EXECUTION COPY
8,000,000 Shares
ADVANCED COMMUNICATIONS GROUP, INC.
Common Stock
UNDERWRITING AGREEMENT
February 12, 1998
PAINEWEBBER INCORPORATED
CIBC OPPENHEIMER
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Advanced communications Group, Inc., a Delaware corporation
(the "Company"), proposes to sell an aggregate of 8,000,000 shares (the "Firm
Shares") of the Company's Common Stock, $.0001 par value per share (the "Common
Stock"), to you and to the other underwriters named in Schedule I
(collectively, the "Underwriters"), for whom you are acting as representatives
(the "Representatives"). The Company has also agreed to grant to you and the
other Underwriters an option (the "Option") to purchase up to an additional
1,200,000 shares of Common Stock (the "Option Shares") on the terms and for the
purposes set forth in Section 1(b). The Firm Shares and the Option Shares are
hereinafter collectively referred to as the "Shares."
The initial public offering price per share for the Shares
and the purchase price per share are for the Shares to be paid by the several
Underwriters shall be agreed upon by the Company and the Representatives,
acting on behalf of the several Underwriters, and such agreement shall be set
forth in a separate written instrument substantially in the form of Exhibit A
hereto (the "Price Determination Agreement"). The Price Determination Agreement
may take the form of an exchange of any standard form of written
telecommunication among the Company and the Representatives and shall specify
such applicable information as is indicated in Exhibit A hereto. The offering
of the Shares will be governed by this Agreement, as supplemented by the Price
Determination Agreement. From and after the date of the execution and delivery
of the Price Determination Agreement, this Agreement shall be deemed to
incorporate, and, unless the context otherwise indicates, all references
contained herein to "this Agreement" and to the phrase "herein" shall be deemed
to include, the Price Determination Agreement.
The Company confirms as follows its agreements with the
Representatives and the several other Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties
and agreements of the Company herein contained and subject to all the terms and
conditions of this Agreement, the Company agrees to sell to each Underwriter
named below, and each Underwriter, severally and not jointly, agrees to
purchase from the Company at the purchase price per share for the Firm Shares
to be agreed upon by the Representatives and the Company in accordance with
Section 1(c) or 1(d) hereof and set forth in the Price Determination Agreement,
the number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I, plus such additional number of Firm Shares which such Underwriter
may become obligated to purchase pursuant to Section 8 hereof. Schedule I may
be attached to the Price Determination Agreement.
(b) Subject to all the terms and conditions of this
Agreement, the Company grants the Option to the several Underwriters to
purchase, severally and not jointly, up to 1,200,000 Option Shares from the
Company at the same price per share as the Underwriters shall pay for the Firm
Shares. The Option may be exercised only to cover over-allotments in the sale
of the Firm Shares by the Underwriters and may be exercised in whole or in part
at any time (but not more than once) on or before the 30th day after the date
of this Agreement (or, if the Company has elected to rely on Rule 430A, on or
before the 30th day after the date of the Price Determination Agreement), upon
written or telegraphic notice (the "Option Shares Notice") by the
Representatives to the Company no later than 12:00 noon, New York City time, at
least two and no more than five business days before the date specified for
closing in the Option Shares Notice (the "Option Closing Date") setting forth
the aggregate number of Option Shares to be purchased and the time and date for
such purchase. On the Option Closing Date, the Company will issue and sell to
the Underwriters the number of Option Shares set forth in the Option Shares
Notice, and each Underwriter will purchase such percentage of the Option Shares
as is equal to the percentage of Firm Shares that such Underwriter is
purchasing, as adjusted by the Representatives in such manner as they deem
advisable to avoid fractional shares.
(c) The initial public offering price per share for
the Firm Shares and the purchase price per share for the Firm Shares to be paid
by the several Underwriters shall be agreed upon and set forth in the Price
Determination Agreement, if the Company
2
has elected to rely on Rule 430A. In the event such price has not been agreed
upon and the Price Determination Agreement has not been executed by the close
of business on the fourteenth business day following the date on which the
Registration Statement (as hereinafter defined) becomes effective, this
Agreement shall terminate forthwith, without liability of any party to any
other party except that Section 6 shall remain in effect.
(d) If the Company has elected not to rely on Rule
430A, the initial public offering price per share for the Firm Shares and the
purchase price per share for the Firm Shares to be paid by the several
Underwriters shall be agreed upon and set forth in the Price Determination
Agreement, which shall be dated the date hereof, and an amendment to the
Registration Statement containing such per share price information shall be
filed before the Registration Statement becomes effective.
2. Delivery and Payment. Delivery of the Firm Shares shall be
made to the Representatives for the accounts of the Underwriters electronically
through the Depository Trust Company ("DTC"), against payment of the purchase
price by wire transfer of Federal Funds or similar same day funds to an account
designated in writing by the Company to PaineWebber Incorporated at least one
business day prior to the Closing Date (as hereinafter defined). Such payment
shall be made at 10:00 a.m., New York City time, on the third business day (or
fourth business day, if the Price Determination Agreement is executed after
4:30 p.m.) after the date on which the first bona fide offering of the Shares
to the public is made by the Underwriters or at such time on such other date,
not later than ten business days after such date, as may be agreed upon by the
Company and the Representatives (such date is hereinafter referred to as the
"Closing Date").
To the extent the Option is exercised, delivery of the Option
Shares against payment by the Underwriters (in the manner specified above) will
take place at the offices specified above for the Closing Date at the time and
date (which may be the Closing Date) specified in the Option Shares Notice.
Certificates evidencing the Shares shall be in definitive
form and shall be registered in such names and in such denominations as the
Representatives shall request at least two business days prior to he Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
The cost of original issue tax stamps, if any, in connection
with the issuance and delivery of the Firm Shares and Option Shares by the
Company to the respective Underwriters shall be borne by the Company. The
Company will pay and save each Underwriter and any subsequent holder of the
Shares harmless from any and all liabilities with respect to or resulting from
any failure or delay in paying Federal and state stamp and
3
other transfer taxes, if any, which may be payable or determined to be payable
in connection with the original issuance or sale to such Underwriter of the
Firm Shares and Option Shares.
3. Representations and Warranties of the Company. The Company
represents, warrants and covenants to each Underwriter that:
(a) A registration statement (Registration No.
333-37671) on Form S-1 relating to the Shares, including a preliminary
prospectus and such amendments to such registration statement as may have been
required to the date of this Agreement, has been prepared by the Company under
the provisions of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (collectively referred to as the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") thereunder, and
has been filed with the Commission. The term "preliminary prospectus" as used
herein means a preliminary prospectus as contemplated by Rule 430 or Rule 430A
("Rule 430A") of the Rules and Regulations included at any time as part of the
registration statement. Copies of such registration statement and amendments
and of each related preliminary prospectus have been delivered to the
Representatives. The term "Registration Statement" means the registration
statement as amended at the time it becomes or became effective (the "Effective
Date"), including financial statements and all exhibits and any information
deemed to be included by Rule 430A or Rule 434 of the Rules and Regulations. If
the Company files a registration statement to register a portion of the Shares
and relies on Rule 462(b) of the Rules and Regulations for such registration
statement to become effective upon filing with the Commission (the "Rule 462
Registration Statement"), then any reference to the "Registration Statement"
shall be deemed to include the Rule 462 Registration Statement, as amended from
time to time. The term "Prospectus" means the prospectus as first filed with
the Commission pursuant to Rule 424(b) of the Rules and Regulations or, if no
such filing is required, the form of final prospectus included in the
Registration Statement at the Effective Date.
(b) On the Effective Date, the date the Prospectus
is first filed with the Commission pursuant to Rule 424(b) (if required), at
the Closing Date and, if later, the Option Closing Date and when any
post-effective amendment to the Registration Statement becomes effective or any
amendment or supplement to the Prospectus is filed with the Commission, the
Registration Statement and the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment or supplement
thereto), including the financial statements included in the Prospectus, did or
will comply with all applicable provisions of the Act and the Rules and
Regulations and will contain all statements required to be stated therein in
accordance with the Act and the Rules and Regulations. On the Effective Date
and when any post-effective amendment to the Registration Statement becomes
effective, no part of the Registration Statement or any such amendment did or
will contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. At the Effective Date, the date the
Prospectus or any amendment or supplement to the Prospectus is filed with the
Commission and at the Closing Date and, if
4
later, the Option Closing Date, the Prospectus did not or will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The foregoing representations and warranties in
this Section 3(b) do not apply to any statements or omissions made in reliance
on and in conformity with information relating to any Underwriter furnished in
writing to the Company by the Representatives specifically for inclusion in the
Registration Statement or Prospectus or any amendment or supplement thereto.
For all purposes of this Agreement, the amounts of the selling concession and
reallowance set forth in the Prospectus, the last full paragraph on the cover
of the Prospectus, and the penultimate paragraph under the caption
"Underwriting" in the Prospectus constitute the only information relating to
any Underwriter furnished in writing to the Company by the Representatives
specifically for inclusion in the Registration Statement, the preliminary
prospectus or the Prospectus. The Company has not distributed any offering
material in connection with the offering or sale of the Shares other than the
Registration Statement, the preliminary prospectus, the Prospectus or any other
materials, if any, permitted by the Act.
