
It is understood that the Company and the Selling Shareholders are
concurrently entering into an agreement dated the date hereof (the
"International Purchase Agreement") providing for the offering by the Company
and the Selling Shareholders of an aggregate of 4,183,200 shares of Common Stock
(the "Initial International Securities") through arrangements with certain
underwriters outside the United States and Canada (the "International Managers")
for which Xxxxxxx Xxxxx International, Xxxxxxxxx, Lufkin & Xxxxxxxx
International, Xxxxxxx Sachs International, CIBC Oppenheimer International
Limited, Baring Brothers Limited (as agent for ING Bank N.V.) and Renaissance
Advisory Limited are acting as the international representatives (collectively,
the "International Representatives") and the grant by the Company to the
International Managers, acting severally and not jointly, of an option to
purchase all or any part of the International Managers' pro rata portion of up
to 627,480 additional shares of Common Stock solely to cover over-allotments, if
any (the "International Option Securities" and, together with the U.S. Option
Securities, the "Option Securities"). The Initial International Securities and
the International Option Securities are hereinafter called the "International
Securities." It is understood that the Company and the Selling Shareholders are
not obligated to sell, and the U.S. Underwriters are not obligated to purchase,
any Initial U.S. Securities unless all of the Initial International Securities
are contemporaneously purchased by the International Managers.
The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters," the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities," the U.S. Securities and the International Securities are
hereinafter collectively called the "Securities," and this Agreement and the
International Purchase Agreement are hereinafter collectively called the
"Purchase Agreements."
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The Underwriters will concurrently enter into an Intersyndicate
Agreement of even date herewith (the "Intersyndicate Agreement") providing for
the coordination of certain transactions among the Underwriters under the
direction of Xxxxxxx Xxxxx & Co. (in such capacity, the "Global Coordinator").
The Company and the Selling Shareholders understand that the U.S.
Underwriters propose to make a public offering of the U.S. Securities as soon as
the U.S. Representatives deem advisable after this Agreement has been executed
and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-52733) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). Two
forms of prospectus are to be used in connection with the offering and sale of
the Securities: one relating to the U.S. Securities (the "Form of U.S.
Prospectus") and one relating to the International Securities (the "Form of
International Prospectus"). The Form of International Prospectus is identical to
the Form of U.S. Prospectus, except for the front cover and back cover pages and
the information under the caption "Underwriting." The information included in
any such prospectus or in any such Term Sheet, as the case may be, that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule
430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as
"Rule 434 Information." Each Form of U.S. Prospectus and Form of International
Prospectus used before such registration statement became effective, and any
prospectus that omitted, as applicable, the Rule 430A Information or the Rule
434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto, at the time it
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became effective and including the Rule 430A Information and the Rule 434
Information, as applicable, is herein called the "Registration Statement." Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
is herein referred to as the "Rule 462(b) Registration Statement," and after
such filing the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The final Form of U.S. Prospectus and the final Form of
International Prospectus in the forms first furnished to the Underwriters for
use in connection with the offering of the Securities are herein called the
"U.S. Prospectus" and the "International Prospectus," respectively, and
collectively, the "Prospectuses." If Rule 434 is relied on, the terms "U.S.
Prospectus" and "International Prospectus" shall refer to the preliminary U.S.
Prospectus dated June 12, 1998 and preliminary International Prospectus dated
June 12, 1998, respectively, each together with the applicable Term Sheet and
all references in this Agreement to the date of such Prospectuses shall mean the
date of the applicable Term Sheet. For purposes of this Agreement, all
references to the Registration Statement, any preliminary prospectus, the U.S.
Prospectus, the International Prospectus or any Term Sheet or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("XXXXX").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The
Company represents and warrants to each U.S. Underwriter as of the date hereof,
as of the Closing Time referred to in Section 2(c) hereof, and as of each Date
of Delivery (if any) referred to in Section 2(b), hereof and agrees with each
U.S. Underwriter, as follows:
(i) Compliance with Registration Requirements. The
Registration Statement has become effective under the 1933 Act and no
stop order suspending the effectiveness of the Registration Statement
has been issued under the 1933 Act and no proceedings for that purpose
have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the
part of the Commission for additional information has been complied
with.
At the respective times the Registration Statement and any
post-effective amendments thereto became effective and at the Closing
Time (and, if any U.S. Option Securi-
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ties are purchased, at the Date of Delivery), the Registration
Statement and any amendments and supplements thereto complied and will
comply in all material respects with the requirements of the 1933 Act
and the 1933 Act Regulations and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading. Neither of the Prospectuses nor any amendments or
supplements thereto, at the time the Prospectuses or any amendments or
supplements thereto were issued and at the Closing Time (and, if any
U.S. Option Securities are purchased, at the Date of Delivery),
included or will include an untrue statement of a material fact or
omitted or will omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading. If Rule 434 is used, the Company
will comply with the requirements of Rule 434 and the Prospectuses
shall not be "materially different," as such term is used in Rule 434,
from the prospectuses included in the Registration Statement at the
time it became effective. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or the U.S. Prospectus made in reliance upon and
in conformity with information furnished to the Company in writing by
or on behalf of any U.S. Underwriter through the U.S. Representatives
expressly for use in the Registration Statement or the U.S. Prospectus.
Each preliminary prospectus and the prospectuses 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 1933 Act,
complied when so filed in all material respects with the requirements
of the 1933 Act and the 1933 Act Regulations and each preliminary
prospectus and the Prospectuses delivered to the Underwriters for use
in connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX,
except to the extent permitted by Regulation S-T.
(ii) Independent Accountants. The accountants who certified
the financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required
by the 1933 Act and the 1933 Act Regulations.
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(iii) Financial Statements. The financial statements included
in the Registration Statement and the Prospectuses, together with the
related schedules and notes, present fairly the financial position of
the entities to which they relate as of the dates indicated and their
respective results of operations, stockholders' equity and cash flows
for the periods specified; said financial statements have been prepared
in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved. The
supporting schedules included in the Registration Statement present
fairly in accordance with GAAP the information required to be stated
therein. The selected financial data and the summary financial
information included in the Prospectuses present fairly the information
shown therein and, in the case of the consolidated financial data
therein, have been compiled on a basis consistent with that of the
audited financial statements included in the Registration Statement,
and in the case of the combined financial data therein, have been
compiled from financial statements prepared on a basis consistent with
that of the audited financial statements included in the Registration
Statement.
(iv) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement (at the time it became effective), except as otherwise stated
therein (at the time it became effective), (A) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and
its Subsidiaries (as defined below) considered as one enterprise,
whether or not arising in the ordinary course of business (a "Material
Adverse Effect"), (B) there have been no transactions entered into by
the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the
Company and its subsidiaries considered as one enterprise, and (C)
there has been no dividend or distribution of any kind declared, paid
or made by the Company on any class of its capital stock.
(v) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the state of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectuses and to enter into and perform
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its obligations under this Agreement; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing
in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not, singly or in the aggregate, result in a
Material Adverse Effect.
