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Exhibit 1.1
LONG DISTANCE INTERNATIONAL INC.
PURCHASE AGREEMENT
April 7, 1998
Xxxxxx Xxxxxxx & Co. Incorporated
SBC Warburg Dillon Read Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Long Distance International Inc., a Florida corporation (the
"Company"), proposes to issue and sell to Xxxxxx Xxxxxxx & Co. Incorporated and
SBC Warburg Dillon Read Inc. (together, the "Initial Purchasers") 225,000 Units
(the "Units"). Each Unit consists of (i) $1,000 principal amount of 12 1/4%
Senior Notes due 2008 (collectively, the "Notes") of the Company to be issued
pursuant to the provisions of an Indenture (the "Indenture") dated as of the
Closing Date (as defined in Section 4 below) between the Company and The Bank of
New York (in such capacity, the "Trustee") and (ii) one Warrant (collectively,
the "Warrants"), entitling the holder thereof to purchase 15.0874 shares
(collectively, the "Warrant Shares") of Common Stock, par value $0.001 per
share, of the Company ("Common Stock") at an exercise price of $.01 per share,
subject to adjustment as provided in the Warrant Agreement (as defined below).
The Warrants will be issued pursuant to the provisions of a warrant agreement
(the "Warrant Agreement") dated as of the Closing Date between the Company and
The Bank of New York (in such capacity, the "Warrant Agent"). The Company will
pledge pursuant to a Collateral Pledge and Security Agreement (the "Pledge
Agreement") to be dated as of the Closing Date in favor of the Trustee a portion
of the net proceeds of the issuance and sale of the Units as security for
payment of the first six scheduled interest payments due on the Notes.
The Units will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), to qualified
institutional buyers in compliance with the exemption from registration provided
by Rule 144A under the Securities Act, in offshore transactions in reliance on
Regulation S under the Securities Act ("Regulation S") and to institutional
accredited investors (as defined in Rule 501(a)(1), (2), (3) or (7) under the
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Securities Act) that deliver a letter in the form annexed to the Final
Memorandum (as defined below).
The Initial Purchasers and their direct and indirect transferees
will be entitled to the benefits of (i) a registration rights agreement relating
to the Notes (the "Notes Registration Rights Agreement"), dated the date hereof
between the Company and the Initial Purchasers and (ii) a registration rights
agreement relating to the Warrants (the "Warrants Registration Rights
Agreement"), dated the date hereof between the Company and the Warrant Agent.
In connection with the sale of the Units, the Company has prepared a
preliminary offering memorandum (the "Preliminary Memorandum") and will prepare
a final offering memorandum (the "Final Memorandum" and, with the Preliminary
Memorandum, each a "Memorandum") including a description of the terms of the
Units, the Notes, the Warrants and the Common Stock, the terms of the offering
and a description of the Company.
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, you that:
(a) The Preliminary Memorandum does not contain and the Final
Memorandum, in the form used by the Initial Purchasers to confirm sales and on
the Closing Date, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, except
that the representations and warranties set forth in this paragraph do not apply
to statements or omissions in either Memorandum based upon information relating
to any Initial Purchaser furnished to the Company in writing by such Initial
Purchaser through you expressly for use therein.
(b) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Florida, has the
corporate power and authority to own its property and to conduct its business as
described in each Memorandum and is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its subsidiaries, taken as a whole.
(c) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in each Memorandum and is
duly qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or
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leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole; all of the
issued shares of capital stock of each subsidiary of the Company have been duly
and validly authorized and issued, are fully paid and non-assessable and are
owned directly by the Company, free and clear of all liens, encumbrances,
equities or claims.
(d) The shares of Common Stock outstanding on the date hereof have
been duly authorized and are validly issued, fully paid and non-assessable and
the authorized capital stock of the Company conforms in all material respects as
to legal matters to the description thereof contained in the Final Memorandum.
(e) This Agreement has been duly authorized, executed and delivered
by the Company.
(f) The Notes have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Initial Purchasers in accordance with the terms of this
Agreement, will be valid and binding obligations of the Company enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles of
equity, and will be entitled to the benefits of the Indenture, the Pledge
Agreement and the Notes Registration Rights Agreement.
(g) The Warrants have been duly authorized and, when executed,
countersigned by the Warrant Agent in accordance with the terms of the Warrant
Agreement and delivered to and paid for by the Initial Purchasers in accordance
with the terms of this Agreement, will be valid and binding obligations of the
Company enforceable in accordance with their terms subject to applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
general principles of equity and will be entitled to the benefits of the Warrant
Agreement and the Warrants Registration Rights Agreement.