(c) The Company and each of its subsidiaries as
listed on Exhibit 21.1 to the Registration Statement together with, after the
Closing, Tele-Systems, Inc. (the "Subsidiaries") is, and at the Closing Date
will be, a corporation or an entity duly organized or formed, validly existing
and in good standing under the laws of its jurisdiction of incorporation. The
Company and each of its Subsidiaries has, and at the Closing Date will have,
full corporate power and authority to conduct all the activities conducted by
it, to own or lease all the assets owned or leased by it and to conduct its
business as described in the Registration Statement and the Prospectus. The
Company and each of its Subsidiaries is, and at the Closing Date will be, duly
licensed or qualified to do business and in good standing as a foreign
corporation in all jurisdictions in which the nature of the activities
conducted by it or the character of the assets owned or leased by it makes such
licensing or qualification necessary and where the failure to be so qualified
would have a material adverse effect on the Company and its subsidiaries
considered as a whole. All of the outstanding shares of capital stock of the
Subsidiaries have been duly authorized and validly issued and are fully paid
and non-assessable and are owned by the Company free and clear of all liens,
encumbrances and claims whatsoever, except as set forth in the Registration
Statement. Except for the stock of the Subsidiaries and of subsidiaries which,
considered in the aggregate as a single subsidiary, would not constitute a
"significant subsidiary" as defined in the Rules and Regulations or as
disclosed in the Registration Statement, the Company does not own, and at the
Closing Date will not own, directly or indirectly, any shares of stock or any
other equity or long-term debt securities of any corporation or have any equity
interest in any firm, partnership, joint venture, association or other entity.
Complete and correct copies of the certificate of incorporation and of the
by-laws of the Company and each of its Subsidiaries and all amendments thereto
have been delivered to the Representatives, and except for those disclosed in
the Registration Statement no changes therein will be made subsequent to the
date hereof and prior to the Closing Date or, if later, the Option Closing
Date.
5
(d) The outstanding shares of Common Stock have
been, and the Shares to be issued and sold by the Company upon such issuance
will be, duly authorized, validly issued, fully paid and nonassessable and will
not be subject to any preemptive or similar right. The description of the
Common Stock in the Registration Statement and the Prospectus is, and at the
Closing Date will be, complete and accurate in all material respects. Except as
set forth in the Prospectus, the Company does not have outstanding, and at the
Closing Date will not have outstanding, any options to purchase, or any rights
or warrants to subscribe for, or any securities or obligations convertible
into, or any contracts or commitments to issue or sell, any shares of Common
Stock, any shares of capital stock of any Subsidiary or any such warrants,
convertible securities or obligations.
(e) The financial statements and schedules included
in the Registration Statement or the Prospectus present fairly the consolidated
financial condition of the Company and the financial condition of certain of
the Subsidiaries and KIN Network Inc. as of the respective dates thereof and
the consolidated results of operations and cash flows of the Company and the
results of operations and cash flows of such Subsidiaries and KIN Network Inc.
for the respective periods covered thereby, all in conformity with generally
accepted accounting principles applied on a consistent basis throughout the
entire period involved, except as otherwise disclosed in the Prospectus. The
pro forma financial statements and other pro forma financial information
included in the Registration Statement or the Prospectus (i) present fairly in
all material respects the information shown therein, (ii) have been prepared in
accordance with the Commission's rules and guidelines with respect to pro forma
financial statements and (iii) have been properly computed on the bases
described therein. The assumptions used in the preparation of the pro forma
financial statements and other pro forma financial information included in the
Registration Statement or the Prospectus are reasonable and the adjustments
used therein are appropriate to give effect to the transactions or
circumstances referred to therein. No other financial statements or schedules
are required by the Act or the Rules and Regulations to be included in the
Registration Statement or the Prospectus. KPMG Peat Marwick LLP, Xxxx +
Associates LLP, Xxxxxxx and Xxx, LLC and Xxxxxxx Xxxxxxxxx & Co. (the
"Accountants") who have reported on such financial statements and schedules,
are independent accountants with respect to the Company as required by the Act
and the Rules and Regulations. The statements included in the Registration
Statement with respect to the Accountants pursuant to Item 509 of Regulation
S-K of the Rules and Regulations are true and correct in all material respects.
(f) The Company maintains a system of internal
accountings control sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or specific
6
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(g) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus and prior
to the Closing Date, except as set forth in or contemplated by the Registration
Statement and the Prospectus, (i) there has not been and will not have been any
change in the capitalization of the Company, or any materially adverse change
in the business, properties, business prospects, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries
considered as a whole, arising for any reason whatsoever, (ii) neither the
Company nor any of its Subsidiaries has incurred nor will it incur any material
liabilities or obligations, direct or contingent, nor has it entered into nor
will it enter into any material transactions other than pursuant to this
Agreement and the transactions referred to herein and (iii) the Company has not
and will not have paid or declared any dividends or other distributions of any
kind on any class of its capital stock.
(h) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act
of 1940, as amended.
(i) Except as set forth in the Registration
Statement and the Prospectus, there are no actions, suits or proceedings
pending or threatened against or affecting the Company or any of its
Subsidiaries or any of their respective officers in their capacity as such,
before or by any Federal or state court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, wherein
an unfavorable ruling, decision or finding might materially and adversely
affect the Company and its Subsidiaries, or their business, properties,
business prospects, condition (financial or otherwise) or results of
operations, considered as a whole.
(j) Except as set forth in the Registration
Statement, and except as would not have a materially adverse effect on the
Company and its Subsidiaries considered as a whole, the Company and each of its
Subsidiaries has, and at the Closing Date will have, (i) all governmental
licenses, permits, consents, orders, approvals and other authorizations
necessary to carry on its business as currently conducted and as described in
the Prospectus, (ii) complied in all respects with all laws, regulations and
orders applicable to it or its business and (iii) performed all its obligations
required to be performed by it, and is not, and at the Closing Date will not
be, in default, under any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement, lease, contract or
other agreement or instrument (collectively, a "contract or other agreement")
to which it is a party or by which its property is bound or affected. To the
best knowledge of the Company, neither the Company nor any of its Subsidiaries
is a party to any contract or other agreement in which the other party is in
default in any respect thereunder that would be materially adverse to the
Company and its Subsidiaries considered as a whole. Neither
7
the Company nor any of its Subsidiaries is, nor at the Closing Date will any of
them be, in violation of any provision of its certificate of incorporation or
by-laws.
(k) No consent, approval, authorization or order of,
or any filing or declaration with, any court or governmental agency or body is
required in connection with the authorization, issuance, transfer, sale or
delivery of the Shares by the Company, in connection with the execution,
delivery and performance of this Agreement by the Company or in connection with
the taking by the Company of any action contemplated hereby, except such as
have been obtained under the Act or the Rules and Regulations and such as may
be required under state securities or Blue Sky laws or the by-laws and rules of
the National Association of Securities Dealers, Inc. (the "NASD") in connection
with the purchase and distribution by the Underwriters of the Shares.
(l) The Company has full corporate power and
authority to enter into this Agreement. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
binding agreement of the Company and is enforceable against the Company in
accordance with the terms hereof. The performance of this Agreement and the
consummation of the transactions contemplated hereby and the application of the
net proceeds from the offering and sale of the Shares in the manner set forth
in the Prospectus under "Use of Proceeds" will not result in the creation or
imposition of any lien, charge or encumbrance upon any of the assets of the
Company or any of its Subsidiaries pursuant to the terms or provisions of, or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or give any other party a right to terminate any of
its obligations under, or result in the acceleration of any obligation under,
the certificate of incorporation or by-laws of the Company or any of its
Subsidiaries, any material contract or other agreement to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of its properties is bound or affected, or violate or
conflict with any judgment, ruling, decree, order, statute, rule or regulation
of any court or other governmental agency or body applicable to the business or
properties of the Company or any of its Subsidiaries.
(m) The Company and each of its Subsidiaries has
good title to all properties and assets described in the Prospectus as owned by
it, free and clear of all liens, charges, encumbrances or restrictions, except
such as are described in the Prospectus or are not material to the business of
the Company and its Subsidiaries considered as a whole. The Company and each of
its Subsidiaries has valid, subsisting and enforceable leases for the
properties described in the Prospectus as leased by it, with such exceptions as
are not material and do not materially interfere with the use made and proposed
to be made of such properties by the Company and such Subsidiaries.
(n) Except as set forth in the Registration
Statement, and except as would not have a materially adverse effect on the
Company and its Subsidiaries considered as a whole, the Company and its
Subsidiaries (i) are in compliance with any and all applicable federal, state
and local laws and regulations relating to telecommunications
8
("Telecommunications Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Telecommunications Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval.
(o) There is no document or contract of a character
required to be described in the Registration Statement or the Prospectus or to
be filed as an exhibit to the Registration Statement which is not described or
filed as required. All such contracts to which the Company or any Subsidiary is
a party have been duly authorized, executed and delivered by the Company or
such Subsidiary, constitute valid and binding agreements of the Company or such
Subsidiary and are enforceable against the Company or such Subsidiary in
accordance with the terms thereof.