(vi) Good Standing of Subsidiaries. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) and all entities in which the Company has a direct or
indirect majority equity interest or voting power (each a "Subsidiary"
and, collectively, the "Subsidiaries") has been duly organized (to the
extent applicable) and is validly existing as a corporation, general
partnership, limited partnership, limited liability company, closed
joint stock company, or similar entity in good standing (to the extent
applicable) under the laws of the jurisdiction of its organization, has
organizational power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectuses
and is duly qualified as a foreign corporation to transact business and
is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to
be in good standing would not, singly or in the aggregate, result in a
Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, all of the issued and outstanding capital stock
or other ownership interests of each such Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable (to the
extent applicable) and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity, except that the Company's
Capital Stock in Commstock International B.V. and in GTS Hungary has
been pledged to Ericsson Finans A.B. and Creditanstalt Bank as
collateral for certain borrowings; none of the outstanding shares of
capital stock or other ownership interests of any Subsidiary was issued
in violation of the preemptive or similar rights of any securityholder
of such Subsidiary. The only subsidiaries of the Company are (a) the
subsidiaries listed on Exhibit 21 to the Registration Statement and (b)
certain other subsidiaries which, considered in the aggregate as a
single Subsidiary,
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do not constitute a "significant subsidiary" as defined in Rule 1-02
of Regulation S-X.
(vii) Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectuses in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectuses or pursuant to the exercise of convertible securities or
options referred to in the Prospectuses). The shares of issued and
outstanding capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable; none of the
outstanding shares of capital stock of the Company was issued in
violation of the preemptive or other similar rights of any
securityholder of the Company.
(viii) Authorization of Agreement. This Agreement and the
International Purchase Agreement have been duly authorized, executed
and delivered by the Company.
(ix) Authorization and Description of Securities. The
Securities to be purchased by the U.S. Underwriters and the
International Managers from the Company have been duly authorized for
issuance and sale to the U.S. Underwriters pursuant to this Agreement
and the International Managers pursuant to the International Purchase
Agreement, respectively, and, when issued and delivered by the Company
pursuant to this Agreement and the International Purchase Agreement,
respectively, against payment of the consideration set forth herein and
the International Purchase Agreement, respectively, will be validly
issued, fully paid and non-assessable; the Common Stock conforms in all
material respects to all statements relating thereto contained in the
Prospectuses and such description conforms to the rights set forth in
the instruments defining the same; no holder of the Securities will be
subject to personal liability by reason of being such a holder; and the
issuance of the Securities is not subject to the preemptive or other
similar rights of any securityholder of the Company.
(x) Absence of Defaults and Conflicts. Neither the Company
nor any of its Ventures (as defined below) is in violation of its
charter or by-laws (or equivalent constitutive documents) or in default
in the performance or observance of any obligation, agreement, covenant
or condition
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contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which
the Company or any of its Ventures is a party or by which it or any of
them may be bound, or to which any of the property or assets of the
Company or any Venture is subject (collectively, "Agreements and
Instruments") except for such defaults that would not, singly or in the
aggregate, result in a Material Adverse Effect; and the execution,
delivery and performance of this Agreement and the International
Purchase Agreement and the consummation of the transactions
contemplated in this Agreement, the International Purchase Agreement
and in the Registration Statement (including the issuance and sale of
the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectuses under the caption "Use of
Proceeds") and compliance by the Company with its obligations under
this Agreement and the International Purchase Agreement have been duly
authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company or any Venture pursuant to, the Agreements and Instruments
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor
will such action result in any violation of the provisions of the
charter or by-laws (or equivalent constitutive documents) of the
Company or any Venture or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any Venture or any of their assets,
properties or operations. As used herein, (a) "Ventures" means all
entities in which the Company has a direct or indirect greater than 25%
equity interest or voting power and (b) a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company or any Venture.
(xi) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any Venture exists or, to the knowledge of
the Company, is threatened, and the Company
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is not aware of any existing or threatened labor disturbance by the
employees of any of its or any Venture's principal suppliers,
manufacturers, customers or contractors, which, in either case, may
reasonably be expected to, singly or in the aggregate, result in a
Material Adverse Effect.
(xii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the
Company or any Venture, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which,
singly or in the aggregate, might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets of the Company
or any Venture or the consummation of the transactions contemplated in
this Agreement and the International Purchase Agreement or the
performance by the Company of its obligations hereunder or thereunder;
the aggregate of all pending legal or governmental proceedings to which
the Company or any Venture is a party or of which any of their
respective property or assets is the subject which are not described in
the Registration Statement, including ordinary routine litigation
incidental to the business, singly or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
(xiii) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectuses or to be filed as exhibits thereto which have not been so
described and filed as required.
(xiv) Possession of Intellectual Property. The Company and the
Ventures own or possess, or can acquire on reasonable terms, adequate
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, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the
business now operated by them, except to the extent the failure to so
own, possess or be able to acquire would not result in a Material
Adverse Effect, and neither the Company nor any Venture has received
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any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of
the Company or any Venture therein, and which infringement or conflict
(if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would result in a
Material Adverse Effect.
(xv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering, issuance or
sale of the Securities under this Agreement and the International
Purchase Agreement or the consummation of the transactions contemplated
by this Agreement and the International Purchase Agreement, except such
as have been already obtained or as may be required under the 1933 Act
or the 1933 Act Regulations and foreign or state securities or blue sky
laws.
(xvi) Possession of Licenses and Permits. Except as otherwise
disclosed in the Registration Statement, the Company and the Ventures
possess such material permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them; the
Company and the Ventures are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, result in a
Material Adverse Effect; all of the Governmental Licenses are valid and
in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to
be in full force and effect would not have a Material Adverse Effect;
and neither the Company nor any Venture has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(xvii) Title to Property. The Company and the Ventures have good
and marketable title to all real property owned
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by the Company and the Ventures and good title to all other properties
owned by them, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any
kind except such as (a) are described in the Prospectuses or (b) do
not, singly or in the aggregate, 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 or any Venture; and all of the leases
and subleases material to the business of the Company and the Ventures,
considered as one enterprise, and under which the Company or any
Venture holds properties described in the Prospectuses, are in full
force and effect, and neither the Company nor any Venture has any
notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any Venture under any of
the leases or subleases mentioned above, or affecting or questioning
the rights of the Company or such Venture to the continued possession
of the leased or subleased premises under any such lease or sublease.
(xviii) Compliance with Cuba Act. The Company has complied with,
and is and will be in compliance with, the provisions of that certain
Florida act relating to disclosure of doing business with Cuba,
codified as Section 517.075 of the Florida statutes, and the rules and
regulations thereunder (collectively, the "Cuba Act") or is exempt
therefrom.
(xix) Investment Company Act. Neither the Company nor any of
its Subsidiaries is, nor upon the issuance and sale of the Securities
as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectuses will 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
(the "1940 Act").
(xx) Environmental Laws. Except as described in the
Registration Statement and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any Venture is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation,
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ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, "Environmental Laws"), (B) the Company and the
Ventures have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigation or
proceedings relating to any Environmental Law against the Company or
any Ventures and (D) there are no events or circumstances that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any
Ventures relating to Hazardous Materials or any Environmental Laws.
