RSL COMMUNICATIONS, LTD.
Class A Common Shares
--------------
Underwriting Agreement
(U.S. Version)
--------------------------
November , 1998
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.,
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, and
Warburg Dillon Read LLC, a subsidiary of UBS AG
c/o Goldman, ▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
RSL Communications, Ltd., a Bermuda corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an
aggregate of 5,250,000 shares of Class A Common Shares ("Stock") of the Company
(the "Firm Shares"), and the Company and each of the selling shareholders
identified on Schedule II hereto (the "Selling Shareholders") proposes, subject
to the terms and conditions stated herein, to sell, at the election of the
Underwriters, up to 787,500 additional shares (the "Optional Shares") of Stock.
The Firm Shares and the Optional Shares that the Underwriters elect to purchase
pursuant to Section 2 hereof are collectively called the "Shares".
It is understood and agreed to by all parties that the Company and the
Selling Shareholders are concurrently entering into an agreement (the
"International Underwriting Agreement") providing for the sale by the Company
of 1,750,000 shares of Stock (exclusive of the Underwriters' overallotment
option), and the sale by the Company and the Selling Shareholders through an
overallotment option of up to a total of 262,500 additional shares of Stock
(the 2,012,500 shares of stock offered thereby are collectively, the
"International Shares"), through arrangements with ▇▇▇▇▇▇▇ Sachs International,
▇▇▇▇▇▇ Brothers International (Europe), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International
Limited, ▇▇▇▇▇▇▇ ▇▇▇▇▇ International and UBS AG (the "International
Underwriters"). Anything herein or therein to the contrary notwithstanding, the
respective closings under this Agreement and the International Agreement are
hereby expressly made conditional on one another. The Underwriters hereunder
and the International Underwriters are simultaneously entering into an
Agreement between U.S. and International Underwriting Syndicates (the
"Agreement between Syndicates") which provides, among other things, for the
transfer of shares of Stock between the
two syndicates. Two forms of prospectus are to be used in connection with
the offering and sale of shares of Stock contemplated by the foregoing, one
relating to the Shares hereunder and the other relating to the International
Shares. The latter form of prospectus will be identical to the former except
for certain substitute pages as included in the registration statement and
amendments thereto as mentioned below. Except as used in Sections 2, 3, 4, 9
and 11 herein, and except as the context may otherwise require, references
hereinafter to the Shares shall include all the shares of Stock which may be
sold pursuant to either this Agreement or the International Underwriting
Agreement, and references herein to any prospectus whether in preliminary or
final form, and whether as amended or supplemented, shall include both the U.S.
and the international versions thereof.
1. (A) The Company represents and warrants to, and agrees
with, each of the Underwriters that:
(a) A registration statement on Form S-1
(File No. 333-62325) in respect of the Shares has been filed
with the Securities and Exchange Commission (the
"Commission"); such registration statement and any
post-effective amendment thereto, each in the form heretofore
delivered to you, and, excluding exhibits thereto, to you for
each of the other Underwriters, have been declared effective
by the Commission in such form; no other document with
respect to such registration statement has heretofore been
filed with the Commission; and no stop order suspending the
effectiveness of such registration statement has been issued
and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus
included in such registration statement or filed with the
Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Securities Act of
1933, as amended (the "Act"), is hereinafter called a
"Preliminary Prospectus"; the various parts of such
registration statement, including all exhibits thereto and
including the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b)
under the Act in accordance with Section 5(a) hereof and
deemed by virtue of Rule 430A under the Act to be part of the
registration statement at the time it was declared effective,
each as amended at the time such part of the registration
statement became effective, are hereinafter collectively
called the "Registration Statement"; and such final
prospectus, in the form first filed pursuant to Rule 424(b)
under the Act, is hereinafter called the "Prospectus");
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and
each Preliminary Prospectus, at the time of filing thereof,
conformed in all material respects to the requirements of the
Act and the rules and regulations of the Commission
thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided, however, that this representation and warranty
shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of an Underwriter
through ▇▇▇▇▇▇▇, Sachs & Co. expressly for use therein or by
or on behalf of a Selling Shareholder expressly for use in
the preparation of the answers therein to Items 7 and 11(m)
of Form S-1;
(c) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus will conform, in all
material respects to the requirements of the Act and the
rules and regulations of the Commission thereunder and do not
and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of
the applicable filing date as to the Prospectus and any
amendment
or supplement thereto, 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; provided, however, that this representation
and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of an
Underwriter through ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use
therein or by or on behalf of a Selling Shareholder expressly
for use in the preparation of the answers therein to Items 7
and 11(m) of Form S-1;
(d) Neither the Company nor any of its subsidiaries
has sustained since the date of the latest audited financial
statements included in the Prospectus any loss to, or
interference with, its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order
or decree, which loss or interference is material to the
business of the Company and its subsidiaries taken as a whole
otherwise than as set forth or contemplated in the
Prospectus; and, since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital
stock, short-term debt or long-term debt of the Company or
any of its subsidiaries or any material adverse change, or
any development involving a prospective material adverse
change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of
operations of the Company and its subsidiaries taken as a
whole (a "Material Adverse Effect"), otherwise than as set
forth or contemplated in the Prospectus;
(e) The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good
and marketable title to all personal property owned by them
and material to the business of the Company and its
subsidiaries taken as a whole, in each case free and clear of
all liens, encumbrances and defects except such as are
described in the Prospectus or such as do not materially
affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the
Company and its subsidiaries; and any real property and
buildings held under lease by the Company and its
subsidiaries and material to the business of the Company and
its subsidiaries taken as a whole are held by them under
valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the
Company and its subsidiaries;
(f) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of Bermuda (meaning that it has not failed to make any
filing with any Bermuda governmental authority or to pay any
Bermuda government fee or tax, the failure of which would
make it liable to be struck off the Bermuda Register of
Companies and thereby cease to exist under the laws of
Bermuda) with corporate power and authority to own its
properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which
it owns or leases properties or conducts any business so as
to require such qualification except for any failures to be
so qualified or in good standing, that individually or in the
aggregate, would not reasonably be expected to have a
Material Adverse Effect; and each material subsidiary of the
Company listed on Schedule III hereto (the "Material
Subsidiaries") has been duly incorporated or organized and is
validly existing as a corporation or limited liability
company and, where available, is in good standing under the
laws of its jurisdiction of incorporation or organization;
3
(g) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the issued shares of
capital stock of the Company have been duly and validly
authorized and issued, and are fully paid and non-assessable
and conform to the description of the capital stock contained
in the Prospectus; and all of the issued shares of capital
stock owned by the Company of each subsidiary of the Company
have been duly and validly authorized and issued, are fully
paid and non-assessable and (except for directors' qualifying
shares and except as set forth in the Prospectus) are owned
directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims;
(h) The unissued Shares to be issued and sold by the
Company to the Underwriters hereunder and under the
International Underwriting Agreement have been duly and
validly authorized and, when issued and delivered against
payment therefor as provided herein and in the International
Underwriting Agreement, will be duly and validly issued and
fully paid and non-assessable and will conform to the
description of the Stock contained in the Prospectus;
(i) The issue and sale of the Shares by the Company
hereunder and under the International Underwriting Agreement
and the compliance by the Company with all of the provisions
of this Agreement and the International Underwriting
Agreement and the consummation of the transactions herein and
therein contemplated will not (i) result in any violation of
the provisions of the Memorandum of Association or By-laws of
the Company, (ii) result in a breach or violation of any of
the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject,
nor (iii) will such action result in any violation of any
existing statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties
except, in the case of clauses (ii) and (iii) above, such
breaches or violations which would not, individually or in
the aggregate, be reasonably likely to have a Material
Adverse Effect or be reasonably likely to prevent the Company
from performing its obligations under this Agreement; and no
consent, approval, authorization, order, registration or
qualification of or with any such governmental agency is
required for the issue and sale of the Shares or the
consummation by the Company of the transactions contemplated
by this Agreement and the International Underwriting
Agreement, except the registration under the Act of the
Shares and such consents, approvals, authorizations,
registrations or qualifications as may be required under
foreign or state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the
Underwriters and the International Underwriters;
(j) Neither the Company nor any Material Subsidiary
is in violation of its Memorandum of Association or Bye-laws
or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by
which it or any of its properties may be bound, except for
defaults that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect;
(k) The statements set forth in the Prospectus under
the caption "Description of Capital Stock", insofar as they
purport to constitute a summary of the terms of the Stock and
under the captions "Certain United States Federal Income
4
Tax Considerations" and "Certain Bermuda Tax Considerations",
and under the caption "Underwriting", insofar as they purport
to describe the provisions of the laws and documents referred
to therein, are accurate and fair summaries or descriptions
thereof;
(l) Other than as set forth in the Prospectus, there
are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any
property of the Company or any of its subsidiaries is the
subject with respect to which there is a reasonable
likelihood of a determination that, individually or in the
aggregate, would have a Material Adverse Effect and, to the
best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or
threatened by others;
(m) The Company is not and, after giving effect to
the offering and sale of the Shares, will not be an
"investment company" or an entity "controlled" by an
"investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment
Company Act");
(n) Neither the Company nor any of its affiliates
does business with the government of Cuba or with any person
or affiliate located in Cuba within the meaning of Section