(h) The Warrant Shares have been duly authorized and reserved for
issuance upon the exercise of the Warrants and, when issued and delivered upon
exercise of the Warrants in accordance with the terms of the Warrant Agreement,
will be validly issued, fully paid and non-assessable and will not be subject to
any preemptive or similar rights or taxes, liens, charges and security
interests.
(i) Each of the Indenture, the Pledge Agreement and the Warrant
Agreement has been duly authorized and, when executed and delivered by the
Company, will be a valid and binding agreement of the Company, enforceable in
accordance with its terms,
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subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity.
(j) Each of the Notes Registration Rights Agreement and the Warrants
Registration Rights Agreement has been duly authorized, executed and delivered
by the Company, and is a valid and binding agreement of the Company, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles of
equity.
(k) Upon the delivery to the Trustee of the certificates or
instruments, if any, representing the Pledged Securities (as defined in the
Final Memorandum) and the filing of financing statements, if any, required by
the Uniform Commercial Code in the appropriate offices in the State of Florida,
the pledge of and grant of a security interest in the Pledged Securities for the
benefit of the Trustee and the holders of the Notes will constitute a first
priority security interest in the Pledged Securities, enforceable as against all
creditors of the Company (and any persons purporting to purchase any of the
Pledged Securities from the Company).
(l) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement, the
Indenture, the Pledge Agreement, the Notes Registration Rights Agreement, the
Notes, the Warrant Agreement, the Warrants Registration Rights Agreement and the
Warrants and the issuance by the Company of the Warrant Shares upon exercise of
the Warrants will not contravene any provision of applicable law or the articles
of incorporation or by-laws of the Company or any agreement or other instrument
binding upon the Company or any of its subsidiaries that is material to the
Company and its subsidiaries, taken as a whole, or any judgment, order or decree
of any governmental body, agency or court having jurisdiction over the Company
or any subsidiary, and no permit, license, consent, approval, authorization or
order of, or filing, declaration or qualification with, any governmental body or
agency is required for the performance by the Company of its obligations under
this Agreement, the Indenture, the Notes Registration Rights Agreement, the
Pledge Agreement, the Notes, the Warrant Agreement, the Warrants Registration
Rights Agreement and the Warrants, (i) except such as may be required by the
securities or Blue Sky laws of the various states in connection with the offer
and sale of the Units, the Notes or the Warrants and by Federal and state
securities laws with respect to the Company's obligations under the Notes
Registration Rights Agreement and the Warrants Registration Rights Agreement or
(ii) any such license, consent, approval, authorization, order, filing,
declaration or qualification, the failure of which to make or obtain would not
have a material adverse effect on the Company and its subsidiaries, taken as a
whole.
(m) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in
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the earnings, business or operations of the Company and its subsidiaries, taken
as a whole, from that set forth in the Final Memorandum.
(n) There are no legal or governmental proceedings pending or, to
the Company's knowledge, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or any
of its subsidiaries is subject other than proceedings accurately described in
all material respects in each Memorandum and proceedings that would not have a
material adverse effect on the Company and its subsidiaries, taken as a whole,
or on the power or ability of the Company to perform its obligations under this
Agreement, the Indenture, the Notes Registration Rights Agreement, the Pledge
Agreement, the Notes, the Warrant Agreement, the Warrants Registration Rights
Agreement and the Warrants or to consummate the transactions contemplated by the
Final Memorandum.
(o) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D under the Securities Act, an "Affiliate") of the Company has
directly, or through any agent, (i) sold, offered for sale, solicited offers to
buy or otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the sale of the Units, the
Notes or the Warrants in a manner that would require the registration under the
Securities Act of the Units, the Notes or the Warrants or (ii) engaged in any
form of general solicitation or general advertising in connection with the
offering of the Units, the Notes or the Warrants (as those terms are used in
Regulation D under the Securities Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act.
(p) The Company is not, and after giving effect to the offering and
sale of the Units and the application of the proceeds thereof as described in
the Final Memorandum, will not be an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(q) It is not necessary in connection with the offer, sale and
delivery of the Units to the Initial Purchasers in the manner contemplated by
this Agreement to register the Units, the Notes or the Warrants under the
Securities Act or to qualify the Indenture under the Trust Indenture Act of
1939, as amended.
(r) The Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants, including
all such laws and regulations concerning electromagnetic radio frequency
emissions ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws,
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failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(s) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(t) None of the Company, its Affiliates or any person acting on its
or their behalf has engaged or will engage in any directed selling efforts
(within the meaning of Regulation S) with respect to the Units, the Notes or the
Warrants and the Company and its Affiliates and any person acting on its or
their behalf have complied with and will comply with the offering restrictions
requirement of Regulation S.