(xxi) Registration Rights. Except as disclosed in the
Prospectuses, there are no persons with registration rights or other
similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under the
1933 Act.
(b) Representations and Warranties by the Selling
Shareholders. Each Selling Shareholder severally represents and warrants to each
U.S. Underwriter as of the date hereof and as of the Closing Time, and agrees
with each U.S. Underwriter, as follows:
(i) Accurate Disclosure. Such Selling Shareholder has
reviewed and is familiar with the Registration Statement and the
Prospectuses and neither the Prospectuses nor any amendment or
supplement thereto includes 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; provided, that the representations and
warranties set forth in this paragraph 1(b)(i) apply only to statements
or omissions in the Registration Statement or the Prospectuses based
upon information relating to such Selling Shareholder furnished to the
Company in writing
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by such Selling Shareholder expressly for use therein. It is understood
and agreed that the only written information furnished to the Company
by each respective Selling Shareholder specifically for use in the
Registration Statement is the information relating to such Selling
Shareholder set forth in the table under the caption "Principal and
Selling Stockholders" in the Prospectuses.
(ii) Authorization of Agreements. Such Selling Shareholder
has the full right, power and authority to enter into this Agreement
and, with the exception of Commingled Pension Trust Fund (Multi-Market
Special Investment Fund II) of Xxxxxx Guaranty Trust Company of New
York, Xxxxxx X. Xxxxx Foundation (Multi-Market Account), Multi-Market
Special Investment Trust Fund of Xxxxxx Guaranty Trust Company of New
York, JPM Emerging Markets Special Opportunities Portfolio, L.P. and
JPM Emerging Markets Special Opportunities Portfolio Offshore, L.P.
(collectively, the "X.X. Xxxxxx Entities") and Emerging Markets Growth
Fund, Inc., Capital International Emerging Markets Fund and New Europe
East Investment Fund (collectively, the "Capital Group Entities"), a
Power of Attorney and Custody Agreement (the "Power of Attorney and
Custody Agreement"), and such Selling Shareholder has the full right,
power and authority to sell, transfer and deliver the Securities to be
sold by such Selling Shareholder hereunder. The execution and delivery
of this Agreement and, with the exception of the X.X. Xxxxxx Entities
and the Capital Group Entities, the Power of Attorney and Custody
Agreement, and the sale and delivery of the Securities to be sold by
such Selling Shareholder and the consummation of the transactions
contemplated herein and compliance by such Selling Shareholder with its
obligations hereunder have been duly authorized by such Selling
Shareholder and do not and will not, whether with or without the giving
of notice or passage of time or both, conflict with or constitute a
breach of, or default under, or result in the creation or imposition of
any tax, lien, charge or encumbrance upon the Securities to be sold by
such Selling Shareholder or any property or assets of such Selling
Shareholder pursuant to any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, license, lease or other
agreement or instrument to which such Selling Shareholder is a party or
by which such Selling Shareholder may be bound, or to which any of the
property or assets of such Selling Shareholder is subject, nor will
such action result in any violation of the provisions of the charter or
by-laws or other organizational instrument
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of such Selling Shareholder, if applicable, or any applicable treaty,
law, statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over such Selling Shareholder or any of its
properties.
(iii) Valid and Marketable Title. Such Selling Shareholder
has and will at the Closing Time have valid and marketable title to the
Securities to be sold by such Selling Shareholder hereunder, free and
clear of any security interest, mortgage, pledge, lien, charge, claim,
equity or encumbrance of any kind, other than pursuant to this
Agreement; and upon delivery of such Securities and payment of the
purchase price therefor as herein contemplated, assuming each such U.S.
Underwriter has no notice of any adverse claim, each of the U.S.
Underwriters will receive valid and marketable title to the Securities
purchased by it from such Selling Shareholder, free and clear of any
security interest, mortgage, pledge, lien, charge, claim, equity or
encumbrance of any kind.
(iv) Due Execution of Power of Attorney and Custody
Agreement. Such Selling Shareholder, with the exception of the X.X.
Xxxxxx Entities and the Capital Group Entities, has duly executed and
delivered, in the form heretofore furnished to the U.S.
Representatives, the Power of Attorney and Custody Agreement with Xxxxx
X. Xxxxxx, Xxxxxxx X. Xxxxxxx and Xxxx Xxxxxx, or any of them, as
attorneys-in-fact (the "Attorneys-in-Fact") and the Company, as
custodian (the "Custodian"); the Custodian is authorized to deliver the
Securities to be sold by such Selling Shareholder hereunder and to
accept payment therefor; and each Attorney-in-Fact is authorized to
execute and deliver this Agreement and the certificate referred to in
Section 5(f) or that may be required pursuant to Section 5(l) on behalf
of such Selling Shareholder, to sell, assign and transfer to the U.S.
Underwriters the Securities to be sold by such Selling Shareholder
hereunder, to determine the purchase price to be paid by the
Underwriters to such Selling Shareholder, as provided in Section 2(a)
hereof, but subject to the provisions of the Power of Attorney, to
authorize the delivery of the Securities to be sold by such Selling
Shareholder hereunder, to accept payment therefor, and otherwise to act
on behalf of such Selling Shareholder in connection with this
Agreement.
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(v) Absence of Manipulation. Such Selling Shareholder has
not taken, and will not take, directly or indirectly, any action which
is designed to or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of the Securities.
(vi) Absence of Further Requirements. No filing with, or
consent, approval, authorization, order, registration, qualification or
decree of, any court or governmental authority or agency, domestic or
foreign, is necessary or required for the performance by each Selling
Shareholder of its obligations hereunder or, with the exception of the
X.X. Xxxxxx Entities and the Capital Group Entities, in the Power of
Attorney and Custody Agreement, or in connection with the sale and
delivery of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement, except such as may have
previously been made or obtained or as may be required under the 1933
Act or the 1933 Act Regulations or state securities laws.
(vii) Restriction on Sale of Securities. During of a period
of 90 days from the date of the Prospectuses, such Selling Shareholder
will not, without the prior written consent of Xxxxxxx Xxxxx on behalf
of the Underwriters, (a) 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 or otherwise
transfer or dispose of, directly or indirectly, any share of Common
Stock or any securities convertible into or exercisable or exchangeable
for Common Stock or file any registration statement under the 1933 Act
with respect to any of the foregoing or (b) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause
(a) or (b) 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 the sale of the Securities hereunder and under the
International Purchase Agreement.
(viii) Certificates Suitable for Transfer. Certificates for
all of the Securities to be sold by such Selling Shareholder, with the
exception of the X.X. Xxxxxx Entities
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and the Capital Group Entities, pursuant to this Agreement, in suitable
form for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank with signatures
guaranteed, have been placed in custody with the Custodian with
irrevocable conditional instructions to deliver such Securities to the
U.S. Underwriters pursuant to this Agreement.
(c) Officer's Certificates. Any certificate signed by any
officer of the Company or any Ventures delivered to the Global Coordinator, the
U.S. Representatives or to counsel for the U.S. Underwriters shall be deemed a
representation and warranty by the Company herein to each U.S. Underwriter as to
the matters covered thereby; and any certificate signed by or on behalf of the
Selling Shareholders as such and delivered to the U.S. Representatives or to
counsel for the U.S. Underwriters pursuant to the terms of this Agreement shall
be deemed a representation and warranty by such Selling Shareholder to the U.S.
Underwriters as to the matters covered thereby.
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing.