517.075, Florida Statutes;
(o) Deloitte & Touche, LLP, who have certified
certain financial statements of the Company and its
subsidiaries and certain financial statements of RSL COM
North America, Inc., formerly known as International
Telecommunications Group, Ltd., are independent public
accountants as required by the Act and the rules and
regulations of the Commission thereunder;
(p) The Company and its subsidiaries (i) are in
material compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all
permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except
where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such
permits, licenses or approvals would not, individually or in
the aggregate, reasonably be expected to have a Material
Adverse Effect;
(q) The Company and its subsidiaries own or possess
the right to use all patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks,
service marks and trade names currently employed by them in
connection with, and material to, the business now operated
by them, taken as a whole, and neither the Company nor any of
its subsidiaries has received any notice of infringement of
or conflict with asserted rights of others with respect to
any of the foregoing with respect to which there is a
reasonable likelihood of a determination that, individually
or in the aggregate, would have a Material Adverse Effect;
(r) Except as described in or contemplated by the
Prospectus, no material labor dispute with the employees of
the Company or any of its subsidiaries exists, or, to the
knowledge of the Company, is imminent that, individually or
in the
5
aggregate would reasonably be expected to have a Material
Adverse Effect; and the Company is not aware of any existing,
threatened or imminent labor disturbance by the employees of
any of its principal suppliers, manufacturers or contractors
that would reasonably be expected to result in a Material
Adverse Effect;
(s) The Company and its subsidiaries are insured by
insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and
customary in the businesses in which they are engaged;
neither the Company nor any such subsidiary has been refused
any insurance coverage sought or applied for; and neither the
Company nor any such subsidiary has any reason to believe
that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not result in a
Material Adverse Effect, except as described in or
contemplated by the Prospectus;
(t) The Company and its subsidiaries (i) possess all
certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities
necessary to conduct their respective businesses (excepting
any certificate, authorization or permit, the failure to
possess which would not reasonably be expected to result in a
Material Adverse Effect) and (ii) have not received any
notice of proceedings relating to revocation or modification
of any such certificate, authorization or permit with respect
to which there is a reasonable likelihood of a determination
that, individually or in the aggregate, would have a Material
Adverse Effect, except as described in or contemplated by the
Prospectus;
(u) The Company and its subsidiaries maintain a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in
accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted
only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for
assets in compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences; and
(v) The Company is reviewing its operations and that
of its subsidiaries and any third parties with which the
Company or any of its subsidiaries has a relationship
material to the business of the Company and its subsidiaries
taken as a whole to evaluate the extent to which the business
or operations of the Company or any of its subsidiaries will
be affected by the Year 2000 Problem. Based on the results of
such review to the date hereof, the Company has no reason to
believe, and does not believe, that the Year 2000 Problem
will have a Material Adverse Effect. The "Year 2000 Problem"
as used herein means any significant risk that computer
hardware or software used in the receipt, transmission,
processing, manipulation, storage, retrieval, retransmission
or other utilization of data or in the operation of
mechanical or electrical systems of any kind will not, in the
case of dates or time periods occurring after December 31,
1999, function at least as effectively as in the case of
dates or time periods occurring prior to January 1, 2000.
6
(B) Each of the Selling Shareholders severally represents and
warrants to, and agrees with, each of the Underwriters and the Company that:
(a) All consents, approvals, authorizations and
orders necessary for the execution and delivery by such
Selling Shareholder of this Agreement, the International
Underwriting Agreement, the Power of Attorney and the Custody
Agreement hereinafter referred to, and for the sale and
delivery of the Shares to be sold by such Selling Shareholder
hereunder and under the International Underwriting Agreement,
have been obtained, except for the registration under the Act
of the Shares and such consents, approvals, authorizations,
registrations or qualifications as may be required under
foreign or state securities or Blue Sky laws; and such
Selling Shareholder has full right, power and authority to
enter into this Agreement, the International Underwriting
Agreement, the Power of Attorney and the Custody Agreement
and to sell, assign, transfer and deliver the Shares to be
sold by such Selling Shareholder hereunder and under the
International Underwriting Agreement;
(b) The sale of the Shares to be sold by such
Selling Shareholder hereunder and under the International
Underwriting Agreement and the compliance by such Selling
Shareholder with all of the provisions of this Agreement, the
International Underwriting Agreement, the Power of Attorney
and the Custody Agreement and the consummation of the
transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under,
any statute, indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which such
Selling Shareholder is a party or by which such Selling
Shareholder is 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
Certificate of Incorporation or By-laws of such Selling
Shareholder if such Selling Shareholder is a corporation, the
partnership agreement of such Selling Shareholder if such
Selling Shareholder is a partnership or any statute or any
order, rule or regulation of any court or governmental agency
or body having jurisdiction over such Selling Shareholder or
the property of such Selling Shareholder, except that such
Selling Shareholder makes no representation under this
paragraph as to the registration or filing requirements or
disclosure provisions (other than with respect to the
information provided by or on behalf of such Selling
Shareholder expressly for use in the preparation of the
answers therein to Items 7 and 11(m) of Form S-1) of the
securities laws of the United States or the securities or
Blue Sky laws of any other jurisdiction;
(c) Such Selling Shareholder has, and immediately
prior to each Time of Delivery (as defined in Section 4
hereof) (except in the case of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, in which
case solely prior to the Second Time of Delivery (as defined
in Section 4 hereof)) such Selling Shareholder will have good
and valid title to the Shares to be sold by such Selling
Shareholder hereunder and under the International
Underwriting Agreement, free and clear of all liens,
encumbrances, equities or claims; and, upon delivery of such
Shares and payment therefor pursuant hereto and thereto, good
and valid title to such Shares, free and clear of all liens,
encumbrances, equities or claims, will pass to the several
Underwriters or the International Underwriters, as the case
may be;
(d) Except for ▇▇▇▇▇▇ ▇▇▇▇▇▇ and Bukfenc, Inc.,
during the period beginning from the date hereof and
continuing to and including the date 90 days after the date
of the Prospectus, not to offer, sell, contract to sell or
otherwise dispose of, except as provided hereunder or under
the International Underwriting
7
Agreement, any securities of the Company that are
substantially similar to the Shares, including but not
limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive,
Stock or any such substantially similar securities (other
than pursuant to employee stock option plans existing on, or
upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, the date of this
Agreement), without your prior written consent;
(e) 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 Shares;
(f) To the extent that any statements or omissions
made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement
thereto are made in reliance upon and in conformity with
written information furnished to the Company by or on behalf
of such Selling Shareholder expressly for use therein, such
Preliminary Prospectus and the Registration Statement did,
and the Prospectus and any further amendments or supplements
to the Registration Statement and the Prospectus, when they
become effective or are filed with the Commission, as the
case may be, will conform in all material respects to the
requirements of the Act and the rules and regulations of the
Commission thereunder and will not contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make there
not misleading;
(g) In order to document the Underwriters'
compliance with the reporting and withholding provisions of
the Tax Equity and Fiscal Responsibility Act of 1982 with
respect to the transactions herein contemplated, such Selling
Shareholder will deliver to you prior to or at the Time of
Delivery (as hereinafter defined) a properly completed and
executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department
regulations in lieu thereof);
(h) Certificates in negotiable form representing all
of the Shares to be sold by such Selling Shareholder
hereunder and under the International Underwriting Agreement
have been placed in custody under a Custody Agreement, in the
form heretofore furnished to you (the "Custody Agreement"),
duly executed and delivered by such Selling Shareholder to
American Stock Transfer and Trust Company, as custodian (the
"Custodian"), and such Selling Shareholder has duly executed
and delivered a Power of Attorney, in the form heretofore
furnished to you (the Power of Attorney), appointing the
persons indicated in Schedule II hereto, and each of them, as
such Selling Shareholder's attorneys-in-fact (the
"Attorney-in-Fact") with authority to execute and deliver
this Agreement and the International Underwriting Agreement
on behalf of such Selling Shareholder, to determine the
purchase price to be paid by the Underwriters and the
International Underwriters to the Selling Shareholders as
provided in Section 2 hereof, to authorize the delivery of
the Shares to be sold by such Selling Shareholder hereunder
and otherwise to act on behalf of such Selling Shareholder in
connection with the transactions contemplated by this
Agreement, the International Underwriting Agreement and the
Custody Agreement; and
(i) The Shares represented by the certificates held
in custody for such Selling Shareholder under the Custody
Agreement are subject to the interests of the Underwriters
hereunder and the International
8
Underwriters under the International Underwriting Agreement;
the arrangements made by such Selling Shareholder for such
custody, and the appointment by such Selling Shareholder of
the Attorneys-in-Fact by the Power of Attorney, are to that
extent irrevocable; the obligations of the Selling
Shareholders hereunder shall not be terminated by operation
of law, whether by the death or incapacity of any individual
Selling Shareholder or, in the case of an estate or trust, by
the death or incapacity of any executor or trustee or the
termination of such estate or trust, or in the case of a
partnership or corporation, by the dissolution of such
partnership or corporation, or by the occurrence of any other
event; if any individual Selling Shareholder or any such
executor or trustee should die or become incapacitated, or if
any such estate or trust should be terminated, or in any such
partnership or corporation should be dissolved, or if any
other such event should occur, before the delivery of the
Shares hereunder, certificates representing the Shares shall
be delivered by or on behalf of the Selling Shareholders in
accordance with the terms and conditions of this Agreement,
to the International Underwriting Agreement and of the
Custody Agreements; and actions taken by the
Attorneys-in-Fact pursuant to the Powers of Attorney shall be
as valid as if such death, incapacity, termination,
dissolution or other event had not occurred, regardless of
whether or not the Custodian, the Attorneys-in-Fact, or any
of them, shall have received notice of such death,
incapacity, termination, dissolution or other event.