(p) No statement, representation, warranty or
covenant made by the Company in this Agreement or made in any certificate or
document required by this Agreement to be delivered to the Representatives was
or will be, when made, inaccurate, untrue or incorrect in any material respect.
(q) Neither the Company nor any of its directors,
officers or controlling persons has taken, directly or indirectly, any action
intended, or which might reasonably be expected, to cause or result, under the
Act or otherwise, in, or which has constituted, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares.
(r) No holder of securities of the Company has
rights to the registration of any securities of the Company because of the
filing of the Registration Statement.
(s) Prior to the Closing Date, the Shares will be
duly authorized for listing by the New York Stock Exchange upon official notice
of issuance.
(t) Except as would not have a materially adverse
effect on the Company and its Subsidiaries considered as a whole, the Company
and its Subsidiaries are in compliance with all federal, state and local
employment and labor laws, including, but not limited to, laws relating to
non-discrimination in hiring, promotion and pay of employees, and no labor
dispute with the employees of the Company or any Subsidiary exists or, to the
knowledge of the Company, is imminent or threatened; and the Company is not
aware of any existing, imminent or threatened labor disturbance by the
employees of any of its principal suppliers, manufacturers or contractors that
could result in a material adverse effect on the condition (financial or
otherwise) or on the earnings, business, properties, business prospects or
operations of the Company and its Subsidiaries, taken as a whole.
(u) Except as would not have a materially adverse
effect on the Company and its Subsidiaries considered as a whole, the Company
and its Subsidiaries own,
9
or are licensed or otherwise have the right to use, the material patents,
patent rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, services marks and trade names
(collectively, "patent and proprietary rights") presently employed by them or
which are necessary in connection with the conduct of the business now operated
by them, and neither the Company nor any of its Subsidiaries has received any
written notice or otherwise has actual knowledge of any infringement of or
conflict with asserted rights of others or any other claims with respect to any
patent or proprietary rights, or of any basis for rendering any patent and
proprietary rights invalid or inadequate to protect the interest of the Company
or any of its Subsidiaries.
(v) Neither the Company nor any of its Subsidiaries
nor, to the Company's knowledge, any employee or agent of the Company or any
Subsidiary has made any payment of funds of the Company or any Subsidiary or
received or retained any funds in violation of any law, rule or regulation or
of a character required to be disclosed in the Prospectus.
(w) The Company has complied, and until the
completion of the distribution of the Shares will comply, with all of the
provisions of (including, without limitation, filing all forms required by)
Section 517.075 of the Florida Securities and Investor Protection Act and
Regulation 3E-900.001 issued thereunder with respect to the offering and sale
of the Shares.
(x) The Company and its Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or imposing liability or standards of conduct concerning any
Hazardous Material (as hereinafter defined) ("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 result in a material adverse effect on the
condition (financial or otherwise) or on the earnings, business, properties,
business prospects or operations of the Company and its Subsidiaries, taken as
a whole. The term "Hazardous Material" means (A) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, (B) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (C) any petroleum or petroleum
product, (D) any polychlorinated biphenyl and (E) any pollutant or contaminant
or hazardous, dangerous, or toxic chemical, material, waste or substance
regulated under or within the meaning of any other Environmental Law.
10
(y) The Company maintains insurance with respect to
its properties and business of the types and in amounts generally deemed
adequate for its business and consistent with insurance coverage maintained by
similar companies and businesses, all of which insurance is in full force and
effect.
(z) The Company has filed all material federal,
state and foreign income and franchise tax returns and has paid all taxes shown
as due thereon, other than taxes which are being contested in good faith and
for which adequate reserves have been established in accordance with generally
accepted accounting principles ("GAAP"); and the Company has no knowledge of
any material tax deficiency which has been or might be asserted or threatened
against the Company. There are no tax returns of the Company or any of its
Subsidiaries that are currently being audited by state, local or federal taxing
authorities or agencies (and with respect to which the Company or any
Subsidiary has received notice), where the findings of such audit, if adversely
determined, would result in a material adverse effect on the condition
(financial or otherwise) or on the earnings, business, properties, business
prospects or operations of the Company and its Subsidiaries, taken as a whole.
(aa) With respect to each employee benefit plan,
program and arrangement (including, without limitation, any "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) maintained or contributed to by the Company, or
with respect to which the Company could incur any liability under ERISA
(collectively, the "Benefit Plans"), no event has occurred and, to the best
knowledge of the Company, there exists no condition or set of circumstances, in
connection with which the Company could be subject to any liability under the
terms of such Benefit Plan, applicable law (including, without limitation,
ERISA and the Internal Revenue Code of 1986, as amended) or any applicable
agreement that could materially adversely affect the business, properties,
business prospects, condition (financial or otherwise) or results of operations
of the Company and its Subsidiaries, taken as a whole.
4. Agreements of the Company. The Company agrees with the
several Underwriters as follows:
(a) The Company will not, either prior to the
Effective Date or thereafter during such period as the Prospectus is required
by law to be delivered in connection with sales of the Shares by an Underwriter
or dealer, file any amendment or supplement to the Registration Statement or
the Prospectus, unless a copy thereof shall first have been submitted to the
Representatives within a reasonable period of time prior to the filing thereof
and the Representatives shall not have objected thereto in good faith.
(b) The Company will use its best efforts to cause
the Registration Statement to become effective, and will notify the
Representatives promptly, and will confirm such advice in writing, (1) when the
Registration Statement has become effective and when any post-effective
amendment thereto becomes effective, (2) of any
11
request by the Commission for amendments or supplements to the Registration
Statement or the Prospectus or for additional information, (3) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose or
the threat thereof, (4) of the happening of any event during the period
mentioned in the second sentence of Section 4(e) that in the judgment of the
Company makes any statement made in the Registration Statement or the
Prospectus untrue in any material respect or that requires the making of any
changes in the Registration Statement or the Prospectus in order to make the
statements therein, in light of the circumstances in which they are made, not
misleading in any material respect and (5) of receipt by the Company or any
representative or attorney of the Company of any other communication from the
Commission relating to the Company, the Registration Statement, any preliminary
prospectus or the Prospectus. If at any time the Commission shall issue any
order suspending the effectiveness of the Registration Statement, the Company
will make every reasonable effort to obtain the withdrawal of such order at the
earliest possible moment. The Company will use its best efforts to comply with
the provisions of and make all requisite filings with the Commission pursuant
to Rule 430A and to notify the Representatives promptly of all such filings.
(c) The Company will furnish to the Representatives,
without charge, two signed copies of the Registration Statement and of any
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto and will furnish to the Representatives, without
charge, for transmittal to each of the other Underwriters, a copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules but without exhibits.
(d) The Company will comply with all the provisions
of any undertakings contained in the Registration Statement.
(e) On the Effective Date, and thereafter from time
to time, the Company will deliver to each of the Underwriters, without charge,
as many copies of the Prospectus or any amendment or supplement thereto as the
Representatives may reasonably request. The Company consents to the use of the
Prospectus or any amendment or supplement thereto by the several Underwriters
and by all dealers to whom the Shares may be sold, both in connection with the
offering or sale of the Shares and for any period of time thereafter during
which the Prospectus is required by law to be delivered in connection
therewith. If during such period of time any event shall occur which in the
judgment of the Company or counsel to the Underwriters should be set forth in
the Prospectus in order to make any statement therein, in the light of the
circumstances under which it was made, not misleading in any material respect,
or if it is necessary to supplement or amend the Prospectus to comply with law,
the Company will forthwith prepare and duly file with the Commission an
appropriate supplement or amendment thereto, and will deliver to each of the
Underwriters, without charge, such number of copies thereof as the
Representatives may reasonably request.
12
(f) Prior to any public offering of the Shares by
the Underwriters, the Company will cooperate with the Representatives and
counsel to the Underwriters in connection with the registration or
qualification of the Shares for offer and sale under the securities or Blue Sky
laws of such jurisdictions as the Representatives may request; provided, that
in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to general service of process in any jurisdiction where it is not
now so subject.
(g) During the period of five years commencing on
the Effective Date, the Company will furnish to the Representatives and each
other Underwriter who may so request copies of such financial statements and
other periodic and special reports as the Company may from time to time
distribute generally to the holders of any class of its capital stock, and will
furnish to the Representatives and each other Underwriter who may so request a
copy of each annual or other report it shall be required to file with the
Commission.
(h) The Company will make generally available to
holders of its securities as soon as may be practicable but in no event later
than the last day of the fifteenth full calendar month following the calendar
quarter in which the Effective Date falls, an earnings statement (which need
not be audited but shall be in reasonable detail) for a period of 12 months
ended commencing after the Effective Date, and satisfying the provisions of
Section 11(a) of the Act (including Rule 158 of the Rules and Regulations).