(a) Initial Securities. The Company and each Selling
Shareholder, severally and not jointly, agrees to sell to each U.S. Underwriter,
severally and not jointly, and on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, each U.S. Underwriter, severally and not jointly, agrees to purchase from
the Company and each Selling Shareholder, at the price per share set forth in
Schedule C, that proportion of the number of Initial Securities set forth in
Schedule B opposite the name of the Company or such Selling Shareholder, as the
case may be, which the number of Initial U.S. Securities set forth in Schedule A
opposite the name of such U.S. Underwriter, plus any additional number of
Initial U.S. Securities which such U.S. Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof, bears to the total
number of Initial Securities, subject in each case, to such adjustments among
the U.S. Underwriters as the U.S. Representatives in their sole discretion shall
make to eliminate any sales or purchases of fractional shares.
(b) Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company and each Selling Shareholder, severally
and not jointly, hereby grants an option to the U.S. Underwriters, severally and
not
22
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jointly, to purchase up to an additional 941,220 shares of Common Stock as set
forth in Schedule B, at the price per share set forth in Schedule C, less an
amount per share equal to any dividends or distributions declared by the Company
and payable on the Initial U.S. Securities but not payable on the U.S. Option
Securities. The option hereby granted will expire 30 days after the date hereof
and may be exercised not more than two times in whole or in part only for the
purpose of covering over-allotments which may be made in connection with the
offering and distribution of the Initial U.S. Securities upon notice by the
Global Coordinator to the Company and the Selling Shareholders setting forth the
number of U.S. Option Securities as to which the several U.S. Underwriters are
then exercising the option and the time and date of payment and delivery for
such U.S. Option Securities. Any such time and date of delivery for the U.S.
Option Securities (a "Date of Delivery") shall be determined by the Global
Coordinator, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or any portion of the
U.S. Option Securities, each of the U.S. Underwriters, acting severally and not
jointly, on the basis of the representations and warranties of the Company
contained herein and subject to the terms and conditions herein set forth, will
purchase that proportion of the total number of U.S. Option Securities then
being purchased which the number of Initial U.S. Securities set forth in
Schedule A opposite the name of such U.S. Underwriter bears to the total number
of Initial U.S. Securities, subject in each case to such adjustments as the
Global Coordinator in its discretion shall make to eliminate any sales or
purchases of fractional shares.
(c) Payment. Payment of the purchase price for the Initial
Securities shall be made at the offices of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other place as shall be agreed upon
by the Global Coordinator and the Company, at 9:00 A.M. (Eastern time) on the
third (fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on the date
hereof) business day after the date hereof (unless postponed in accordance with
the provisions of Section 10), or such other time not later than ten business
days after such date as shall be agreed upon by the Global Coordinator and the
Company (such time and date of payment and delivery being herein called "Closing
Time").
In addition, in the event that any or all of the U.S. Option
Securities are purchased by the U.S. Underwriters, payment of the purchase price
for such U.S. Option Securities
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shall be made at the above-mentioned offices, or at such other place as shall be
agreed upon by the Global Coordinator and the Company, on each Date of Delivery
as specified in the notice from the Global Coordinator to the Company.
Payment shall be made to the Company and the Selling
Shareholders by wire transfer of immediately available funds to bank accounts
designated by the Company and the Custodian pursuant to each Selling
Shareholder's Power of Attorney and Custody Agreement, as the case may be, with
the exception of the X.X. Xxxxxx Entities and the Capital Group Entities. It is
understood that each U.S. Underwriter has authorized the U.S. Representatives,
for its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Initial U.S. Securities and the U.S. Option Securities,
if any, which it has agreed to purchase. Xxxxxxx Xxxxx, individually and not as
representative of the U.S. Underwriters, may (but shall not be obligated to)
make payment of the purchase price for the Initial U.S. Securities or the U.S.
Option Securities, if any, to be purchased by any U.S. Underwriter whose funds
have not been received by the Closing Time or the relevant Date of Delivery, as
the case may be, but such payment shall not relieve such U.S. Underwriter from
its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial
U.S. Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates for the Initial
U.S. Securities and the U.S. Option Securities, if any, will be made available
for examination and packaging by the U.S. Representatives in The City of New
York not later than 10:00 A.M. (Eastern time) on the business day prior to the
Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants
with each U.S. Underwriter as follows:
(a) Compliance with Securities Regulations and Commission
Requests. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify the Global
Coordinator immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement shall become effective,
or any supplement to the Prospectuses or any amended Prospectuses shall have
been filed, (ii) of the receipt of any comments
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-20-
from the Commission, (iii) of any request by the Commission for any amendment to
the Registration Statement or any amendment or supplement to the Prospectuses or
for additional information, and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company will promptly effect the filings necessary pursuant
to Rule 424(b) and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under Rule 424(b)
was received for filing by the Commission and, in the event that it was not, it
will promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term Sheet
or any amendment, supplement or revision to either the prospectus included in
the Registration Statement at the time it became effective or to the
Prospectuses, will furnish the Global Coordinator with copies of any such
documents a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file or use any such document to which the Global
Coordinator or counsel for the U.S. Underwriters shall reasonably object within
three Business Days after being furnished such documents.
(c) Delivery of Registration Statements. The Company has
furnished or will deliver to the U.S. Representatives and counsel for the U.S.
Underwriters, without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the U.S.
Representatives, without charge, a conformed copy of the Registration Statement
as originally filed and of each amendment thereto (without exhibits) for each of
the U.S. Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the U.S. Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
XXXXX, except to the extent permitted by Regulation S-T.
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(d) Delivery of Prospectuses. The Company has delivered to
each U.S. Underwriter, without charge, as many copies of each preliminary
prospectus as such U.S. Underwriter reasonably requested, and the Company hereby
consents to the use of such copies for purposes permitted by the 1933 Act. The
Company will furnish to each U.S. Underwriter, without charge, during the period
when the U.S. Prospectus is required to be delivered under the 1933 Act or the
Securities Exchange of 1934 (the "1934 Act"), such number of copies of the U.S.
Prospectus (as amended or supplemented) as such U.S. Underwriter may reasonably
request. The U.S. Prospectus and any amendments or supplements thereto furnished
to the U.S. Underwriters will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company
will comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement, the International Purchase Agreement and the Prospectuses. If at any
time when a prospectus is required by the 1933 Act to be delivered in connection
with sales of the Securities, any event shall occur or condition shall exist as
a result of which it is necessary, in the reasonable opinion of counsel for the
U.S. Underwriters or for the Company, to amend the Registration Statement or
amend or supplement any Prospectus in order that the Prospectuses will not
include any untrue statements of a material fact or omit to state a material
fact necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time it is delivered to a purchaser,
or if it shall be necessary, in the reasonable opinion of any such counsel, at
any such time to amend the Registration Statement or amend or supplement any
Prospectus in order to comply with the requirements of the 1933 Act or the 1933
Act Regulations, the Company will promptly prepare and file with the Commission,
subject to Section 3(b), such amendment or supplement as may be necessary to
correct such statement or omission or to make the Registration Statement or the
Prospectuses comply with such requirements, and the Company will furnish to the
U.S. Underwriters such number of copies of such amendment or supplement as the
U.S. Underwriters may reasonably request.
(f) Rule 158. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally available
to its securityholders an earnings statement for the purposes of, and to provide
the benefits contemplated by, the last paragraph of Section 11(a) of the 1933
Act.
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(g) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified in the
Prospectuses under "Use of Proceeds."