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company,
at a purchase price per share of $[ ], the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto and (b) in the event
and to the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Company agrees to issue and sell and
each of the Selling Shareholders agrees, severally and not jointly, to sell to
each of the Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company and each of the Selling Shareholders,
at the purchase price per share set forth in clause (a) of this Section 2, that
portion of the number of Optional Shares as to which such election shall have
been exercised (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying such number of Optional Shares by a fraction, the
numerator of which is the maximum number of Optional Shares which such
Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of Optional Shares that all of the Underwriters are entitled to purchase
hereunder.
The Company and the Selling Shareholders, as and to the extent
indicated in Schedule II hereto, hereby grant, severally and not jointly, to
the Underwriters the right to purchase at their election up to 787,500 Optional
Shares, at the purchase price per share set forth in clause (a) of the
paragraph above, for the sole purpose of covering overallotments in the sale of
the Firm Shares. Any such election to purchase Optional Shares shall be made in
proportion to the maximum number of Optional Shares to be sold by the Company
and each Selling Shareholder as set forth in Schedule II hereto; provided that
in the event of any election by the Underwriters pursuant to their right to
purchase Option Shares, the Underwriters will exercise their overallotment
option first from the Selling Shareholders on a pro rata basis and then from
the Company. Any such election to purchase Optional Shares may be exercised
only by written notice from you to the Company, given within a period of 30
calendar days after the date of this Agreement, setting forth the aggregate
number of Optional Shares to be purchased and the date on which such Optional
Shares are to be delivered, as determined by you but in no event earlier than
the First Time of Delivery (as defined in Section 4 hereof) or, unless you and
the Company otherwise agree in writing, earlier than two or later than ten
business days after the date of such notice.
9
3. Upon the authorization by you of the release of the Firm Shares,
the several Underwriters propose to offer the Firm Shares for sale upon the
terms and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each
Underwriter hereunder, in definitive form, and in such
authorized denominations and registered in such names as
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. may request upon at least forty-eight
hours' prior notice to the Company and the Selling
Shareholders, shall be delivered by or on behalf of the
Company and the Selling Shareholders to ▇▇▇▇▇▇▇, Sachs & Co.,
through the facilities of the Depository Trust Company,
("DTC") for the account of such Underwriter, against payment
by or on behalf of such Underwriter of the purchase price
therefor by wire transfer of immediately available (Federal)
funds to the account specified by the Company and each of the
Selling Shareholders. The Company will cause the certificates
representing the Shares to be made available for checking and
packaging at least twenty-four hours prior to the Time of
Delivery (as defined below) with respect thereto at the
office of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Designated Office"). The time and date
of such delivery and payment shall be, with respect to the
Firm Shares, 9:30 a.m., New York City time, on [ ] or such
other time and date as ▇▇▇▇▇▇▇, Sachs & Co. and the Company
may agree upon in writing, and, with respect to the Optional
Shares, 9:30 a.m., New York time, on the date specified by
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. in the written notice given by ▇▇▇▇▇▇▇,
Sachs & Co. of the Underwriters' election to purchase such
Optional Shares, or such other time and date as ▇▇▇▇▇▇▇,
Sachs & Co. and the Company may agree upon in writing. Such
time and date for delivery of the Firm Shares is herein
called the "First Time of Delivery", such time and date for
delivery of the Optional Shares, if not the First Time of
Delivery, is herein called the "Second Time of Delivery", and
each such time and date for delivery is herein called a "Time
of Delivery".
(b) The documents to be delivered at each Time of
Delivery by or on behalf of the parties hereto pursuant to
Section 7 hereof, including the cross receipts for the Shares
and any additional documents requested by the Underwriters
pursuant to Section 7(m) hereof, will be delivered at the
offices of Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Closing Location"), and the Shares will
be delivered at the Designated Office, all at such Time of
Delivery. A meeting will be held at the Closing Location at
2:00 p.m., New York City time, on the New York Business Day
next preceding such Time of Delivery, at which meeting the
final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking
institutions in New York are generally authorized or
obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
10
(a) To prepare the Prospectus in a form approved by
you and to file such Prospectus pursuant to Rule 424(b) under
the Act not later than the Commission's close of business on
the second business day following the execution and delivery
of this Agreement, or, if applicable, such earlier time as
may be required by Rule 430A(a)(3) under the Act; to make no
further amendment or any supplement to the Registration
Statement or Prospectus prior to the last Time of Delivery
which shall be reasonably disapproved by you promptly after
reasonable notice thereof; to advise you, promptly after it
receives notice thereof, of the time when any amendment to
the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish you with copies
thereof; to advise you, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order
or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus, of the suspension of
the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus or suspending any such
qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action
as you may reasonably request to qualify the Shares for
offering and sale under the securities laws of such
jurisdictions as you may request and to comply with such laws
so as to permit the continuance of sales and dealings therein
in such jurisdictions for as long as may be necessary to
complete the distribution of the Shares, provided that in
connection therewith the Company shall not be required to
qualify as a foreign corporation, take any action that would
subject them to any tax or to file a general consent to
service of process in any jurisdiction;
(c) To furnish the Underwriters with copies of the
Prospectus in such quantities as you may from time to time
reasonably request, and, if the delivery of a prospectus is
required at any time prior to the expiration of nine months
after the time of issue of the Prospectus in connection with
the offering or sale of the Shares and if at such time any
event shall have occurred as a result of which the Prospectus
as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made
when such Prospectus is delivered, not misleading, or, if for
any other reason it shall be necessary or desirable during
such same period to amend or supplement the Prospectus, to
notify you and upon your request to prepare and furnish
without charge to each Underwriter and to any dealer in
securities as many copies as you may from time to time
reasonably request of an amended Prospectus or a supplement
to the Prospectus which will correct such statement or
omission or effect such compliance, and in case any
Underwriter is required to deliver a prospectus in connection
with sales of any of the Shares at any time nine months or
more after the time of issue of the Prospectus, upon your
request but at the expense of such Underwriter, to prepare
and deliver to such Underwriter as many copies as you may
request of an amended or supplemented Prospectus complying
with Section 10(a)(3) of the Act;
(d) To make generally available to its
securityholders as soon as practicable, but in any event not
later than eighteen months after the effective date of the
Registration Statement (as defined in Rule 158(c) under the
Act), an earnings statement of the Company and its
subsidiaries (which need not be audited)
11
complying with Section 11(a) of the Act and the rules and
regulations thereunder (including, at the option of the
Company, Rule 158);
(e) During the period beginning from the date hereof
and continuing to and including the date 90 days after the
date of the Prospectus, not to offer, sell, contract to sell
or otherwise dispose of, except as provided hereunder and
under the International Underwriting Agreement, any
securities of the Company that are substantially similar to
the Shares, including but not limited to any securities that
are convertible into or exchangeable for, or that represent
the right to receive, Stock or any such substantially similar
securities (other than pursuant to stock option plans
existing on, or upon the conversion or exchange of
convertible or exchangeable securities outstanding as of, the
date of this Agreement), without the prior written consent of
▇▇▇▇▇▇▇, Sachs & Co.;
(f) To furnish to its shareholders as soon as
practicable after filing with the Commission an annual report
(including a balance sheet and statements of income,
shareholders' equity and cash flows of the Company and its
consolidated subsidiaries certified by independent public
accountants);
(g) During a period of five years from the effective
date of the Registration Statement, to furnish to you copies
of all reports or other communications (financial or other)
furnished to shareholders, and to deliver to you (i) as soon
as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities
of the Company is listed; and (ii) such additional
information concerning the business and financial condition
of the Company as you may from time to time reasonably
request (such financial statements to be on a consolidated
basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its
shareholders generally or to the Commission);
(h) To use the net proceeds received by it from the
sale of the Shares pursuant to this Agreement and the
International Underwriting Agreement in the manner specified
in the Prospectus under the caption "Use of Proceeds"; and
(i) To use its best efforts to list for quotation
the Shares on the National Association of Securities Dealers
Automated Quotations National Market System ("NASDAQ").