(i) Whether or not the transactions contemplated by
this Agreement are consummated or this Agreement is terminated, the Company
will pay, or reimburse if paid by the Representatives, all costs and expenses
incident to the performance of the obligations of the Company under this
Agreement, including but not limited to costs and expenses of or relating to
(1) the preparation, printing and filing of the Registration Statement and
exhibits to it, each preliminary prospectus, the Prospectus and any amendment
or supplement to the Registration Statement or the Prospectus, (2) the
preparation and delivery of certificates representing the Shares, (3) the word
processing, printing and reproduction of this Agreement, the Agreement Among
Underwriters, any Dealer Agreements and any Underwriters' Questionnaire, (4)
furnishing (including costs of shipping, mailing and courier) such copies of
the Registration Statement, the Prospectus and any preliminary prospectus, and
all amendments and supplements thereto, as may be reasonably requested for use
in connection with the offering and sale of the Shares by the Underwriters or
by dealers to whom Shares may be sold, (5) the listing of the Shares on the New
York Stock Exchange, (6) any filings required to be made by the Underwriters
with the NASD, and the fees, disbursements and other charges of counsel for the
Underwriters in connection therewith, (7) the registration or qualification of
the Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions designated pursuant to Section 4(f), including the fees,
disbursements and other charges of counsel to the Underwriters in connection
therewith, and the preparation and printing of preliminary, supplemental and
13
final Blue Sky memoranda, (8) counsel to the Company, (9) the transfer agent
for the Shares and (10) the Accountants.
(j) If this Agreement shall be terminated by the
Company pursuant to any of the provisions hereof (otherwise than pursuant to
Section 8) or if for any reason the Company shall be unable to perform its
obligations hereunder, the Company will reimburse the several Underwriters for
all out-of-pocket expenses (including the fees, disbursements and other charges
of counsel to the Underwriters) reasonably incurred by them in connection
herewith.
(k) The Company will not at any time, directly or
indirectly, take any action intended, or which might reasonably be expected, to
cause or result in, or which will constitute, stabilization of the price of the
shares of Common Stock to facilitate the sale or resale of any of the Shares.
(l) The Company will apply the net proceeds from the
offering and sale of the Shares to be sold by the Company in the manner set
forth in the Prospectus under "Use of Proceeds" and shall file such reports
with the Commission with respect to the sale of the Shares and the application
of the proceeds therefrom as may be required in accordance with Rule 463 under
the Act.
(m) Except as provided in this Agreement, during the
period of 180 days commencing at the Closing Date, the Company will not,
without the prior written consent of PaineWebber Incorporated, directly or
indirectly, sell, offer to sell, grant any option for the sale of, or otherwise
dispose of or file any shelf registration statement or any registration other
than the Registration Statement with the Commission for any Common Stock or
securities convertible into or exercisable or exchangeable for Common Stock,
other than to the Underwriters pursuant to this Agreement and other than
pursuant to employee or director benefit plans, provided, that the Company will
not grant options to purchase shares of Common Stock pursuant to such employee
or director benefit plans at a price less than the initial public offering
price, except that the Company may (i) issue on the Closing Date the shares of
Common Stock to be issued in connection with the acquisitions to be consummated
on the Closing Date, as described in the Registration Statement, so long as the
certificates issued to such purchasers set forth the legends relating to the
one-year restrictions on the sale or disposition of such shares provided for in
the agreements related to such acquisitions (and the Company hereby agrees with
the Representatives that for a period of 365 days after the Closing Date
("Lock-Up Period"), without written consent of PaineWebber Incorporated, the
Company will not agree to waive or amend such restrictions on sale or
disposition), (ii) issue shares of Common Stock ("Acquisition Shares") during
the Lock-Up Period in connection with additional acquisitions so long as the
purchasers of such Acquisition Shares agree to be bound by the lock-up
agreement with the Representatives in the form set forth in Exhibit B to the
effect that they will not, except as provided therein, without written consent
of PaineWebber Incorporated, sell, contract to sell or otherwise dispose of any
of such shares at any time before the expiration of the Lock-Up Period and
14
the certificates evidencing such Acquisition Shares bear a legend to such
effect, (iii) issue shares of Common Stock during the Lock-Up Period pursuant
to the (x) conversion of the Company's convertible notes ("Convertible Notes"),
and (y) exercise of warrants ("Warrants"), and (z) options ("Options") issued
by the Company in the acquisitions described in the Registration Statement, so
long as the certificates representing such Convertible Notes, Warrants and
Options issued in connection with the acquisitions to be consummated on the
Closing Date and any shares of Common Stock issued upon conversion or exercise
thereof set forth the legends relating to the one-year restrictions on the sale
or disposition of such shares provided for in the agreements related to such
acquisitions (and the Company hereby agrees with the Representatives that
during the LockUp Period, without written consent of PaineWebber Incorporated,
the Company will not agree to waive or amend such restrictions on sale or
disposition), and (iv) grant awards and permit the exercise of awards granted
pursuant to the Company's 1997 Stock Awards Plan and its Non-Qualified Stock
Option Plan for Non-Employee Directors.
(n) The Company will cause each of its executive
officers, directors and each beneficial owner of more than 5% of the
outstanding shares of Common Stock other than Xxx X. Xxxxxxxxx to enter into
agreements with the Representatives in the form set forth in Exhibit B to the
effect that they will not, except as provided therein, for a period of 365 days
after the commencement of the public offering of the Shares, without the prior
written consent of PaineWebber Incorporated, sell, contract to sell or
otherwise dispose of any of such shares (other than pursuant to employee stock
option plans or in connection with other employee incentive compensation
arrangements).
(o) Xxx X. Xxxxxxxxx shall have entered into an
agreement with the Representatives in the form set forth in Exhibit C to the
effect that he will not, except as provided therein, for a period of eighteen
months after the Closing, without the prior written consent of PaineWebber
Incorporated, sell, contract to sell or otherwise dispose of any shares of
Common Stock held by him.
5. Conditions of the Obligations of the Underwriters. In
addition to the execution and delivery of the Price Determination Agreement,
the obligations of each Underwriter hereunder are subject to the following
conditions:
(a) Notification that the Registration Statement has
become effective shall be received by the Representatives not later than 5:00
p.m., New York City time, on the date of this Agreement or at such later date
and time as shall be consented to in writing by the Representatives and all
filings required by Rule 424 of the Rules and Regulations and Rule 430A shall
have been made.
(b) (i) No stop order suspending the effectiveness
of the Registration Statement shall have been issued and no proceedings for
that purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities
15
or Blue Sky laws of any jurisdiction shall be in effect and no proceeding for
such purpose shall be pending before or threatened by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the
Commission or such authorities and (iv) after the date hereof no amendment or
supplement to the Registration Statement or the Prospectus shall have been
filed unless a copy thereof was first submitted to the Representatives and the
Representatives did not object thereto in good faith, and the Representatives
shall have received certificates, dated the Closing Date and the Option Closing
Date and signed by the Chief Executive Officer of the Company and the Chief
Financial Officer of the Company (who may, as to proceedings threatened, rely
upon the best of their information and belief), to the effect of clauses (i),
(ii) and (iii).
(c) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, (i)
there shall not have been, and no development shall have occurred which could
reasonably be expected to result in, a material adverse change in the general
affairs, business, business prospects, properties, management, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole, whether or not arising from transactions in the
ordinary course of business, in each case other than as set forth in or
contemplated by the Registration Statement and the Prospectus and (ii) neither
the Company nor any of its Subsidiaries shall have sustained any loss or
interference with its business or properties material to the Company and its
Subsidiaries taken as a whole from fire, explosion, flood or other casualty,
whether or not covered by insurance, or from any labor dispute or from any
court or legislative or other governmental action, order or decree, which is
not set forth in the Registration Statement and the Prospectus, if in the
judgment of the Representatives any such development makes it impracticable or
inadvisable to consummate the sale and delivery of the Shares by the
Underwriters at the initial public offering price.
(d) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, except
as contemplated by the Registration Statement and the Prospectus, there shall
have been no litigation or other proceeding instituted against the Company or
any of its Subsidiaries or any of their respective officers or directors in
their capacities as such, before or by any Federal, state or local court,
commission, regulatory body, administrative agency or other governmental body,
domestic or foreign, in which litigation or proceeding an unfavorable ruling,
decision or finding would materially and adversely affect the business,
properties, business prospects, condition (financial or otherwise) or results
of operations of the Company and its Subsidiaries taken as a whole.
(e) Each of the representations and warranties of
the Company contained herein shall be true and correct in all material respects
at the Closing Date and, with respect to the Option Shares, at the Option
Closing Date, as if made at the Closing Date and, with respect to the Option
Shares, at the Option Closing Date, and all covenants
16
and agreements herein contained to be performed on the part of the Company and
all conditions herein contained to be fulfilled or complied with by the Company
at or prior to the Closing Date and, with respect to the Option Shares, at or
prior to the Option Closing Date, shall have been duly performed, fulfilled or
complied with.
(f) The Representatives shall have received an
opinion, dated the Closing Date and, with respect to the Option Shares, the
Option Closing Date, and satisfactory in form and substance to counsel for the
Underwriters, from Xxxxxxxxx & Xxxxxxxxx L.L.P., counsel to the Company, to the
effect set forth in Exhibit D.