(h) Listing. The Company will use its best efforts to effect
the admission of the Securities being issued and sold by the Company pursuant to
this Agreement on the European Association of Securities Dealers Automated
Quotation ("EASDAQ") system and comply with the requirements of such exchange to
maintain such listing. The Company will use its best efforts to effect and
maintain the quotation of the Securities being issued and sold by the Company
pursuant to this Agreement on the Nasdaq National Market and will file with the
Nasdaq National Market all documents and notices required by the Nasdaq National
Market of companies that have securities that are traded in the over-the-counter
market and quotations for which are reported by the Nasdaq National Market.
(i) Restriction on Sale of Securities. During a period of 90
days from the date of the Prospectuses, the Company will not, without the prior
written consent of the Global Coordinator, (i) directly or indirectly, 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 or otherwise transfer or dispose of any share of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
file any registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
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 sale of the Securities hereunder and under
the International Purchase Agreement, (B) the issuance of any shares of Common
Stock by the Company upon the exercise of options or warrants or the conversion
of securities outstanding on the date hereof and referred to in the Prospectuses
or (C) the purchase or acquisition of shares of Common Stock pursuant to
contracts entered into prior to the date hereof and referred to in the
Prospectuses.
(j) Reporting Requirements. The Company, during the period
when the Prospectuses are required to be delivered under
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-23-
the 1933 Act or the 1934 Act, will file all documents required to be filed with
the Commission pursuant to the 1934 Act and rules and regulations of the
Commission thereunder within the time periods referred to therein.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to
the performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, including any stock or
other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the Underwriters and the transfer of
the Securities between the U.S. Underwriters and the International Managers,
(iv) the fees and disbursements of the Company's counsel, accountants and other
advisors, (v) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheets and of the Prospectuses and any
amendments or supplements thereto, (vi) the preparation, printing and delivery
to the Underwriters of copies of the Blue Sky Survey and any supplement thereto,
(vii) the fees and expenses of any transfer agent or registrar for the
Securities, (viii) the filing fees incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review by
the National Association of Securities Dealers, Inc. (the "NASD") of the terms
of the sale of the Securities and (ix) the fees and expenses incurred in
connection with the listing of the Securities being issued and sold by the
Company and the Selling Shareholders, as applicable, pursuant to this Agreement
on EASDAQ and inclusion of the Securities being issued and sold by the Company
and the Selling Shareholders, as applicable, pursuant to this Agreement in the
Nasdaq National Market.
(b) Expenses of the Selling Shareholders. The Selling
Shareholders, jointly and severally, will pay all expenses incident to the
performance of their respective obligations under, and the consummation of the
transactions contemplated by, this Agreement, including (i) any stamp duties,
capital duties and stock transfer taxes, if any, payable upon the sale of the
Securities to the U.S. Underwriters, and their transfer
28
-24-
between the U.S. Underwriters pursuant to an agreement between such U.S.
Underwriters, and (ii) the fees and disbursements of their respective counsel
and accountants.
(c) Termination of Agreement. If this Agreement is terminated
by the U.S. Representatives in accordance with the provisions of Section 5,
Section 9(a)(i) or Section 11 hereof, the Company and the Selling Shareholders
shall reimburse the U.S. Underwriters for all of their out-of-pocket expenses
reasonably incurred by the U.S. Underwriters in connection with this Agreement
or the offering of the Securities contemplated hereunder, including the
reasonable fees and disbursements of counsel and special counsel for the U.S.
Underwriters.
(d) Allocation of Expenses. The provisions of this Section
shall not affect any agreement that the Company and the Selling Shareholders may
make for the sharing of such costs and expenses.
SECTION 5. Conditions of U.S. Underwriters' Obligations. The
obligations of the several U.S. Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Company and the Selling
Shareholders contained in Section 1 hereof and in certificates of any officer of
the Company or any subsidiary of the Company or on behalf of any Selling
Shareholder delivered pursuant to the provisions hereof, to the performance by
the Company of its covenants and other obligations hereunder, and to the
following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement has become effective and at Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the U.S. Underwriters. A
prospectus containing the Rule 430A Information shall have been filed
with the Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the
Company has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 424(b).
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(b) Opinion of Counsel for Company. At Closing Time, the U.S.
Underwriters shall have received the favorable opinion, dated as of
Closing Time, of each of Shearman & Sterling, counsel for the Company,
Xxxxx Xxxxxx, Senior Vice President and General Counsel of the Company,
Coudert Brothers, special counsel for the Company and special
regulatory counsel for Hermes Europe Railtel B.V., Shevchenko
Didkovskiy & Partners, special Ukrainian counsel to Bancomsvyaz,
Somodeco, counsel and regulatory counsel to GTS Monaco Access X.X.X.,
and Loeff Xxxxxx Xxxxxxx, special Dutch counsel, each in form and
substance satisfactory to counsel for the U.S. Underwriters, together
with signed or reproduced copies of such letter for each of the other
U.S. Underwriters to the effect set forth in Exhibits A-1 through A-6
hereto.
(c) Opinion of Counsel for the Selling Shareholders. At
Closing Time, the U.S. Underwriters shall have received the favorable
opinion, dated as of the Closing Time, of the respective counsel for
each Selling Shareholder, in form and substance satisfactory to counsel
for the U.S. Underwriters, together with signed or reproduced copies of
such letter for each of the other U.S. Underwriters to the effect set
forth in Exhibit A-7 hereto and to such further effect as counsel to
the U.S. Underwriters may be reasonably request.
(d) Opinion of Counsel for U.S. Underwriters. At Closing Time,
the U.S. Underwriters shall have received the favorable opinion, dated
as of Closing Time, of each of Xxxxxx Xxxxxx & Xxxxxxx, counsel for the
U.S. Underwriters, and Xxxxxxxx Chance, special Russian counsel to the
U.S. Underwriters, together with signed or reproduced copies of such
letter for each of the other U.S. Underwriters as to such matters as
are reasonably requested by the Representatives.
(e) Officers' Certificate. At Closing Time, there shall not
have been, since the date hereof or since the respective dates as of
which information is given in the Prospectuses, any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business, and the U.S. Representatives shall
have received a certificate of the President or a Vice President of the
Company and of the chief financial or chief accounting officer of the
Company,
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dated as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect
as though expressly made at and as of Closing Time, (iii) the Company
has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to Closing Time, and (iv)
no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of such officer, are
contemplated by the Commission.
(f) Certificates of Selling Shareholders. At Closing Time, the
U.S. Underwriters shall have received certificates signed by each
Selling Shareholder or an Attorney-in-Fact on behalf of each Selling
Shareholder, dated as of Closing Time, to the effect that (i) the
representations and warranties of each Selling Shareholder contained in
Section 1(b) hereof are true and correct in all respects with the same
force and effect as though expressly made at and as of Closing Time and
(ii) each Selling Shareholder has complied in all material respects
with all agreements and all conditions on its part to be performed
under this Agreement at or prior to Closing Time.
(g) Accountant's Comfort Letter. At the time of the execution
of this Agreement, the U.S. Underwriters shall have received from Ernst
& Young a letter dated such date, in form and substance satisfactory to
the U.S. Representatives, together with signed or reproduced copies of
such letter for each of the other U.S. Underwriters 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 Prospectuses.
(h) Bring-down Comfort Letter. At Closing Time, the U.S.