12
6. The Company covenants and agrees with the several Underwriters that
(a) the Company will pay or cause to be paid (i) the
fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Shares
under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration
Statement, any Preliminary Prospectus and the Prospectus and
any amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers;
(ii) the cost of reproducing and distributing any Agreement
among Underwriters, this Agreement, closing documents
(including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery
of the Shares; (iii) all expenses in connection with the
qualification of the Shares for offering and sale under state
securities laws as provided in Section 5(b) hereof, including
the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the
Blue Sky survey; (iv) all fees and expenses in connection
with listing the Shares on the NASDAQ; and (v) the filing
fees incident to, and the fees and disbursements of counsel
for the Underwriters in connection with, securing any
required review by the National Association of Securities
Dealers, Inc. of the terms of the sale of the Shares;
(b) the Company will pay or cause to be paid (i) the
cost of preparing stock certificates; (ii) the cost and
charges of any transfer agent or registrar; and (iii) all
other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically
provided for in this Section; and
(c) the Company will pay or cause to be paid all
costs and expenses incident to the performance of each
Selling Shareholder's obligations hereunder which are not
otherwise specifically provided for in this Section,
including (i) any fees and expenses of counsel for each
Selling Shareholder, (ii) each Selling Shareholder's pro rata
share of the fees and expenses of the Custodian, and (iii)
all expenses and taxes incident to the sale and delivery of
the Shares to be sold by each Selling Shareholder to the
Underwriters hereunder. In connection with Clause (c)(iii) of
the preceding sentence, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. agrees to pay
New York State stock transfer tax, and the Company agrees to
reimburse ▇▇▇▇▇▇▇, Sachs & Co. for associated carrying costs
if such tax payment is not rebated on the day of payment and
for any portion of such tax payment not rebated (and the
Company will be entitled to receive any rebate to the extent
that it has previously made any such reimbursement).
It is understood, however, that, except as provided in this Section,
and Sections 8 and 11 hereof, the Underwriters will pay all of their own costs
and expenses, including the fees of their counsel, stock transfer taxes on
resale of any of the Shares by them, and any advertising expenses connected
with any offers they may make.
13
7. The obligations of the Underwriters hereunder, as to the Shares to
be delivered at each Time of Delivery, shall be subject, in their discretion,
to the condition that all representations and warranties and other statements
of the Company and the Selling Shareholders herein are, at and as of such Time
of Delivery, true and correct, the condition that the Company and the Selling
Shareholders shall have performed all of their obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time
period prescribed for such filing by the rules and
regulations under the Act and in accordance with Section 5(a)
hereof; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and all requests
for additional information on the part of the Commission
shall have been complied with to your reasonable
satisfaction;
(b) Cravath, Swaine & ▇▇▇▇▇, counsel for the
Underwriters, shall have furnished to you such opinion or
opinions, dated such Time of Delivery, with respect to such
matters as you may reasonably request, and such counsel shall
have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(c) Debevoise & ▇▇▇▇▇▇▇▇, special counsel for the
Company, shall have furnished to you their written opinion,
dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) Each subsidiary of the Company listed
under the caption "U.S. Subsidiaries" on Schedule
III hereto (a "U.S. Subsidiary", and, collectively,
the "U.S. Subsidiaries") has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of its jurisdiction of
incorporation, with the corporate power and
authority to own its properties and conduct its
business as described in the Prospectus; and all of
the issued shares of capital stock of each U.S.
Subsidiary owned by the Company or any of its
subsidiaries have been duly and validly authorized
and issued, are fully paid and non-assessable, and
(except for directors' qualifying shares and except
as otherwise set forth in the Prospectus) are owned
of record directly or indirectly by the Company,
free and clear of any perfected security interest
or, to such counsel's knowledge, any other lien,
encumbrance, equity or claim (such counsel being
entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect
to matters of fact upon certificates of officers of
the Company or its subsidiaries, provided that such
counsel shall state that they believe that both you
and they are justified in relying upon such opinions
and certificates);
(ii) Each U.S. Subsidiary has been duly
qualified as a foreign corporation for the
transaction of business and, where available, is in
good standing under the laws of each other
jurisdiction in which it owns or leases properties
or conducts any business so as to require such
qualification, except where the failure to be so
qualified or in good standing could not reasonably
be expected to have a Material Adverse Effect (such
counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local
counsel and in respect of matters of fact upon
certificates of officers of the Company or such U.S.
Subsidiary, provided that such counsel shall state
14
that they believe that both you and they are
justified in relying upon such opinions and
certificates);
(iii) To the best of such counsel's
knowledge and other than as set forth in the
Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property
of the Company or any of its subsidiaries is the
subject with respect to which there is a reasonable
likelihood of a determination that individually or
in the aggregate would have a Material Adverse
Effect; and, to the best of such counsel's
knowledge, no such proceedings are threatened or
contemplated by governmental authorities or
threatened by others (such counsel being entitled to
rely in respect of the opinion in this clause upon
certificates of officers of the Company or its
subsidiaries, provided that such counsel shall state
that they believe that both you and they are
justified in relying upon such certificates);
(iv) This Agreement and the International
Underwriting Agreement have been duly authorized,
executed and delivered by the Company (such counsel
being entitled to rely in respect of the opinion in
this clause upon the opinion of ▇▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇▇, provided that such counsel shall state that
both you and they are justified in relying upon such
opinion);
(v) The issue and sale of the Shares being
delivered at such Time of Delivery by the Company
and the compliance by the Company with all of the
provisions of this Agreement and the International
Underwriting Agreement and the consummation of the
transactions herein and therein contemplated will
not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of
trust, loan agreement or any other agreement or
instrument of the Company and its subsidiaries known
to such counsel, except where any such breach,
violation or default could not individually or in
the aggregate be expected to result in a Material
Adverse Effect and would not prevent the Company or
any Selling Shareholder from performing its
obligations hereunder, nor will such action result
in any violation of any provision of the General
Corporation Laws of the state of Delaware (the
"DGCL") or any United States federal or New York
state statute (other than any such statute relating
to federal or state telecommunications laws or state
securities or Blue Sky laws, as to which such
counsel need express no opinion) or any order, rule
or regulation (other than any such order, rule or
regulation relating to federal or state
telecommunications laws or state securities or Blue
Sky laws, as to which such counsel need express no
opinion) known to such counsel of any court or
governmental agency or body of the United States
federal governmental or the state of New York or
(insofar as the DGCL is concerned) the state of
Delaware having jurisdiction over the Company or any
of its subsidiaries or any of their properties;
(vi) No consent, approval, authorization,
order, registration or qualification of or with any
court or governmental agency or body having
jurisdiction over the Company or any of its
subsidiaries or any of their properties is required
under the federal laws of the United States (other
than telecommunications laws), the laws of the state
of New York (other than telecommunications laws) or
the DGCL for the issue and sale of the Shares or the
consummation by the Company of the transactions
contemplated by
15
this Agreement and the International Underwriting
Agreement, except the registration under the Act of
the Shares, and such consents, approvals,
authorizations, registrations or qualifications as
may be required under state securities or Blue Sky
laws in connection with the purchase and
distribution of the Shares by the Underwriters and
the International Underwriters;
(vii) None of the U.S. Subsidiaries is in
violation of its Certificate of Incorporation or
By-laws or in default in the performance or
observance of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed
of trust, loan agreement, lease or other agreement
or instrument known to such counsel to which such
U.S. Subsidiary is a party or by which it or any of
its properties may be bound, except for defaults
that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse
Effect (such counsel being entitled to rely in
respect of the opinion in this clause upon
certificates of officers of the Company or its
subsidiaries, provided that such counsel shall state
that they believe that both you and they are
justified in relying upon such certificates);
(viii) The statements set forth in the
Prospectus under the captions "Risk Factors -
Foreign Personal Holding Company and Passive Foreign
Investment Company Rules," "Certain United States
Federal Income Tax Considerations for U.S. Holders
of Class A Common Stock", insofar as they purport to
describe the legal matters, provisions of the laws
and documents referred to therein, are accurate, and
fair summaries or descriptions thereof;
(ix) The Company is not an "investment
company" or an entity "controlled" by an "investment
company", as such terms are defined in the
Investment Company Act;
(x) Under the laws of the State of New York
relating to personal jurisdiction, the Company has,
pursuant to Section 14 of this Agreement, validly
and irrevocably submitted to the personal
jurisdiction of any state or federal court located
in the Borough of Manhattan, The City of New York,
New York (each a "New York Court") in any action
arising out of or relating to this Agreement or the
transactions contemplated hereby, has validly and
irrevocably waived any objection to the venue of a
proceeding in any such court, and has validly and
irrevocably appointed the Authorized Agent (as
defined herein) as its authorized agent for the
purpose described in Section 14 hereof; and service
of process effected on such agent in the manner set
forth in Section 14 hereof will be effective to
confer valid personal jurisdiction over the Company;
(xi) The Registration Statement and the
Prospectus and any further amendments and
supplements thereto made by the Company prior to
such Time of Delivery (other than the financial
statements, related notes and schedules and other
financial data therein, as to which such counsel
need express no opinion) comply as to form in all
material respects with the requirements of the Act
and the rules and regulations thereunder; and
(xii) To such counsel's knowledge, no
amendment to the Registration Statement is required
to be filed nor are there any contracts or other
documents of a character required to be filed as an
exhibit to the Registration Statement or required to
be described in the Registration Statement or the
Prospectus which are not filed or described as
required.