(g) The Representatives shall have received an
opinion, dated the Closing Date and the Option Closing Date, from Xxxxxx, Xxxxx
& Bockius LLP, counsel to the Underwriters, with respect to the Registration
Statement, the Prospectus and this Agreement, which opinion shall be
satisfactory in all respects to the Representatives.
(h) On the date of the Prospectus, the Accountants
shall have furnished to the Representatives a letter, dated the date of its
delivery, addressed to the Representatives and in form and substance
satisfactory to the Representatives, confirming that they are independent
accountants with respect to the Company as required by the Act and the Rules
and Regulations and, in the case of KPMG Peat Marwick LLP, with respect to the
financial and other statistical and numerical information contained in the
Registration Statement. At the Closing Date and, as to the Option Shares, the
Option Closing Date, KPMG Peat Marwick LLP shall have furnished to the
Representatives a letter, dated the date of its delivery, which shall confirm,
on the basis of a review in accordance with the procedures set forth in their
letter, that nothing has come to their attention during the period from the
date of the letter referred to in the prior sentence to a date (specified in
the letter) not more than five days prior to the Closing Date and the Option
Closing Date which would require any change in their letter dated the date of
the Prospectus, if it were required to be dated and delivered at the Closing
Date and the Option Closing Date.
(i) At the Closing Date and, as to the Option
Shares, the Option Closing Date, there shall be furnished to the
Representatives an accurate certificate, dated the date of its delivery, signed
by each of the Chief Executive Officer and the Chief Financial Officer of the
Company, in form and substance satisfactory to the Representatives, to the
effect that:
(i) Each signer of such certificate has
carefully examined the Registration Statement and the Prospectus and (A) as of
the date of such certificate, such documents are true and correct in all
material respects and do not omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not untrue
or misleading and (B) since the Effective Date, no event has occurred as a
result of which it is necessary to amend or supplement the Prospectus in order
to make the statements therein not untrue or misleading in any material
respect;
17
(ii) Each of the representations and
warranties of the Company contained in this Agreement were, when originally
made, and are, at the time such certificate is delivered, true and correct in
all material respects;
(iii) Each of the covenants required herein
to be performed by the Company on or prior to the delivery of such certificate
has been duly, timely and fully performed and each condition herein required to
be complied with by the Company on or prior to the date of such certificate has
been duly, timely and fully complied with; and
(iv) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, (A)
there has not been, and no development has occurred which could reasonably be
expected to result in, a material adverse change in the general affairs,
business, business prospects, properties, management, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries, taken
as a whole, whether or not arising from transactions in the ordinary course of
business, in each case other than as set forth in or contemplated by the
Registration Statement and the Prospectus and (B) neither the Company nor any
of its Subsidiaries has sustained any loss or interference with its business or
properties material to the Company and its Subsidiaries taken as a whole from
fire, explosion, flood or other casualty, whether or not covered by insurance,
or from any labor dispute or from any court or legislative or other
governmental action, order or decree, which is not set forth in the
Registration Statement and the Prospectus.
(j) On or prior to the Closing Date, the
Representatives shall have received the executed agreements referred to in
Section 4(n).
(k) The Shares shall be qualified for sale in such
states as the Representatives may reasonably request each such qualification
shall be in effect and not subject to any stop order or other proceeding on the
Closing Date and the Option Closing Date.
(l) Prior to the Closing Date, the Shares shall have
been duly authorized for listing by the New York Stock Exchange upon official
notice of issuance.
(m) The National Association of Securities Dealers,
Inc. shall have approved the underwriting terms and arrangements and such
approval shall not have been withdrawn or limited.
(n) The Company shall have furnished to he
Representatives such certificates, in addition to those specifically mentioned
herein, as the Representatives may have reasonably requested as to the accuracy
and completeness at the Closing Date and the Option Closing Date of any
statement in the Registration Statement or the Prospectus as to the accuracy at
the Closing Date and the Option Closing Date of the representations and
warranties of the Company herein, as to the performance by the Company of its
obligations
18
hereunder, or as to the fulfillment of the conditions concurrent and precedent
to the obligations hereunder of the Representatives.
6. Indemnification.
(a) The Company will indemnify and hold harmless
each Underwriter, the directors, officers, employees and agents of each
Underwriter and each person, if any, who controls each Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act from and
against any and all losses, claims, liabilities, expenses and damages
(including, but not limited to, any and all investigative, legal and other
expenses reasonably incurred in connection with, and any and all amounts paid
in settlement of, any action, suit or proceeding between any of the indemnified
parties and any indemnifying parties or between any indemnified party and any
third party, or otherwise, or any claim asserted), as and when incurred, to
which any Underwriter, or any such person, may become subject under the Act,
the Exchange Act or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, liabilities, expenses
or damages arise out of or are based on (i) any 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 to
the Registration Statement or the Prospectus or in any application or other
document executed by or on behalf of the Company or based on written
information furnished by or on behalf of the Company filed in any jurisdiction
in order to qualify the Shares under the Securities Laws thereof or filed with
the Commission, (ii) the omission or alleged omission to state in such document
a material fact required to be stated in it or necessary to make the statements
in it not misleading, (iii) the terms of the acquisitions of the Acquired
Companies and the reverse stock split described in the Registration Statement
and any legal or arbitral proceedings related thereto, or (iv) any act or
failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Shares or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, liability, expense or damage arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Company shall not be
liable under this clause (iv) to the extent it is finally judicially determined
by a court of competent jurisdiction that such loss, claim, liability, expense
or damage resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such underwriter through its gross negligence or willful
misconduct); provided that the Company will not be liable to the extent that
such loss, claim, liability, expense or damage arises from the sale of the
Shares in the public offering to any person by an Underwriter and (A) is based
on an untrue statement or omission or alleged untrue statement or omission made
in reliance on and in conformity with information relating to any Underwriter
furnished in writing to the Company by the Representatives on behalf of any
Underwriter expressly for inclusion in the Registration Statement, any
preliminary prospectus or the Prospectus or (B) results solely from an untrue
statement of a material fact contained in, or the omission of a material fact
from, such preliminary prospectus, which untrue statement or omission was
completely corrected in the Prospectus (as then amended or supplemented), if
the Company shall sustain the burden of proving that the
19
Underwriters sold Shares to the person alleging such loss, claim, liability,
expense or damage without sending or giving, at or prior to the written
confirmation of such sale, a copy of the Prospectus (as then amended or
supplemented) provided that the Company had previously furnished copies thereof
to the Underwriters within a reasonable amount of time prior to such sale or
such confirmation, and the Underwriters failed to deliver the corrected
Prospectus, if required by law to have so delivered it and if delivered would
have been a complete defense against the person asserting such loss, claim,
liability, expense or damage. This indemnity agreement will be in addition to
any liability that the Company might otherwise have.
(b) Each Underwriter will indemnify and hold
harmless the Company, each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, each
director of the Company and each officer of the Company who signs the
Registration Statement to the same extent as the foregoing indemnity from the
Company to each Underwriter, but only insofar as losses, claims, liabilities,
expenses or damages arise out of or are based on any untrue statement or
omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to any Underwriter furnished in writing to
the Company by the Representatives on behalf of such Underwriter expressly for
use in the Registration Statement, the Preliminary Prospectus or the
Prospectus. This indemnity will be in addition to any liability that each
Underwriter might otherwise have; provided, however, that in no case shall any
Underwriter be liable or responsible for any amount in excess of the
underwriting discounts and commissions received by such Underwriter.
(c) Any party that proposes to assert the right to
be indemnified under this Section 6 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 6, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying
party will not relieve it from any liability that it may have to any
indemnified party under the foregoing provisions of this Section 6 unless, and
only to the extent that, such omission results in the forfeiture of substantive
rights or defenses by the indemnifying party. If any such action is brought
against any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in and, to
the extent that it elects by delivering written notice to the indemnified party
promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly
notified, to assume the defense of the action, with counsel satisfactory to the
indemnified party, and after notice from the indemnifying party to the
indemnified party of its election to assume the defense, the indemnifying party
will not be liable to the indemnified party for any legal or other expenses
except as provided below and except for the reasonable costs of investigation
subsequently incurred by the indemnified party in connection with the defense.