Underwriters shall have received from Ernst & Young a letter, dated as
of Closing Time, to the effect that they reaffirm the statements made
in the letter furnished pursuant to subsection (e) of this Section,
except that the specified date referred to shall be a date not more
than three business days prior to Closing Time.
(i) Listing. At Closing Time, the Securities being issued and
sold by the Company pursuant to this Agreement
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shall have been accepted for listing on EASDAQ, subject only to
official notice of issuance. At Closing Time, the Securities being
issued and sold by the Company pursuant to this Agreement shall have
been accepted for inclusion in the Nasdaq National Market, subject only
to official notice of issuance.
(j) No Objection. The NASD has confirmed that it has not
raised any objection with respect to the fairness and reasonableness of
the underwriting terms and arrangements.
(k) Lock-up Agreements. At the date of this Agreement, the
U.S. Representatives shall have received an agreement substantially in
the form of Exhibit B hereto signed by a sufficient number of holders
as is reasonably acceptable to the U.S. Representatives of shares of
Common Stock, warrants, options or other rights to purchase or acquire
shares of Common Stock or other securities convertible or exchangeable
into Common Stock (other than the Company's Convertible Bonds due 2000
(the "Convertible Bonds")).
(l) Purchase of Initial International Securities.
Contemporaneously with the purchase by the U.S. Underwriters of the
Initial U.S. Securities under this Agreement, the International
Managers shall have purchased the Initial International Securities
under the International Purchase Agreement.
(m) Conditions to Purchase of U.S. Option Securities. In the
event that the U.S. Underwriters exercise their option provided in
Section 2(b) hereof to purchase all or any portion of the U.S. Option
Securities, the representations and warranties of the Company and the
Selling Shareholders contained herein and the statements in any
certificates furnished by the Company, any subsidiary of the Company
and the Selling Shareholders hereunder shall be true and correct as of
each Date of Delivery and, at the relevant Date of Delivery, the U.S.
Representatives shall have received:
(i) Officers' Certificate. A certificate, dated such
Date of Delivery, of the President or a Vice President of the
Company and of the chief financial or chief accounting officer
of the Company confirming that the certificate delivered at
the Closing Time
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pursuant to Section 5(d) hereof remains true and correct as of
such Date of Delivery.
(ii) Certificate of the Selling Shareholders. A
certificate, dated such Date of Delivery, of an
Attorney-in-Fact on behalf of each Selling Shareholder
confirming that the certificate delivered at Closing Time
pursuant to Section 5(f) hereof remains true and correct as of
such Date of Delivery.
(iii) Opinion of Counsel for Company. The favorable opinion,
dated as of such Date of Delivery, of each of the counsels
listed in Section 5(b), each in form and substance
satisfactory to counsel for the U.S. Underwriters, relating to
the U.S. Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion
required by Section 5(b) hereof.
(iv) Opinion of Counsel for the Selling Shareholders. The
favorable opinion, dated as of such Date of Delivery, of the
respective counsel for each Selling Shareholder, in form and
substance satisfactory to counsel for the U.S. Underwriters,
relating to the Option Securities to be purchased on such Date
of Delivery and otherwise to the same effect as the opinion
required by Section 5(c) hereof.
(v) Opinion of Counsel for U.S. Underwriters. The
favorable opinion of Xxxxxx Xxxxxx & Xxxxxxx, counsel for the
U.S. Underwriters and Xxxxxxxx Chance, special counsel to the
U.S. Underwriters, dated such Date of Delivery, relating to
the U.S. Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion
required by Section 5(c) hereof.
(vi) Bring-down Comfort Letter. A letter from Ernst &
Young, in form and substance satisfactory to the U.S.
Representatives and dated such Date of Delivery, substantially
in the same form and substance as the letter furnished to the
U.S. Representatives pursuant to Section 5(f) hereof, except
that the "specified date" in the letter furnished pursuant to
this paragraph shall be a date not more than five days prior
to such Date of Delivery.
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(n) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the U.S. Underwriters shall have been furnished
with such documents and opinions as they may reasonably request for the
purpose of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated, or in order to evidence the accuracy
of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the
Company in connection with the issuance and sale of the Securities by
the Company and with the sale of the Securities by the Selling
Shareholders as herein contemplated shall be reasonably satisfactory in
form and substance to the U.S. Representatives and counsel for the U.S.
Underwriters.
(o) Termination of Agreement. If any condition specified in
this Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of U.S. Option Securities on a Date of Delivery which is after
the Closing Time, the obligations of the several U.S. Underwriters to
purchase the relevant Option Securities, may be terminated by the U.S.
Representatives by notice to the Company at any time at or prior to
Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party
except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of U.S. Underwriters. The Company and the
Selling Shareholders, jointly and severally, agree to indemnify and hold
harmless each U.S. Underwriter and each person, if any, who controls any U.S.
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any
34
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untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectuses (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 6(c) below) any such settlement is effected
with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Xxxxxxx
Xxxxx), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of any U.S. Underwriter through the U.S. Representatives expressly for
use in the Registration Statement (or any amendment or supplement thereto),
including the Rule 430A Information and the Rule 434 Information, if applicable,
or any preliminary prospectus or the U.S. Prospectus (or any amendment or
supplement thereto); provided, further that the Company will not be liable to a
U.S. Underwriter with respect to any preliminary prospectus to the extent that
the Company shall sustain the burden of proving that any such loss, liability,
claim, damage or expense resulted from the fact that such U.S. Underwriter, in
contravention of a requirement of this Agreement or applicable law, sold
Securities to a person to whom such U.S. Underwriter failed to send or give, at
or prior to the Closing Date, a copy of the U.S. Prospectus, as then
35
-31-
amended or supplemented if: (i) the Company has previously furnished copies
thereof (sufficiently in advance of the Closing Date to allow for distribution
by the Closing Date) to the U.S. Underwriters and the loss, liability, claim,
damage or expense of such U.S. Underwriter resulted from an untrue statement or
omission of a material fact contained in or omitted from the preliminary
prospectus which was corrected in the U.S. Prospectus as, if applicable, amended
or supplemented prior to the Closing Date and such U.S. Prospectus was required
by law to be delivered at or prior to the written confirmation of sale to such
person and (ii) such failure to give or send such U.S. Prospectus by the Closing
Date to the party or parties asserting such loss, liability, claim, damage or
expense would have constituted the sole defense to the claim asserted by such
person; provided, further, that each Selling Shareholder shall be liable only
with reference to information relating to such Selling Shareholder furnished to
the Company in writing by or on behalf of such Selling Shareholder expressly for
use in the Registration Statement, any preliminary prospectus, the U.S.
Prospectus or any amendment or supplement thereto; provided, further, that each
Selling Shareholder's aggregate liability under this Section 6(a) shall be
limited to an amount equal to the gross proceeds (after deducting the
underwriting discount, but before deducting expenses) received by such Selling
Shareholder from the sale of the U.S. Securities and the International
Securities pursuant to the Purchase Agreements.
(b) Indemnification of Company, Directors and Officers and
Selling Shareholders. Each U.S. Underwriter severally agrees to indemnify and
hold harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, each
Selling Shareholder and each person, if any, who controls any Selling
Shareholder within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment or supplement thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or any preliminary U.S. prospectus or the
U.S. Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such U.S.