16
Such counsel shall also state that such
counsel have participated in conferences with
officers and other representatives of the Company
and its subsidiaries, representatives of the
independent public accountants of the Company and
representatives of and counsel for the Underwriters
at which the contents of the Registration Statement
and the Prospectus were discussed and, although such
counsel are not passing upon, and assume no
responsibility for, the accuracy or completeness of
the Prospectus or any amendment or supplement
thereto, except for those statements referred to in
the opinion in subsection (viii) of this Section
7(c) (to the extent set forth in such paragraph),
they have no reason to believe that, as of its date,
the Prospectus or any further amendment or
supplement thereto made by the Company prior to such
Time of Delivery (other than the financial
statements, related notes and schedules and other
financial data therein, as to which such counsel
need express no belief) contained an untrue
statement of a material fact or omitted to state a
material fact necessary to make the statements
therein, in the light of the circumstances under
which they were made, not misleading.
In rendering such opinion, such counsel may
state that they express no opinion as to any federal
or state telecommunications laws or any other laws
other than the laws of the state of New York, the
corporate law of the state of Delaware, the laws of
any other jurisdiction addressed by opinions of
local counsel relied upon by such counsel and the
federal laws of the United States.
(d) ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇, Bermuda counsel to the
Company and the Selling Shareholders, shall have furnished to
you their written opinion, dated such Time of Delivery, in
form and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of Bermuda, with power and
authority (corporate and other) to own its
properties and conduct its business as described in
the Prospectus;
(ii) The Company has an authorized
capitalization as set forth in the Prospectus, and
all of the issued shares of capital stock of the
Company (including the Shares being delivered at
such Time of Delivery) have been duly and validly
authorized and issued and are fully paid and
non-assessable, and (except for directors'
qualifying shares and except as set forth in the
Prospectus) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrance,
equities or claims; and the Shares conform to the
description of the Stock contained in the
Prospectus;
(iii) To the best of such counsel's
knowledge and other than as set forth in the
Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property
of the Company or any of its subsidiaries is the
subject which, if determined adversely to the
Company or any of its subsidiaries, would
individually or in the aggregate have a Material
Adverse Effect on the current or future consolidated
financial position, shareholders' equity or results
of operations of the Company and its subsidiaries;
and, to the best of such counsel's knowledge, no
such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
17
(iv) This Agreement and the International
Underwriting Agreement have been duly authorized,
executed and delivered by the Company;
(v) The issue and sale of the Shares being
delivered at such Time of Delivery by the Company
and the compliance by the Company with all of the
provisions of this Agreement and the International
Underwriting Agreement and the consummation of the
transactions herein and therein contemplated will
not result in any violation of the provisions of the
Memorandum of Association or Bye-laws of the Company
or any statute or any order, rule or regulation
known to such counsel of any Bermuda court or
governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of
their properties;
(vi) No consent, approval, authorization,
order, registration or qualification of or with any
such Bermuda court or governmental agency or body is
required for the issue and sale of the Shares or the
consummation by the Company of the transactions
contemplated by this Agreement and the International
Underwriting Agreement;
(vii) The statements set forth in the
Prospectus under the caption "Description of Capital
Stock", insofar as they purport to constitute a
summary of the terms of the Stock and the provisions
of Bermuda law, under the caption "Certain Bermuda
Tax Considerations", in the first paragraph under
the caption "Business-Company Overview", under the
caption "Risk Factors-Bermuda Corporate Law", and
under the caption "Service of Process and
Enforcement of Liabilities", insofar as they purport
to describe the provisions of the laws and documents
referred to therein, are accurate, complete and
fair;
(viii) No stamp or other issuance or
transfer taxes or duties and no capital gains,
income, withholding or other taxes are payable by or
on behalf of the Underwriters or the International
Underwriters to Bermuda or to any political
subdivision or taxing authority thereof or therein
in connection with (A) issuance of the Shares, (B)
the sale and delivery by the Company of the Shares
to or for the respective accounts of the
Underwriters or the International Underwriters or
(C) the sale and delivery outside Bermuda by the
Underwriters or the International Underwriters of
the Shares to the initial purchasers thereof in the
manner contemplated herein and in the International
Underwriting Agreement;
(ix) Insofar as matters of Bermuda law are
concerned, the Registration Statement and the filing
of the Registration Statement with the Commission
have been duly authorized by and on behalf of the
Company; and the Registration Statement has been
duly executed pursuant to such authorization by and
on behalf of the Company;
(x) The Company's agreement to the choice
of law provisions set forth in Section 14 hereof
will be recognized by the courts of Bermuda; the
Company can ▇▇▇ and be sued in its own name under
the laws of Bermuda; the irrevocable submission of
the Company to the exclusive jurisdiction of a New
York Court, the waiver by the Company of any
objection to the venue of a proceeding of a New York
Court and the agreement of the Company that
18
this Agreement shall be governed by and construed in
accordance with the laws of the State of New York
are legal, valid and binding; service of process
effected in the manner set forth in Section 14
hereof will be effective, insofar as the law of
Bermuda is concerned, to confer valid personal
jurisdiction over the Company; and judgment obtained
in a New York Court arising out of or in relation to
the obligations of the Company under this Agreement
and the International Underwriting Agreement would
be enforceable against the Company in the courts of
Bermuda;
(xi) The indemnification and contribution
provisions set forth in Section 8 hereof do not
contravene the public policy or laws of Bermuda;
(xii) All dividends and other distributions
declared and payable on the shares of capital stock
of the Company may under the current laws and
regulations of Bermuda to be paid in Bermuda dollars
may be converted into foreign currency that may be
freely transferred out of Bermuda, and all such
dividends and other distributions will not be
subject to withholding or other taxes under the laws
and regulations of Bermuda and are otherwise free
and clear of any other tax, withholding or deduction
in Bermuda and without the necessity of obtaining
any governmental authorization in Bermuda; and
(xiii) Immediately prior to such Time of
Delivery, based solely upon such counsel's
examination of the Share Register Extract, such
Selling Shareholder was the registered shareholder
of a number of shares of Stock equal to the Shares
to be sold at such Time of Delivery by such Selling
Shareholder under this Agreement and the
International Underwriting Agreement. Based solely
upon such counsel's searches of the Register of
Charges maintained by the Registrar of Companies
pursuant to Section 55 of the Companies ▇▇▇ ▇▇▇▇ and
of the public records of the Registrar-General
maintained pursuant to the Mortgage Registration ▇▇▇
▇▇▇▇, each conducted immediately prior to such Time
of Delivery, there are no mortgage or charges
registered against such Selling Shareholder in
respect of such Shares.
In rendering such opinion, such counsel may state
that they express no opinion as to the laws of any
jurisdiction outside Bermuda.