The indemnified party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such indemnified
20
party unless (1) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the indemnified party has
reasonably concluded (based on advice of counsel) that there may be legal
defenses available to it or other indemnified parties that are different from
or in addition to those available to the indemnifying party, (3) a conflict or
potential conflict exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (4) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be
at the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable
fees, disbursements and other charges of more than one separate firm admitted
to practice in such jurisdiction at any one time for all such indemnified party
or parties. All such fees, disbursements and other charges will be reimbursed
by the indemnifying party promptly as they are incurred. An indemnifying party
will not be liable for any settlement of any action or claim effected without
its written consent (which consent will not be unreasonably withheld). No
indemnifying party shall, without the prior written consent of each indemnified
party, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding relating to the matters
contemplated by this Section 6 (whether or not any indemnified party is a party
thereto), unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising or
that may arise out of such claim, action or proceeding. Notwithstanding any
other provision of this Section 6 (c), if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel, such indemnifying party agrees that it shall
be liable for any settlement effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall have
received notice of the terms of such settlement at least 30 days prior to such
settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the
date of such settlement.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in the
foregoing paragraphs of this Section 6 is applicable in accordance with its
terms but for any reason is held to be unavailable from the Company or the
Underwriters, the Company and the Underwriters will contribute to the total
losses, claims, liabilities, expenses and damages (including any investigative,
legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim asserted,
but after deducting any contribution received by the Company from persons other
than the Underwriters, such as persons who control the Company within the
meaning of the Act, officers of the Company who signed the Registration
Statement and directors of the Company, who also may be liable for
contribution) to which the Company and any one or
21
more of the Underwriters may be subject in such proportion as shall be
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other. The relative benefits received by the
Company 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 (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. If, but only if, the
allocation provided by the foregoing sentence is not permitted by applicable
law, the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company, on the one hand,
and the Underwriters, on the other, with respect to the statements or omissions
which resulted in such loss, claim, liability, expense or damage, or action in
respect thereof, as well as any other relevant equitable considerations with
respect to such offering. Such relative fault shall be determined by reference
to whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Representatives on behalf of the Underwriters,
the intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 6(d) were to be 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 into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, liability, expense or
damage, or action in respect thereof, referred to above in this Section 6(d)
shall be deemed to include, for purpose of this Section 6(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6(d), no Underwriter shall be required to contribute
any amount in excess of the underwriting discounts and commissions received by
it and no person found guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) will be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute as provided in this Section 6(d) are
several in proportion to their respective underwriting obligations and not
joint. For purposes of this Section 6(d), any person who controls a party to
this Agreement within the meaning of the Act will have the same rights to
contribution as that party, and each officer of the Company who signed the
Registration Statement will have the same rights to contribution as the
Company, subject in each case to the provisions hereof. Any party entitled to
contribution, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim for contribution may be made
under this Section 6(d), will notify any such party or parties from whom
contribution may be sought, but the omission so to notify will not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have under this Section 6 (d). Except for a settlement entered
into pursuant to the last sentence of Section 6 (c) hereof, no party will be
liable for
22
contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld).
(e) The indemnity and contribution agreements
contained in this Section 6 and the representations and warranties of the
Company contained in this Agreement shall remain operative and in full force
and effect regardless of (i) any investigation made by or on behalf of the
Underwriters, (ii) acceptance of the Shares and payment therefore or (iii) any
termination of this Agreement.
7. Termination. The obligations of the several Underwriters
under this Agreement may be terminated at any time on or prior to the Closing
Date (or, with respect to the Option Shares, on or prior to the Option Closing
Date), by notice to the Company from the Representatives, without liability on
the part of any Underwriter to the Company, if, prior to delivery and payment
for the Shares (or the Option Shares, as the case may be), in the sole judgment
of the Representatives, (i) there has been, since the respective dates as of
which information is given in the Registration Statement, any material adverse
change in the business, properties, business prospects, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries
considered as a whole, (ii) trading in any of the equity securities of the
Company shall have been suspended by the Commission, the NASD, by an exchange
that lists the Shares or by the Nasdaq Stock Market, (iii) trading in
securities generally on the New York Stock Exchange or the Nasdaq Stock Market
shall have been suspended or limited or minimum or maximum prices shall have
been generally established on such exchange or over the counter market, or
additional material governmental restrictions, not in force on the date of this
Agreement, shall have been imposed upon trading in securities generally by such
exchange or by order of the Commission or the NASD or any court or other
governmental authority, (iv) a general banking moratorium shall have been
declared by either Federal or New York State authorities or (v) any material
adverse change in the financial or securities markets in the United States or
in political, financial or economic conditions in the United States or any
outbreak or material escalation of hostilities or declaration by the United
States of a national emergency or war or other calamity or crisis shall have
occurred, the effect of any of which is such as to make it, in the sole
judgment of the Representatives, impracticable or inadvisable to market the
Shares on the terms and in the manner contemplated by the Prospectus.
8. Substitution of Underwriters. If any one or more of the
Underwriters shall fail or refuse to purchase any of the Firm Shares which it
or they have agreed to purchase hereunder, and the aggregate number of Firm
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase is not more than one-tenth of the aggregate number of Firm
Shares, the other Underwriters shall be obligated, severally, to purchase the
Firm Shares which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase, in the proportions which the number of Firm Shares
which they have respectively agreed to purchase pursuant to Section 1 bears to
the aggregate number of Firm Shares which all such non-defaulting Underwriters
have so
23
agreed to purchase, or in such other proportions as the Representatives may
specify; provided that in no event shall the maximum number of Firm Shares
which any Underwriter has become obligated to purchase pursuant to Section 1 be
increased pursuant to this Section 8 by more than one-ninth of the number of
Firm Shares agreed to be purchased by such Underwriter without the prior
written consent of such Underwriter. If any Underwriter or Underwriters shall
fail or refuse to purchase any Firm Shares and the aggregate number of Firm
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase exceeds one-tenth of the aggregate number of the Firm
Shares and arrangements satisfactory to the Representatives and the Company for
the purchase of such Firm Shares are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company for the purchase or sale of any
Shares under this Agreement. In any such case either the Representatives or the
Company shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken pursuant to this Section 8 shall
not relieve any defaulting Underwriter from liability in respect of any default
of such Underwriter under this Agreement.
9. Miscellaneous. Notice given pursuant to any of the
provisions of this Agreement shall be in writing and, unless otherwise
specified, shall be mailed or delivered (a) if to the Company, at the office of
the Company, 000 Xxxxx Xxxxx Xxxx Xxxx, Xxxxx 000, Xx. Xxxxx, Xxxxxxxx 00000.
Attention: Xxxxxxx X. Xxxxxxx, or (b) if to the Underwriters, to the
Representatives at the offices of PaineWebber Incorporated, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxxx X. Xxxxxxxxx, Corporate
Finance Department. Any such notice shall be effective only upon receipt. Any
notice under Section 7 or 8 may be made by telex or telephone, but if so made
shall be subsequently confirmed in writing.
This Agreement has been and is made solely for the benefit of
the several Underwriters and the Company and of the controlling persons,
directors and officers referred to in Section 6, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" as used
in this Agreement shall not include a purchaser, as such purchaser, of Shares
from any of the several Underwriters.
All representations, warranties and agreements of the Company
contained herein or in certificates or other instruments delivered pursuant
hereto, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any of its controlling
persons and shall survive delivery of and payment for the Shares hereunder.
Any action required or permitted to be taken by the
Representatives under this Agreement may be taken by them jointly or by
PaineWebber Incorporated.
24
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES OF SUCH STATE.
This Agreement may be signed in two or more counterparts with
the same effect as if the signatures thereto and hereto were upon the same
instrument.
In case any provision in this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
The Company and the Underwriters each hereby irrevocably
waive any right they may have to a trial by jury in respect of any claim based
upon or arising out of this Agreement or the transactions contemplated hereby.
This Agreement may not be amended or otherwise modified or any
provision hereof waived except by an instrument in writing signed by the
Representatives and the Company.
Please confirm that the foregoing correctly sets forth the
agreement among the Company and the several Underwriters.
Very truly yours,
ADVANCED COMMUNICATIONS GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxx III
----------------------------------------
Name: Xxxxxxx X. Xxxxxx III
Title: Chief Financial Officer, Executive Vice
President, Secretary and Treasurer
Confirmed as of the date first above mentioned:
PAINEWEBBER INCORPORATED
CIBC XXXXXXXXXXX
Acting on behalf of themselves
and as the Representatives of the
other several Underwriters
named in Schedule I hereof.
25
By: PAINEWEBBER INCORPORATED
By:/s/ Xxxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: Managing Director
By: CIBC XXXXXXXXXXX
By:/s/ Xxxxxx Xxxxxx
-----------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
26
Schedule I
Number of
Underwriter Shares
----------- ------
PaineWebber Incorporated ........................................ 3,500,000
CIBC Xxxxxxxxxxx ................................................ 2,340,000
ABN AMRO Chicago Corporation .................................... 150,000
Credit Lyonnaise Securities (USA) Inc. .......................... 150,000
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation ............. 150,000
Xxxxxx Xxxx LLC ................................................. 150,000
Xxxxxxx, Xxxxx & Co. ............................................ 150,000
Xxxxxx Xxxxxxx & Co. Incorporated ............................... 150,000
SBC Warburg Dillon Read Inc. .................................... 150,000
Xxxxxxx Xxxxx Xxxxxx Inc. ....................................... 150,000
Xxxxxx X. Xxxx & Company ........................................ 80,000
Xxxxxxxxxx & Co. Inc. ........................................... 80,000
Xxxxxx Xxxxxx Xxxxxxxx & Co., LLC ............................... 80,000
Xxxxxxx Bros., L.P. ............................................. 80,000
Ladenburg Xxxxxxxx & Co. Inc .................................... 80,000
Xxxx Xxxxx Inc. ................................................. 80,000
Xxxxx XxxXxxxxx Incorporated .................................... 80,000
Xxxxxxx Xxxxxx Xxxxx Inc. ....................................... 80,000
Sands Brothers & Co., Ltd. ...................................... 80,000
Soundview Financial Group ....................................... 80,000
X.X. XXXXXXXXX, TOWBIN .......................................... 80,000
Wit Capital Corporation ......................................... 80,000
Total ........................................................... 8,000,000
---------
EXHIBIT A
ADVANCED COMMUNICATIONS GROUP, INC.