Underwriter through the U.S. Representatives expressly for use in the
Registration Statement (or any amendment or supplement thereto) or such
preliminary prospectus or the U.S. Prospectus (or any amendment or supplement
thereto).
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(c) Actions Against Parties; Notification. Each indemnified
party shall give notice as promptly as reasonably practicable to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability hereunder to
the extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have otherwise than on
account of this indemnity agreement. In the case of parties indemnified pursuant
to Section 6(a) above, counsel to the indemnified parties shall be selected by
Xxxxxxx Xxxxx, and, in the case of parties indemnified pursuant to Section 6(b)
above, counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) Settlement Without Consent if Failure to Reimburse. If at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its written
37
-33-
consent if (i) such settlement is entered into more than 45 days after receipt
by such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
(e) Other Agreements with Respect to Indemnification. The
provisions of this Section shall not affect any agreement among the Company and
the Selling Shareholders with respect to indemnification.
SECTION 7. Contribution. If the indemnification provided for
in Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Shareholders on the one hand and the U.S. Underwriters
on the other hand from the offering of the Securities pursuant to this Agreement
or (ii) if the allocation provided by clause (i) 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 the Selling Shareholders on the one hand and of the U.S.
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling
Shareholders on the one hand and the U.S. Underwriters on the other hand in
connection with the offering of the U.S. Securities pursuant to this Agreement
shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of the U.S. Securities pursuant to this Agreement
(before deducting expenses) received by the Company and the Selling Shareholders
and the total underwriting discount received by the U.S. Underwriters, in each
case as set forth on the cover of the U.S. Prospectus, or, if Rule 434 is used,
the corresponding location on the Term Sheet, bear to the aggregate initial
public offering price of the U.S. Securities as set forth on such cover.
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The relative fault of the Company and the Selling Shareholders
on the one hand and the U.S. Underwriters on the other hand shall be determined
by reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Selling Shareholders
or by the U.S. Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Shareholders and the U.S.
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation (even if the
U.S. Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this Section 7. The aggregate amount of losses,
liabilities, claims, damages and expenses incurred by an indemnified party and
referred to above in this Section 7 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission.
Notwithstanding the provisions of this Section 7, (i) no
Selling Shareholder shall be required to contribute any amount in excess of the
amount of the total net proceeds received by such Selling Shareholder from the
U.S. Securities purchased from such Selling Shareholder and (ii) no U.S.
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the U.S. Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such U.S. Underwriter has otherwise been required to pay by reason
of any 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 0000 Xxx) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who
controls a U.S. Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the
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same rights to contribution as such U.S. Underwriter, and each director of the
Company, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company or any the Selling Shareholder
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Company or such Selling
Shareholder, as the case may be. The U.S. Underwriters' respective obligations
to contribute pursuant to this Section 7 are several in proportion to the number
of Initial U.S. Securities set forth opposite their respective names in Schedule
A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements contained in
this Agreement or in certificates of officers of the Company or any Venture or
the Selling Shareholders submitted pursuant hereto, shall remain operative and
in full force and effect, regardless of any investigation made by or on behalf
of any U.S. Underwriter or controlling person, or by or on behalf of the Company
or the Selling Shareholders, and shall survive delivery of the Securities to the
U.S. Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The U.S. Representatives may
terminate this Agreement, by notice to the Company and the Selling Shareholders,
at any time at or prior to Closing Time (i) if there has been, since the time of
execution of this Agreement or since the respective dates as of which
information is given in the U.S. Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the U.S. Representatives, impracticable
to market the Securities or to enforce contracts for the sale of the Securities,
or (iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission, or EASDAQ, Luxembourg Stock Exchange or
the Nasdaq National Market, or if trading generally on the American Stock
Exchange or the New York Stock Exchange
40
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or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the NASD or any other governmental authority, or (iv)
if a banking moratorium has been declared by either Federal or New York
authorities.
(b) Liabilities. If this Agreement is terminated pursuant to
this Section, such termination shall be without liability of any party to any
other party except as provided in Section 4 hereof, and provided further that
Sections 1, 6, 7 and 8 shall survive such termination and remain in full force
and effect.
SECTION 10. Default by One or More of the U.S. Underwriters.
If one or more of the U.S. Underwriters shall fail at Closing Time or a Date of
Delivery to purchase the Securities which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"), the U.S. Representatives
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting U.S. Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, the U.S.
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of U.S. Securities to be purchased on such date, each of
the non-defaulting U.S. Underwriters shall be obligated, severally and
not jointly, to purchase the full amount thereof in the proportions
that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting U.S. Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of U.S. Securities to be purchased on such date, this Agreement
or, with respect to any Date of Delivery which occurs after the Closing
Time, the obligation of the U.S. Underwriters to purchase and of the
Company to sell the Option Securities to be purchased and sold on such
Date of Delivery shall terminate without liability on the part of any
non-defaulting U.S. Underwriter.
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No action taken pursuant to this Section shall relieve any
defaulting U.S. Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery which is
after the Closing Time, which does not result in a termination of the obligation
of the U.S. Underwriters to purchase and the Company to sell the relevant U.S.
Option Securities, as the case may be, either (i) the U.S. Representatives or
(ii) the Company and any Selling Shareholder shall have the right to postpone
Closing Time or the relevant Date of Delivery, as the case may be, for a period
not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
As used herein, the term "U.S. Underwriter" includes any person substituted for
a U.S. Underwriter under this Section 10.
SECTION 11. Default by One or More of the Selling Shareholders
or the Company. (a) If one or more of the Selling Shareholders selling an
aggregate of at least $15,000,000 of Securities shall fail at Closing Time or at
a Date of Delivery to sell and deliver the number of Securities which such
Selling Shareholder or Selling Shareholders are obligated to sell hereunder, and
the remaining Selling Shareholders do not exercise the right hereby granted to
increase, pro rata or otherwise, the number of Securities to be sold by them
hereunder to the total number to be sold by all Selling Shareholders as set
forth in Schedule B hereto, then the U.S. Underwriters may, at option of the
U.S. Representatives, by notice from the U.S. Representatives to the Company and
the non-defaulting Selling Shareholders, either (a) terminate this Agreement
without any liability on the fault of any non-defaulting party except that the
provisions of Sections 1, 4, 6, 7 and 8 shall remain in full force and effect or
(b) elect to purchase the Securities which the non-defaulting Selling
Shareholders and the Company have agreed to sell hereunder. No action taken
pursuant to this Section 11 shall relieve any Selling Shareholder so defaulting
from liability, if any, in respect of such default.
In the event of a default by any Selling Shareholder as
referred to in this Section 11, each of the U.S. Representatives, the Company
and the non-defaulting Selling Shareholders shall have the right to postpone
Closing Time or the Date of Delivery for a period not exceeding seven days in
order to effect any required change in the Registration Statement or
Prospectuses or in any other documents or arrangements.
42
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(b) If the Company shall fail at Closing Time or at the Date
of Delivery to sell the number of Securities that it is obligated to sell
hereunder, then this Agreement shall terminate without any liability on the part
of any non-defaulting party; provided, however, that the provisions of Sections
1, 4, 6, 7 and 8 shall remain in full force and effect. No action taken pursuant
to this Section 11 shall relieve the Company from liability, if any, in respect
of such default.