(e) Local counsel to the Company in Australia,
Austria, Belgium, Canada, Denmark, Finland, France, Germany,
Italy, The Netherlands, Portugal, Spain, Sweden, Switzerland,
United Kingdom and Venezuela, shall have furnished to you
their written opinion, dated such Time of Delivery, in form
and substance satisfactory to you, to the effect that:
(i) each subsidiary of the Company
incorporated or formed in such counsel's country (a
"Relevant Subsidiary") has been duly incorporated
and is validly existing as a corporation in good
standing (where applicable) under the laws of its
jurisdiction of incorporation, with corporate power
and authority to own its properties and conduct its
business as described in the Prospectus; and all of
the issued shares of capital stock of each such
subsidiary have been duly and validly authorized and
issued, are fully paid and non-assessable, and
(except for directors' qualifying shares and except
as otherwise set forth in the Prospectus) are owned
directly or indirectly by the Company, free and
clear of any perfected security interest or any
other lien, encumbrance, equity or claim (such
counsel being entitled to rely in
19
respect of the opinion in this clause upon opinions
of local counsel and in respect to matters of fact
upon certificates of officers of the Company or such
Relevant Subsidiary, provided that such counsel
shall state that they believe that both you and they
are justified in relying upon such opinions and
certificates);
(ii) each Relevant Subsidiary has been duly
qualified as a foreign corporation for the
transaction of business and is in good standing
under the laws of each other jurisdiction within
such counsel's country in which it owns or leases
properties or conducts any business so as to require
such qualification, or is subject to no material
liability or disability by reason of failure to be
so qualified in any such jurisdiction (such counsel
being entitled to rely in respect of the opinion in
this clause upon opinions of local counsel and in
respect of matters of fact upon certificates of
officers of the Company or such Relevant Subsidiary,
provided that such counsel shall state that they
believe that both you and they are justified in
relying upon such opinions and certificates);
(iii) the statements set forth in the
Prospectus under the caption "Risk
Factors-Government Regulatory Restrictions", and
under the caption "Business", insofar as they
purport to describe the provisions of the laws of
such counsel's country or any political subdivision
thereof (or the European Union, as applicable) and
documents governed by the laws of such counsel's
country or any political subdivision thereof (or the
European Union, as applicable), are accurate,
complete and fair;
(iv) each Relevant Subsidiary has all
necessary certificates, orders, permits, licenses,
authorizations, consents and approvals of and from,
and has made all declarations and filings with all
applicable state, federal or supranational
governmental authorities to own, lease, license and
use its properties and assets and to conduct its
business in the manner described in the Prospectus;
such Relevant Subsidiary has not received any notice
of proceedings relating to revocation or
modification of any such certificates, orders,
permits, licenses, authorizations, consents or
approvals, nor is such Relevant Subsidiary in
violation of, or in default under, any federal,
state, local, foreign supranational, national or
regional law, regulation, rule, decree, order or
judgment applicable to such Relevant Subsidiary the
effect of which, individually or in the aggregate,
would have a material adverse effect on the current
or future consolidated financial condition,
shareholders' equity or results of operations of
such Relevant Subsidiary, except as described in the
Prospectus; and
(v) there are no restrictions (legal,
contractual or otherwise) on the ability of each
Relevant Subsidiary to declare and pay any dividends
or make any payment or transfer of property or
assets to its shareholder other than those described
in the Prospectus.
In rendering such opinion, each such local counsel
may state that they express no opinion as to the laws of any
jurisdiction outside of such counsel's country or the
European Union, as applicable.
(f) Holland and Knight LLP, regulatory counsel for
the Company, shall have furnished to you their written
opinion, dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
20
(i) (A) the execution and delivery of this
Agreement and the International Underwriting
Agreement by the Company, and the consummation of
the transactions contemplated hereby and thereby do
not violate (1) the Federal Communications Act of
1934, as amended (the "Communications Act"), (2) any
rules or regulations of the Federal Communications
Commission applicable to the Company and its
subsidiaries, (3) the telecommunications laws of any
state applicable to the Company and its
subsidiaries, and (4) to the best of such counsel's
knowledge, any decree from any court, and (B) no
authorization of or filing with the FCC or any state
authority overseeing telecommunications matters
("State Authority") is necessary for the execution
and delivery of this Agreement and the International
Underwriting Agreement by the Company and the
consummation of the transactions contemplated hereby
and thereby in accordance with the terms hereof and
thereof;
(ii) (A) except as set forth in the
Prospectus, each of the Company and the U.S.
Subsidiaries has all certificates, orders, permits,
licenses, authorizations, consents and approvals of
and from the FCC and the State Authorities necessary
to own, lease, license and use its properties and
assets and to conduct its business in the manner
described in the Prospectus; and (B) to the best of
such counsel's knowledge, neither the Company nor
any of the U.S. Subsidiaries has received any notice
of proceedings relating to the revocation or
modification of any such certificates, orders,
permits, licenses, authorizations, consents or
approvals, or the qualification or rejection of any
such filing or registration, the effect of which,
individually or in the aggregate, would have a
material adverse effect on the current or future
consolidated financial position, shareholders'
equity or results of operations of the Company and
its subsidiaries;
(iii) to the best of such counsel's
knowledge, neither the Company nor any of the U.S.
Subsidiaries is in violation of, or in default under
the Communications Act, the telecommunications rules
or regulations of the FCC or the telecommunications
laws of any state, the effect of which, individually
or in the aggregate, would have a material adverse
effect on the current or future consolidated
financial position, shareholders' equity or results
of operations of the Company and its subsidiaries;
(iv) to the best of such counsels knowledge
(A) no decree or order of the FCC or any State
Authority has been issued against the Company or any
of the U.S. Subsidiaries and (B) no litigation,
proceedings, inquiry or investigation has been
commenced or threatened, and no notice of violation
or order to show cause has been issued, against the
Company or any of the U.S. Subsidiaries before or by
the FCC or any State Authority. To the best of such
counsel's knowledge, there are no rulemakings or
other administrative proceedings pending before the
FCC or any State Authority which (A) are generally
applicable to telecommunications services or the
resale thereof and (B) which, if decided adversely
to the interest of the Company or its subsidiaries,
would have a material adverse effect on the current
or future consolidated financial position,
shareholders' equity or results of operations of the
Company and its subsidiaries; and
(v) the statements in the Prospectus under
the captions "Risk Factors Government Regulatory
Restrictions", "Business - Regulatory Environment -
Federal" and "- State" and in the first four
paragraphs under
21
the caption "Business - Legal Proceedings", insofar
as they purport to describe the provisions of the
laws and documents referred to therein, are
accurate, complete and fair.
In rendering such opinion, such counsel may state
that they express no opinion as to the laws of any
jurisdiction outside of United States federal and state
telecommunications laws.
(g) The respective counsel for each of the Selling
Shareholders, as indicated in Schedule II hereto, each shall
have furnished to you their written opinion with respect to
each of the Selling Shareholders for whom they are acting as
counsel, dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) A Power of Attorney and a Custody
Agreement have been duly executed and delivered by
such Selling Shareholder and constitute valid and
binding agreements of such Selling Shareholder in
accordance with their terms, subject as to
enforcement to bankruptcy, insolvency,
reorganization and similar laws of general
applicability relating to or affecting creditors'
rights generally and to general equity principles;
(ii) This Agreement and the International
Underwriting Agreement have been duly executed and
delivered by or on behalf of such Selling
Shareholder; and the sale of the Shares to be sold
by such Selling Shareholder hereunder and thereunder
and the compliance by such Selling Shareholder with
all of the provisions of this Agreement and the
International Underwriting Agreement, the Power of
Attorney and the Custody Agreement and the
consummation of the transactions herein and therein
contemplated will not conflict with or result in a
breach or violation of any terms or provisions of,
or constitute a default under, any statute,
indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument known to such
counsel to which such Selling Shareholder is a party
or by which such Selling Shareholder is 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
Certificate of Incorporation or By-laws of such
Selling Shareholder if such Selling Shareholder is a
corporation, the Partnership Agreement of such
Selling Shareholder if such Selling Shareholder is a
partnership or any provision of the DGCL or any
United States federal or New York State statute
(other than any such statute relating to federal or
state telecommunications laws or state securities or
Blue Sky, laws as to which such counsel need express
no opinion), any order, rule or regulation (other
than any such order, rule or regulation relating to
federal or state telecommunications laws or state
securities or Blue Sky laws, as to which such
counsel need express no opinion), known to such
counsel of any court or governmental agency or body
of the United States federal government or the state
of New York or (insofar as the DGCL is concerned)
the state of Delaware having jurisdiction over such
Selling Shareholder or the property of such Selling
Shareholder;
(iii) No consent, approval, authorization
or order of any court or governmental agency or body
is required under the federal laws of the United
States (other than telecommunications laws) the laws
of the state of New York (other than
telecommunications laws) or the DGCL for the
consummation of the transactions contemplated by
this Agreement and the
22
International Underwriting Agreement in connection
with the Shares to be sold by such Selling
Shareholder hereunder or thereunder, except which
have been duly obtained and are in full force and
effect, such as have been obtained under the Act and
such as may be required under foreign or state
securities or Blue Sky laws in connection with the
purchase and distribution of such Shares by the
Underwriters or the International Underwriters;
(iv) Immediately prior to such Time of
Delivery such Selling Shareholder was the registered
shareholder of a number of shares of Stock equal to
the Shares to be sold at such Time of Delivery by
such Selling Shareholder under this Agreement and
the International Underwriting Agreement (such
counsel herein entitled to rely in respect of the
opinion in this clause upon opinion of Bermuda
counsel for the Company); and
(v) Upon (A) payment for the Shares to be
sold by the Selling Shareholders in accordance with
this Agreement and the International Underwriting
Agreement, (B) registration of the transfer of such
Shares to, and registration of such Shares in the
name of Cede & Co. or such other nominee designated
by DTC and (C) the crediting of such Shares to the
accounts maintained by DTC for the several
Underwriters or International Underwriters, as
applicable, assuming such accounts are "securities
accounts" (as defined in Section 8-501 of the
Uniform Commercial Code as currently in effect in
the State of New York (the "UCC")), (i) the
Underwriters or International Underwriters, as
applicable, will acquire "security entitlements" (as
defined in Section 8-102 of the UCC) in respect of
such Shares and (ii) no action based on an "adverse
claim" (as defined in Section 8-102 of the UCC) to
such Shares may be asserted against the Underwriters
or International Underwriters, as applicable, with
respect to such security entitlements, assuming that
each Underwriter and International Underwriter does
not have "notice" (within the meaning of Section
8-105 of the UCC) of any "adverse claim" (as defined
in Section 8-102 of the UCC) to such Shares.