---------------------
PRICE DETERMINATION AGREEMENT
[Date]
PAINEWEBBER INCORPORATED
CIBC XXXXXXXXXXX
As Representatives of the several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Reference is made to the Underwriting Agreement, dated
______, 1998 (the "Underwriting Agreement"), among Advanced Communications
Group, Inc., a Delaware corporation (the "Company") and the several
Underwriters named in Schedule I thereto or hereto (the "Underwriters"), or
whom PaineWebber Incorporated and CIBC Xxxxxxxxxxx are acting as
representatives (the "Representatives"). The Underwriting Agreement provides
for the purchase by the Underwriters from the Company, subject to the terms and
conditions set forth therein, of an aggregate of ________ shares (the "Firm
Shares") of the Company's common stock, par value $.0001 per share. This
Agreement is the Price Determination Agreement referred to in the Underwriting
Agreement.
Pursuant to Section 1 of the Underwriting Agreement, the
undersigned agrees with the Representatives as follows:
The initial public offering price per share for the Firm
Shares shall be $
-------.
The purchase price per share for the Firm Shares to be paid
by the several Underwriters shall be $_______ representing an amount equal to
the initial public offering price set forth above, less $______ per share.
The Company represents and warrants to each of the
Underwriters that the representations and warranties of the Company set forth
in Section 3 of the Underwriting Agreement are accurate as though expressly
made at and as of the date hereof.
As contemplated by the Underwriting Agreement, attached as
Schedule I is a completed list of the several Underwriters, which shall be a
part of this Agreement and the Underwriting Agreement.
THIS AGREEMENT SHALL BE GOVERNED BY THE LAW OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE.
If the foregoing is in accordance with your understanding of
the agreement among the Underwriters and the Company, please sign and return to
the Company a counterpart hereof, whereupon this instrument along with all
counterparts and together with the Underwriting Agreement shall be a binding
agreement among the Underwriters and the Company in accordance with its terms
and the terms of the Underwriting Agreement.
Very truly yours,
ADVANCED COMMUNICATIONS GROUP, INC.
By:________________________________________
Name: Xxxxxxx X. Xxxxxx III
Title: Chief Financial Officer
Executive Vice President
Secretary and Treasurer
2
Confirmed as of the date first above mentioned:
PAINEWEBBER INCORPORATED CIBC XXXXXXXXXXX Acting on behalf of
themselves and as the Representatives of the other several
Underwriters named in Schedule I hereof.
By: PAINEWEBBER INCORPORATED
By: ________________________
Name: Xxxxxxxx X. Xxxxxxxxx
Title: Managing Director
By: CIBC XXXXXXXXXXX
By: _______________________
Name: Xxxxxx Xxxxxx
Title: Vice President
3
EXHIBIT B
[DATE]
PAINEWEBBER INCORPORATED
CIBC XXXXXXXXXXX
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
In consideration of the agreement of the several
Underwriters, for which PaineWebber Incorporated and CIBC Xxxxxxxxxxx
(the "Representatives") intend to act as Representatives to underwrite
a proposed public offering (the "Offering") of ____ shares of Common
Stock, par value $.0001 per share (the "Common Stock") of Advanced
Communications Group, Inc., a Delaware corporation, as contemplated by
a registration statement with respect to such shares filed with the
Securities and Exchange Commission on Form S-1 (Registration No.
333-37671), the undersigned hereby agrees that the undersigned will
not, except for transfers to immediate family members, or to charities
or charitable foundations or similar entities, who, in each case,
agree to be bound in writing by the restrictions set forth herein (or
trusts for the benefit of the undersigned or family members the
trustees of which so agree in writing), or, in the case of
Consolidation Partners Founding Fund, L.L.C., distributions of shares
of Common Stock in accordance with its charter and regulations to
holders of its Class A and Class B Interests, so long as the
certificates representing the shares so distributed bear legends with
respect to the restrictions on transfer imposed on such shares, for a
period of 365 days after the Closing without the prior written consent
of PaineWebber Incorporated, offer to sell, sell, contract to sell,
grant any option to sell, or otherwise dispose of, or require the
Company to file
with the Securities and Exchange Commission a registration statement
under the Securities Act of 1933 to register any shares of Common
Stock, or in the case of persons signing this agreement or agreements
in writing to be bound hereby, securities convertible into or
exchangeable for Common Stock or warrants or other rights to acquire
shares of Common Stock of which the undersigned is now[, or may in the
future become,] the beneficial owner within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934) (other than pursuant to
employee or director stock option plans or in connection with other
employee incentive compensation arrangements).
Very truly yours,
By:_______________________
Print Name:_______________
2
EXHIBIT C
[DATE]
PAINEWEBBER INCORPORATED
CIBC XXXXXXXXXXX
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
In consideration of the agreement of the several
Underwriters, for which PaineWebber Incorporated and CIBC Xxxxxxxxxxx
(the "Representatives") intend to act as Representatives to underwrite
a proposed public offering (the "Offering") of ____ shares of Common
Stock, par value $.0001 per share (the "Common Stock") of Advanced
Communications Group, Inc., a Delaware corporation, as contemplated by
a registration statement with respect to such shares filed with the
Securities and Exchange Commission on Form S-1 (Registration No.
333-37671), the undersigned hereby agrees that the undersigned will
not, except for transers to immediate family members, or to charities
or charitable trusts or foundations or similar entities, who, in each
case, agree in writing to be bound by the restrictions set forth
herein (or trusts for the benefit of the undersigned or family members
of which trusts the trustees so agree in writing), and except for
transfers or dispositions described in the Registration Statement, for
a period of eighteen months after the Closing, without the prior
written consent of PaineWebber Incorporated, offer to sell, sell,
contract to sell, grant any option to sell, or otherwise dispose of,
or require the Company to file with the Securities and Exchange
Commission a registration statement under the Securities Act of 1933
to register any shares of Common Stock or securities convertible into
or exchangeable for Common Stock or warrants or other rights to
acquire shares of Common Stock of which the undersigned is now, or may
in the future become, the beneficial owner within the meaning of Rule
13d-3 under the Securities Exchange Act of
1934 (other than pursuant to option plans or in connection with other
employee incentive compensation arrangements).
Very truly yours,
By:________________________
Print Name: Xxx X. Xxxxxxxxx
2
EXHIBIT D
Form of Opinion of
Counsel to the Company
The Company and each of its Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has full corporate power and authority to
conduct all the activities conducted by it, to own or lease all the assets
owned or leased by it and to conduct its business as described in the
Registration Statement and the Prospectus. The Company is the sole record owner
and, to the best of our knowledge after due inquiry, the sole beneficial owner
of all of the capital stock of each of its Subsidiaries.
All of the outstanding shares of Common Stock have been, and
the Shares, when paid for by the Underwriters in accordance with the terms of
the Agreement, will be, duly authorized, validly issued, fully paid and
nonassessable and will not be subject to any preemptive or similar right under
(i) the General Corporation Law of the State of Delaware, (ii) the Company's
certificate of incorporation or by-laws or (iii) any instrument, document,
contract or other agreement specifically referred to in the Registration
Statement or any instrument, document, contract or agreement filed as an
exhibit to the Registration Statement. Except as described in the Registration
Statement or the Prospectus, to the best of our knowledge after due inquiry,
there is no commitment or arrangement to issue, and there are no outstanding
options, warrants or other rights calling for the issuance of, any share of
capital stock of the Company or any Subsidiary to any person or any security or
other instrument that by its terms is convertible into, exercisable for or
exchangeable for capital stock of the Company.
No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is
required in connection with the authorization, issuance, transfer, sale or
delivery of the Shares by the Company, in connection with the execution,
delivery and performance of the Agreement by the Company or in connection with
the taking by the Company of any action contemplated thereby [or, if so
required, all such consents, approvals, authorizations and orders, [specifying
the same] have been obtained and are in full force and effect], except such as
have been obtained under the Act and the Rules and Regulations and such as may
be required under state securities or "Blue Sky" laws or by the by-laws and
rules of the NASD in connection with the purchase and distribution by the
Underwriters of the Shares to be sold by the Company.
The authorized, issued and outstanding capital stock of the
Company is as set forth in the Registration Statement and the Prospectus under
the caption "Capitalization." The description of the Common Stock contained in
the Prospectus is complete and accurate in all material respects. The form of
certificate used to evidence the Common Stock is in due and proper form and
complies with all applicable statutory requirements.
The Registration Statement and the Prospectus comply in all
material respects as to form with the requirements of the Act and the Rules and
Regulations (except that we express no opinion as to financial statements,
schedules and other financial and statistical data contained in the
Registration Statement or the Prospectus).