SECTION 12. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
U.S. Underwriters shall be directed to the U.S. Representatives c/o Merrill
Xxxxx & Co., Xxxxxxx Xxxxx Xxxxxx, Xxxxxx & Xxxxx Incorporated at North Tower,
World Financial Center, New York, New York 10281-1201, attention of Xxxxxx
Xxxxxx; notices to the Company shall be directed to it at 0000 Xxxxxxxx Xxxxx,
Xxxxx Xxxxx - 00xx Xxxxx, XxXxxx, XX 00000, attention of Xxxxxxx X. Xxxxxxx; and
notices to the Selling Shareholders shall be directed to the Company at 0000
Xxxxxxxx Xxxxx, Xxxxx Xxxxx - 00xx Xxxxx, XxXxxx, XX 00000, attention of Xxxxxxx
X. Xxxxxxx.
SECTION 13. Parties. This Agreement shall each inure to the
benefit of and be binding upon the U.S. Underwriters, the Company and the
Selling Shareholders and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the U.S. Underwriters, the Company and
the Selling Shareholders and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the U.S. Underwriters, the Company and the Selling
Shareholders and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any U.S. Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
43
-39-
SECTION 15. Effect of Headings. The Article and Section
headings herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.
44
-40-
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the U.S. Underwriters, the Company and the Selling
Shareholders in accordance with its terms.
Very truly yours,
GLOBAL TELESYSTEMS GROUP, INC.
By:
Title:
THE SELLING SHAREHOLDERS NAMED IN
SCHEDULE B HERETO, EXCLUDING
THE X.X. XXXXXX ENTITIES AND
THE CAPITAL GROUP ENTITIES
By:
As Attorney-in-Fact acting on behalf of the
Selling Shareholders named in Schedule B
hereto, excluding the X.X. Xxxxxx Entities
and the Capital Group Entities
45
-41-
XXXXXX GUARANTY TRUST COMPANY OF X.X. XXXXXX INVESTMENT MANAGEMENT INC.
NEW YORK, AS TRUSTEE OF THE AS INVESTMENT MANAGER AND AGENT JPM
COMMINGLED PENSION TRUST FUND EMERGING MARKETS SPECIAL OPPORTUNITIES
(MULTI-MARKET SPECIAL INVESTMENT PORTFOLIO, L.P.
FUND II) OF XXXXXX GUARANTY TRUST
COMPANY OF NEW YORK
X.X. XXXXXX INVESTMENT MANAGEMENT INC.
AS INVESTMENT MANAGER AND AGENT JPM
XXXXXX GUARANTY TRUST COMPANY OF EMERGING MARKETS SPECIAL OPPORTUNITIES
NEW YORK, AS INVESTMENT MANAGER PORTFOLIO OFFSHORE, L.P.
AND AGENT FOR THE XXXXXX X.
XXXXX FOUNDATION (MULTI-MARKET
ACCOUNT)
XXXXXX GUARANTY TRUST COMPANY
OF NEW YORK, AS TRUSTEE OF THE
MULTI-MARKET SPECIAL INVESTMENT
TRUST FUND OF XXXXXX GUARANTY
TRUST COMPANY OF NEW YORK
By: By:
---------------------------- -------------------------------------
Name: Name:
Title: Title:
46
-42-
EMERGING MARKETS GROWTH FUND, INC.
By:
-------------------------------------
Name:
Title:
CAPITAL INTERNATIONAL EMERGING MARKETS FUND
By:
-------------------------------------
Name:
Title:
NEW EUROPE EAST INVESTMENT FUND
By:
-------------------------------------
Name:
Title:
47
-43-
CONFIRMED AND ACCEPTED, as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
XXXXXX BROTHERS INC.
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:
---------------------------------------------
Authorized Signatory
For themselves and as U.S. Representatives of the other U.S. Underwriters named
in Schedule A hereto.
48
SCHEDULE A
Number of
Initial U.S.
Name of U.S. Underwriter Securities
------------------------ ------------
Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated..........................................................
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation......................................................
Bear, Xxxxxxx & Co. Inc.........................................................
BT Alex. Xxxxx Incorporated.....................................................
Xxxxxx Brothers Inc.............................................................
Prudential Securities Incorporated..............................................
Xxxxxxx and X. Xxxxxxxxxxxx, Inc................................................ -------------
Total........................................................................... $
SCHEDULE X-0
00
XXXXXXXX X
Number of Maximum Number
Initial U.S. of Option
Securities Securities
to be Sold to be Sold
----------- --------------
Global TeleSystems Group, Inc...............................
[SELLING SHAREHOLDERS]......................................
Total....................................................... $ $
------------ ------------
SCHEDULE B-1
50
SCHEDULE C
GLOBAL TELESYSTEMS GROUP, INC.
Shares of Common Stock
(Par Value $.10 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $[ ].
2. The purchase price per share for the U.S. Securities to be paid
by the several U.S. Underwriters shall be $[ ], being an amount equal to the
initial public offering price set forth above less $[ ] per share; provided that
the purchase price per share for any U.S. Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be reduced
by an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial U.S. Securities but not payable on the U.S.
Option Securities.
SCHEDULE C-1
51
Exhibit B
, 1998
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx, Xxxxx, Xxxxxx, Xxxxxx & Xxxxx
Incorporated
North Tower
World Financial Center
Xxx Xxxx, Xxx Xxxx 00000-0000
Xxxxxx Xxxxxx of America
Re: Agreement not to sell or otherwise
dispose of securities of Global
TeleSystems Group, Inc.
Ladies and Gentlemen:
The undersigned, a stockholder of Global TeleSystems Group, Inc. (the
"Company"), understands that the Company proposes to file two registration
statements on Form S-1 with the Securities and Exchange Commission in connection
with public offerings (the "Offerings") of shares of Common Stock (the "Shares")
and convertible bonds (the "Bonds," together with the Shares, the "Securities")
of the Company. The undersigned further understands that the Company proposes to
enter into one or more purchase agreements (the "Purchase Agreements") with
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") as
representative of the underwriters of the Offerings (the "Underwriters").
In recognition of the benefit that such Offerings will confer upon the
undersigned as a stockholder of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
in order to induce the Company and the Underwriters to enter into the respective
Purchase Agreements and to proceed with the Offerings, the undersigned hereby
agrees, that until the date that is 90 days after the date of the Purchase
Agreements, the undersigned will not, without the prior written consent of
Xxxxxxx Xxxxx, directly or indirectly, (i) offer, pledge, sell,
B-1
52
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant for the sale of, or
otherwise dispose of or transfer any Shares or any securities convertible into
or exchangeable or exercisable for any Shares (other than any Shares sold
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"), or any securities convertible into or
exchangeable or exercisable for any such Shares, whether now owned or hereafter
acquired by the undersigned or with respect to which the undersigned has or
hereafter acquires the power of disposition (except for publicly-traded Shares
that have been acquired on Nasdaq or Easdaq) or request the filing of any
registration statement under the Securities Act with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of Shares (other than any Shares sold pursuant to an
effective registration statement under the Securities Act), whether any such
swap transaction is to be settled by delivery of Shares or other securities, in
cash or otherwise.
Sincerely,
Name of Stockholder:
--------------------------------------
(Print)
Signature:
--------------------------------------
By:
(if not natural person)
B-2