In rendering such opinion, such counsel may state that they
express no opinion as to the laws of any jurisdiction outside
the United States and in rendering the opinion in
subparagraph (iv) such counsel may rely upon a certificate of
such Selling Shareholder in respect of matters of fact as to
ownership of, and liens, encumbrances, equities or claims on
the Shares sold by such Selling Shareholder, provided that
such counsel shall state that they believe that both you and
they are justified in relying upon such certificate.
(h) On the date of the Prospectus at a time prior to
the execution of this Agreement, at 9:30 a.m., New York City
time, on the effective date of any post-effective amendment
to the Registration Statement filed subsequent to the date of
this Agreement and also at each Time of Delivery, Deloitte &
Touche LLP shall have furnished to you a letter or letters,
dated the respective dates of delivery thereof, in form and
substance satisfactory to you, to the effect set forth in
Annex I hereto;
(i) (i) Neither the Company nor any of its
subsidiaries shall have sustained since the date of the
latest audited financial statements included in the
Prospectus any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus, and (ii) since the
respective dates as of which
23
information is given in the Prospectus there shall
not have been any change in the capital stock,
short-term debt or long-term debt of the Company or
any of its subsidiaries or any change, or any
development involving a prospective change, in or
affecting the general affairs, management, financial
position, shareholders' equity or results of
operations of the Company and its subsidiaries,
otherwise than as set forth or contemplated in the
Prospectus, the effect of which, in any such case
described in Clause (i) or (ii), is in the judgment
of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. so material and adverse as
to make it impracticable or inadvisable to proceed
with the public offering or the delivery of the
Shares being delivered at such Time of Delivery on
the terms and in the manner contemplated in the
Prospectus;
(j) On or after the date hereof (i) no downgrading
shall have occurred in any rating accorded the Company's debt
securities by any "nationally recognized statistical rating
organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act, and (ii) no such
organization shall have publicly announced that it has under
surveillance or review, with possible negative implications,
its rating of any of the Company's debt securities;
(k) On or after the date hereof there shall not have
occurred any of the following: (i) a suspension or material
limitation in trading in securities generally on the New York
Stock Exchange or on NASDAQ; (ii) a suspension or material
limitation in trading in the Company's securities on NASDAQ;
(iii) a general moratorium on commercial banking activities
declared by either Federal or New York State authorities;
(iv) the outbreak or escalation of hostilities involving the
United States or the declaration by the United States of a
national emergency or war, if the effect of any such event
specified in this Clause (iv) is in the judgment of ▇▇▇▇▇▇▇,
Sachs & Co. so material and adverse as to make it
impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares being delivered at
such Time of Delivery on the terms and in the manner
contemplated in the Prospectus; or (v) the occurrence of any
material adverse change in the existing financial, political
or economic conditions in the United States or elsewhere
which, in the judgment of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. would
materially and adversely affect the financial markets or the
market for the Shares and other equity securities;
(l) The Shares to be sold by the Company and the
Selling Shareholders at such Time of Delivery shall have been
duly listed for quotation on NASDAQ;
(m) The Company has obtained and delivered to the
Underwriters executed copies of an agreement from each person
or entity named under Schedule IV hereto substantially to the
effect set forth in Subsection 1(B)(d) hereof in form and
substance satisfactory to you;
(n) The Company and the Selling Shareholders shall
have furnished or caused to be furnished to you at such Time
of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations
and warranties of the Company and of the Selling
Shareholders, respectively, herein at and as of such Time of
Delivery, as to the performance by the Company and the
Selling Shareholders of all of their respective obligations
hereunder to be performed at or prior to such Time of
Delivery, as to the matters set forth in subsections (a) and
(i) of this Section and as to such other matters as you may
reasonably request; and
(o) The Company shall have delivered a good standing
certificate with respect to RSL Communications, N. America,
Inc.
24
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several,
to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact required to be stated therein necessary to make the
statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that
the Company shall not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through ▇▇▇▇▇▇▇, Sachs
& Co. expressly for use therein.
(b) Each Selling Shareholder will indemnify and hold harmless
each Underwriter against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such
Selling Shareholder expressly for use therein; and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by
such Underwriter in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however,
that such Selling Shareholder shall not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through ▇▇▇▇▇▇▇, ▇▇▇▇▇ &
Co. expressly for use therein.
(c) Each Underwriter will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which
the Company may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or
alleged omission was made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Underwriter
25
through ▇▇▇▇▇▇▇, Sachs & Co. expressly for use therein; and will
reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending
any such action or claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection,
notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be
brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party under such subsection
for any legal expenses of other counsel or any other expenses, in each
case subsequently incurred by such indemnified party, in connection
with the defense thereof other than reasonable costs of investigation.
No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent
to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless
such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf
of any indemnified party.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a), (b) or (c) above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of
such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Shareholders on the
one hand and the Underwriters on the other from the offering of the
Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection
(d) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as
is appropriate to reflect not only such relative benefits but also the
relative fault of the Company and the Selling Shareholders on the one
hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by
the Company and the Selling Shareholders on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering of the Shares purchased
under this Agreement (before deducting expenses) received by the
Company and the Selling Shareholders bear to the total underwriting
discounts and commissions received by the Underwriters with respect to
the Shares purchased under this Agreement, in each case as set forth
in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Shareholders
26
on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, each of
the Selling Shareholders and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this subsection (e)
were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to above in this subsection (e). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding
the provisions of this subsection (e), no Underwriter shall be
required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection
(e) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(f) The obligations of the Company and the Selling
Shareholders under this Section 8 shall be in addition to any
liability which the Company and the respective Selling Shareholders
may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls or is an affiliate of
any Underwriter within the meaning of the Act; and the obligations of
the Underwriters under this Section 8 shall be in addition to any
liability which the respective Underwriters may otherwise have and
shall extend, upon the same terms and conditions, to each officer and
director of the Company (including any person who, with his or her
consent, is named in the Registration Statement as about to become a
director of the Company) and to each person, if any, who controls the
Company or any Selling Shareholder within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company and the Selling Shareholders shall be entitled to
a further period of thirty-six hours within which to procure another party or
other parties satisfactory to you to purchase such Shares on such terms. In the
event that, within the respective prescribed periods, you notify the Company
and the Selling Shareholders that you have so arranged for the purchase of such
Shares, or the Company and the Selling Shareholders notify you that they have
so arranged for the purchase of such Shares, you or the Company and the Selling
Shareholders shall have the right to postpone such Time of Delivery for a
period of not more than seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus, or
in any other documents or arrangements, and the Company agrees to file promptly
any amendments to the Registration Statement or the Prospectus which in your
opinion may thereby be made necessary. The term "Underwriter" as used in this
Agreement shall include any person substituted under this Section with like
effect as if such person had originally been a party to this Agreement with
respect to such Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by
you and the Company and the Selling Shareholders as provided in
subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate
number of all
27
the Shares to be purchased at such Time of Delivery, then the Company
and the Selling Shareholders shall have the right to require each
non-defaulting Underwriter to purchase the number of Shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and,
in addition, to require each non-defaulting Underwriter to purchase
its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such
defaulting Underwriter or Underwriters for which such arrangements
have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by
you and the Company and the Selling Shareholders as provided in
subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of
all the Shares to be purchased at such Time of Delivery, or if the
Company and the Selling Shareholders shall not exercise the right
described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or
Underwriters, then this Agreement (or, with respect to the Second Time
of Delivery, the obligations of the Underwriters to purchase and of
the Company and the Selling Shareholders to sell the Optional Shares)
shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company or the Selling Shareholders,
except for the expenses to be borne by the Company and the Selling
Shareholders and the Underwriters as provided in Section 6 hereof and
the indemnity and contribution agreements in Section 8 hereof; but
nothing herein shall relieve a defaulting Underwriter from liability
for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Selling Shareholders and
the several Underwriters, as set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement, shall remain in full
force and effect, regardless of any investigation (or any statement as to the
results thereof) made by or on behalf of any Underwriter or any controlling
person of any Underwriter, or the Company, or any of the Selling Shareholders
or any officer or director or controlling person of the Company, or any
controlling person of any Selling Shareholder, and shall survive delivery of
and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, neither the Company nor the Selling Shareholders shall then be under
any liability to any Underwriter except as provided in Sections 6 and 8 hereof;
but, if for any other reason, any Shares are not delivered by or on behalf of
the Company and the Selling Shareholders as provided herein, the Company will
reimburse the Underwriters through you for all out-of-pocket expenses approved
in writing by you, including reasonable fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Shares not so delivered, but the Company and
the Selling Shareholders shall then be under no further liability to any
Underwriter in respect of the Shares not so delivered except as provided in
Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. on behalf of you as the
Underwriters; and in all dealings with any Selling Shareholder hereunder, you
and the Company shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of such Selling Shareholder made or given by any
or all of the Attorneys-in-Fact for such Selling Shareholder.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex
or facsimile transmission to you as the representatives in care of ▇▇▇▇▇▇▇,
Sachs & Co., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
28
Attention: Registration Department; if to any Selling Shareholder shall be
delivered or sent by mail, telex or facsimile transmission to counsel for such
Selling Shareholder at its address set forth in Schedule II hereto; and if to
the Company shall be delivered or sent by mail, telex or facsimile transmission
to the address of the Company set forth in the Registration Statement,
Attention: Secretary; provided, however, that any notice to an Underwriter
pursuant to Section 8(d) hereof shall be delivered or sent by mail, telex or
facsimile transmission to such Underwriter at its address set forth in its
Underwriters' Questionnaire, or telex constituting such Questionnaire, which
address will be supplied to the Company or the Selling Shareholders by you upon
request. Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and the Selling Shareholders and, to
the extent provided in Sections 8 and 10 hereof, the officers and directors of
the Company and each person who controls the Company and any Selling
Shareholder, or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
14. Each of the parties hereto irrevocably (i) agrees that any legal
suit, action or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby may be instituted in any New York Court, (ii)
waives, to the fullest extent it may effectively do so, any objection which it
may now or hereafter have to the laying of venue of any such proceeding and
(iii) submits to the exclusive jurisdiction of such courts in any such suit,
action or proceeding. The Company hereby appoints RSL Communications N.