To the best of our knowledge after due inquiry, any
instrument, document, lease, license, contract or other agreement
(collectively, "Documents") required to be described or referred to in the
Registration Statement or the Prospectus has been described or referred to
therein as required and any Document required to be filed as an exhibit to the
Registration Statement has been filed as an exhibit thereto or has been
incorporated as an exhibit by reference in the Registration Statement.
To the best of our knowledge after due inquiry, except as
disclosed in the Registration Statement or the Prospectus, no person or entity
has the right to require the registration under the Act of shares of Common
Stock or other securities of the Company by reason of the filing or
effectiveness of the Registration Statement.
Except as set forth in the Registration Statement and the
Prospectus or as will not have a material adverse effect on the Company and its
Subsidiaries considered as a whole, each of the Company and the Subsidiaries
has all permits, licenses or other authorizations required by the FCC or
relevant state regulatory authorities required to provide the local and long
distance telecommunications services described as being provided by it in the
Registration Statement and the Prospectus.
To the best of our knowledge after due inquiry, neither the
Company nor any of the Subsidiaries is in violation of, or default with respect
to, any federal or state Telecommunications Law, except as set forth in the
Registration Statement and the Prospectus or such as do not have a material
adverse effect on the Company and its Subsidiaries considered as a whole.
Except as set forth in the Registration Statement, to the
best of our knowledge after due inquiry, (a) there is no decision, decree, or
order that has been issued by the FCC or any
2
relevant state regulatory agency against or in respect of the Company or the
Subsidiaries, or any of the FCC and state licenses held by the Subsidiaries,
that would reasonably be expected to impair materially the operations of the
Company and the Subsidiaries taken as a whole, and (b) there is no notice of
violation, proceeding, claim, investigation, or other action by or before the
FCC or any relevant state regulatory agency pending or threatened in writing
that is specifically directed against or in respect of the Company and the
Subsidiaries, or any of the FCC licenses and state licenses held by the Company
and the Subsidiaries, that would reasonably be expected to result in the
revocation of any such FCC or state licenses, to impair the operations of the
Company and the Subsidiaries or to result in any assessment, fine or penalty
against the Company or the Subsidiaries, in each case, material to the Company
and its Subsidiaries considered as a whole.
The statements appearing in the Prospectus under the captions
"Risk Factors -Implications of Telecommunications Act and Other Regulation" and
"Business -- Regulation," to the extent that they constitute summaries of
statutes, regulations or legal or governmental proceedings are accurate in all
material respects.
In rendering the opinions referred to in paragraphs
[telecommunications permits and Telecommunications Laws], we have consulted
with and relied in part upon the advice of other legal counsel who we believe
to be experts with respect to such matters.
The Company has full corporate power and authority to enter
into the Agreement, and the Agreement has been duly authorized, executed and
delivered by the Company, is a valid and binding agreement of the Company and,
except for the indemnification and contribution provisions thereof, as to which
we express no opinion, is enforceable against the Company in accordance with
the terms thereof.
The execution and delivery by the Company of, and the
performance by the Company of its agreements in, the Agreement do not and will
not (i) violate the certificate of incorporation or by-laws of the Company,
(ii) breach or result in a default under, cause the time for performance of any
obligation to be accelerated under, or result in the creation or imposition of
any lien, charge or encumbrance upon any of the assets of the Company or any of
its Subsidiaries pursuant to the terms of, (x) any material indenture,
mortgage, deed of trust, loan agreement, bond, debenture, note agreement,
capital lease or other evidence of indebtedness of which we have knowledge
after due inquiry, (y) any voting trust arrangement or any contract or other
agreement to which the Company is a party that restricts the ability of the
Company to issue securities and of which we have knowledge after due inquiry or
(z) any Document filed as an exhibit to the Registration Statement, (iii)
breach or otherwise violate any existing obligation of the Company under any
court or administrative order, judgment or decree of which we have knowledge
after due
3
inquiry or (iv) violate applicable provisions of any statute or regulation of
the State of Texas or the United States or of the General Corporation Law of
the State of Delaware.
The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
The Shares have been duly authorized for listing by the New
York Exchange upon official notice of issuance.
We hereby confirm to you that we have been advised by the
Commission that the Registration Statement has become effective under the Act
and that to the best of our knowledge after due inquiry no order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose has been instituted or is pending, threatened or contemplated.
We hereby further confirm to you that except as set forth in
or contemplated by the Registration Statement and the Prospectus, to the best
of our knowledge after due inquiry, there are no actions, suits, proceedings or
investigations pending or overtly threatened in writing against the Company or
any of its Subsidiaries, or any of their respective officers or directors in
their capacities as such, before or by any court, governmental agency or
arbitrator which (i) seek to challenge the legality or enforceability of the
Agreement, (ii) seek to challenge the legality or enforceability of any of the
Documents filed as exhibits to the Registration Statement, (iii) seek damages
or other remedies with respect to any of the Documents filed as exhibits to the
Registration Statement, except as set forth in or contemplated by the
Registration Statement or as would not have a material adverse effect on the
Company and its Subsidiaries considered as a whole, (iv) except as set forth in
or contemplated by the Registration Statement and the Prospectus, seek money
damages which would be material to the Company and its Subsidiaries considered
as a whole or seek to impose criminal penalties upon the Company, any of its
Subsidiaries or any of their respective officers or directors in their
capacities as such and of which we have knowledge or (v) seek to enjoin any of
the business activities of the Company or any of its Subsidiaries that are
material to the Company and its Subsidiaries considered as a whole or the
transactions described in the Prospectus and of which we have knowledge.
We have participated in conferences with officers and other
representatives of the Company, its auditors, and your representatives at which
the contents of the Registration Statement and the Prospectus and related
matters were discussed. Based upon such participation and review, and relying
as to materiality in part upon the factual statements of officers and other
representatives
4
of the Company, we advise you that no facts have come to our attention that
have caused us to believe that the Registration Statement (except for the
financial statements, schedules and related data and other financial or
statistical data as to which we have not been asked to comment), at the time it
became effective, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus (except for the
financial statements, schedules and related data and other financial or
statistical data, as to which we have not been asked to comment), as of the
date of such Prospectus or as of the data hereof, contained an untrue statement
of a material fact or omitted 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. However, because the primary purpose of our
engagement was not to confirm factual matters or financial or accounting
matters and because of the wholly or partially non-legal character of many of
the statements contained in the Registration Statement and the Prospectus, we
are not passing upon and do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus (except to the extent expressly set forth in
paragraphs ___ and ___ above [Capitalization and statements under specified
sections]), and we have not independently verified the accuracy, completeness
or fairness of such statements (except as aforesaid). Without limiting the
foregoing, we assume no responsibility for, have not independently verified and
have not been asked to comment on the accuracy, completeness or fairness of the
financial statements, schedules and other financial or statistical data
included in the Registration Statement or the exhibits to the Registration
Statement, and we have not examined the accounting, financial or other records
from which such financial statements, schedules and other financial or
statistical data and information were derived. We note that, although certain
portions of the Registration Statement (including financial statements and
related data) have been included herein on the authority of "experts" within
the meaning of the 1933 Act, we are not experts with respect to any portion of
the Registration Statement, including, without limitation, such financial
statements and related data and other financial or accounting data included
therein.
The foregoing opinion is subject to the qualification that
the enforceability of the Agreement may be: (i) subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally; and (ii) subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding at law or in
equity) including principles of commercial reasonableness or conscionability
and an implied covenant of good faith and fair dealing.
This letter is furnished by us solely for your benefit in
connection with the transactions referred to in the Agreement and may not be
circulated to, or relied upon by, any other person.
5
The foregoing opinion will be limited to the laws of the
United States, the State of Texas, and the General Corporation Law of the State
of Delaware and, with respect to paragraphs [telecommunications permits and
Telecommunications Laws], Telecommunications Laws of the United States and the
Telecommunications Laws of the States of Kansas, Minnesota, Nebraska, North
Dakota, Oklahoma, South Dakota and Texas. In rendering the opinions with
respect to organization, qualification and corporate power and authority of the
Subsidiaries, counsel may rely, to the extent they deem such reliance proper,
on the opinions (in form and substance reasonably satisfactory to Underwriters'
counsel) of other counsel reasonably acceptable to Underwriters' counsel as to
matters governed by the laws of jurisdictions other than the United States and
the State of Texas, and as to matters of fact, upon certificates of officers of
the Company, the Subsidiaries and of government officials; provided
Underwriters and their counsel may rely on such opinions and that such counsel
shall state that the opinion of any other counsel is in form and scope
satisfactory to such counsel and they believe that they are justified in
relying on such opinions. Copies of all such opinions and certificates shall be
furnished to counsel to the Underwriters on the Closing Date.
Solely for purposes of their opinion pursuant to the
Underwriting Agreement, Xxxxxx, Xxxxx & Xxxxxxx LLP, counsel to the several
Underwriters may rely on paragraphs [telecommunications permits and
Telecommunications Laws].
6