America, Inc. ("RSL USA"), ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, as its authorized agent (the "Authorized Agent") upon whom process may
be served in any such action arising out of or based on this Agreement or the
transactions contemplated hereby which may be instituted in any New York Court
by any Underwriter or by any person who controls any Underwriter, expressly
consents to the jurisdiction of any such court in respect of any such action,
and waives any other requirements of or objections to personal jurisdiction
with respect thereto. Such appointment shall be irrevocable. The Company
represents and warrants that the Authorized Agent has agreed to act as such
agent for service of process and agrees to take any and all action, including
the filing of any and all documents and instruments, that may be necessary to
continue such appointment in full force and effect as aforesaid. The Company
hereby agrees that prior to any dissolution, liquidation, winding-up or sale of
RSL USA or incorporation of RSL USA in a jurisdiction outside the United
States, RSL USA shall cause (i) CT Corporation System ("CT Corporation"), ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or (ii) any other direct or indirect
subsidiary of the Company organized under the laws of the United States as
Authorized Agent in accordance with the terms of this Section 14. Service of
process upon the Authorized Agent and written notice of such service to the
Company shall be deemed, in every respect, effective service of process upon
the Company.
Each of the Selling Shareholders hereby appoints CT Corporation as its
authorized agent upon whom process may be served in any such action arising out
of or based on this Agreement or the transactions contemplated hereby which may
be instituted in any New York Court by any Underwriter or by any person who
controls any Underwriter, expressly consents to the jurisdiction of any such
court in respect of any such action, and waives any other requirements of or
objections to personal jurisdiction with respect thereto. Such appointment
shall be irrevocable. Each of the Selling Shareholders represents and warrants
that CT Corporation has agreed to act as such agent for service of process and
agrees to take any and all action, including the filing of any and all
documents and instruments, that may be necessary to continue such appointment
in full force and effect as aforesaid.
15. In respect of any judgment or order given or made for any amount
due hereunder that is expressed and paid in a currency (the "judgment
currency") other than United States dollars,
29
the Company and each Selling Shareholder, as the case may be, will indemnify
each Underwriter against any loss incurred by such Underwriter as a result of
any variation as between (i) the rate of exchange at which the United States
dollar amount is converted into the judgment currency for the purpose of such
judgment or order and (ii) the rate of exchange at which an Underwriter is able
to purchase United States dollars with the amount of the judgment currency
actually received by such Underwriter. The foregoing indemnity shall constitute
a separate and independent obligation of the Company and each Selling
Shareholder and shall continue in full force and effect notwithstanding any
such judgment or order as aforesaid. The term "rate of exchange" shall include
any premiums and costs of exchange payable in connection with the purchase of
or conversion into United States dollars.
16. Time shall be of the essence of this Agreement. As used herein,
the term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
17. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
18. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us 10 counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters, the
Company and each of the Selling Shareholders. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is pursuant to
the authority set forth in a form of Agreement among Underwriters (U.S.
Version), the form of which shall be furnished to the Company and Selling
Shareholders for examination upon request, but without warranty on your part as
to the authority of the signers thereof (except as to persons signing on your
behalf).
Any person executing and delivering this Agreement as Attorney-in-Fact
for a Selling Shareholder represents by so doing that he has been duly
appointed as Attorney-in-Fact by such Selling Shareholder pursuant to a validly
existing and binding Power of Attorney which authorizes such Attorney-in-Fact
to take such action.
Very truly yours,
RSL Communications, Ltd.
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
As Attorney-in-Fact acting on behalf of each of
the Selling Shareholders named in Schedule II
to this Agreement.
30
Accepted as of the date hereof:
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.,
▇▇▇▇▇▇ Brothers Inc.,
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, and
Warburg Dillon Read Inc., a subsidiary of UBS AG
By:
-------------------------------------------------
(▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.)
On behalf of each of the Underwriters
31
SCHEDULE I
Underwriter Total Number of Number of
Firm Shares Optional Shares to be
to be Purchased Purchased if Maximum
Option Exercised
--------------- ----------------------
▇▇▇▇▇▇▇, Sachs & Co.................................................
▇▇▇▇▇▇ Brothers Inc.................................................
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated...............................................
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated...................................
Warburg Dillon Read LLC, a subsidiary of UBS AG.....................
Total............................................. 5,250,000 787,500
========= =======
SCHEDULE II
Selling Shareholders and the Company
Overallotment Option for U.S. Offering
Seller Shares
Bukfenc, Inc. (a)........................... 150,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (b)..................... 168,750
▇▇▇▇▇ ▇. Bildrici (c)....................... 41,666
Tarlovsky Investment Partners, L.P. (d)..... 37,500
Company..................................... 397,916
-------
Total 787,500
(a)(b)(c)(d) This Selling Shareholder is represented by Debevoise & ▇▇▇▇▇▇▇▇
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (attention:
▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇, Esq.) and has appointed ▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇▇▇, and each of them, as the Attorneys-in-Fact for
such Selling Shareholder.
SCHEDULE III
MATERIAL SUBSIDIARIES
RSL United States Operating Subsidiaries State of Incorporation
----------------------------------------
Name
RSL COM North America, Inc. Delaware
RSL COM U.S.A., Inc. Delaware
RSL COM PrimeCall, Inc. Delaware
Delta Three, Inc. Delaware
LDM Systems, Inc. New York
RSL Foreign Operating Subsidiaries
----------------------------------
Name Country of Organization
RSL COM Europe Ltd. United Kingdom
RSL COM Sweden AB Sweden
RSL COM Finland OY Finland
Telecenter OY Finland
RSL COM France S.A. France
RSL COM Deutschland GmbH Germany
RSL COM Nederland B.V. Netherlands
RSL Denmark A/S Denmark
RSL COM Japan K.K. Japan
Maxitel Servicos e Gestao de Telecomunicacoes, S.A. Portugal
RSL COM Italia S.r.L Italy
RSL COM Venezuela C.A. Venezuela
Newtelcom Telekom AG Austria
RSL Communications Spain, S.A. Spain
CallCom AG FUR TeleKommunization Switzerland
European Telecom S.A./N.V. Belgium
European Telecom SARL Luxembourg
RSL COM Canada, Inc. Canada
RSL COM Australia Pty. Ltd Australia
Call Australia Pty. Ltd.
Associated Service Providers Pty. Limited
Digiplus Pty. Limited
Power Serve Communications
Consultants Pty. Limited
Talk 2000 Networks Pty. Limited
Telephone ▇▇▇▇ Pty. Limited
SCHEDULE IV
Parties to Lock-up Agreements
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ van de Vrande
Nir Tarlovsky
RSL Investments Corporation
E/L RSLG Media, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
Tarlovsky Investment Partners, L.P.
Coral Gate Investments Ltd
▇▇▇▇▇▇▇▇ Family Partners I, L.P.
▇▇▇▇▇▇ ▇▇▇▇▇▇ Ventures LLC
RSL ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., ▇.▇.
▇▇▇▇▇▇ Investment Partners, ▇.▇.
▇▇▇ Family Partners, L.P.