(u) The Company and each of its subsidiaries (i) have all necessary
licenses, consents, authorizations, approvals, orders, certificates and permits
of and from, and have made all declarations and filings with, all federal,
state, local, foreign, supranational, regional and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals, to own, lease, license and use its properties and assets and to
conduct its business in the manner described in each Memorandum, and (ii)
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to revocation or modification of any such license, consent,
authorization, approval, order, certificate or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a material adverse effect on the Company and its subsidiaries, taken as a
whole, except as described in each Memorandum.
(v) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(w) Subsequent to the respective dates as of which information is
given in the Final Memorandum, (1) the Company and its subsidiaries have not
incurred any material
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liability or obligation, direct or contingent, nor entered into any material
transaction not in the ordinary course of business; (2) the Company has not
purchased any of its outstanding capital stock, nor declared, paid or otherwise
made any dividend or distribution of any kind on its capital stock; and (3)
there has not been any material change in the capital stock, short-term debt or
long-term debt of the Company and its subsidiaries, taken as a whole, except as
contemplated by the Final Memorandum.
(x) The financial statements included in each Memorandum present
fairly the consolidated financial position of the Company as of the dates
indicated and the results of operations and cash flows of the Company for the
periods specified. Such financial statements have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved. The selected financial data included in each
Memorandum present fairly the information shown therein and have been compiled
from data contained in the audited financial statements of the Company, except
as indicated in each Memorandum.
(y) The Company and its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company and its
subsidiaries, in each case free and clear of all liens, encumbrances and
defects, except such as are described in each Memorandum and such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
materially interfere with the use made and proposed to be made of such property
and buildings by the Company and its subsidiaries, in each case except as
described in each Memorandum.
(z) The Company and its subsidiaries own or have the right to use
all material patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names currently employed by them in connection with the business now
operated by them, and neither the Company nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would have a
material adverse effect on the Company and its subsidiaries, taken as a whole.
(aa) No material labor dispute with the employees of the Company or
any of its subsidiaries exists, except as described in each Memorandum, or, to
the knowledge of the Company, is imminent; and the Company is not aware of any
existing, threatened or imminent
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labor disturbance by the employees of any of its principal suppliers,
manufacturers or contractors that could have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(ab) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are customary in the businesses in which they are engaged; neither
the Company nor any of its subsidiaries has been refused any insurance coverage
sought or applied for; and neither the Company nor any of its subsidiaries has
any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a material and adverse effect on the Company and its
subsidiaries, taken as a whole, except as described in each Memorandum.
(ac) The Company and its subsidiaries have filed all foreign and
U.S. federal and state income and franchise tax returns required to be filed and
have paid all taxes shown thereon as due, and there is no material tax
deficiency which has been asserted against the Company or any of its
subsidiaries; all material tax liabilities of the Company and its subsidiaries
are adequately provided for on the consolidated financial statements of the
Company or its subsidiaries, as the case may be.
(ad) The Units, the Notes, the Warrants, the Common Stock, the
Indenture and the Warrant Agreement conform in all material respects to the
descriptions thereof contained in the Final Memorandum under the headings
"Description of the Units," "Description of the Notes," "Description of the
Warrants," and "Description of the Capital Stock," as applicable.
(ae) The Units, the Notes and the Warrants satisfy the requirements
set forth in Rule 144A(d)(3) under the Securities Act.
(af) Schedule II sets forth all agreements or other instruments
binding upon the Company or any of its subsidiaries that are material to the
Company and its subsidiaries, taken as a whole.
2. Agreement to Sell and Purchase. The Company hereby agrees to sell
to the several Initial Purchasers, and each Initial Purchaser, upon the basis of
the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to purchase
from the Company the respective number of Units set forth in Schedule I hereto
opposite its name at a purchase price of $965 per Unit, for an aggregate
purchase price of $217,125,000 (the "Purchase Price").
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The Company hereby agrees that, without the prior written consent of
Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the Initial Purchasers, it will
not, during the period beginning on the date hereof and continuing to and
including the Closing Date, offer, sell, contract to sell or otherwise dispose
of (a) any debt of the Company or warrants to purchase debt of the Company
substantially similar to the Notes (other than the sale of the Units, the Notes
and the Warrants under this Agreement and the issuance of commercial paper in
the ordinary course of business) or (b) Common Stock of the Company, other than
upon the exercise of outstanding options and warrants, or warrants to purchase
Common Stock of the Company.
3. Terms of Offering. You have advised the Company that the Initial
Purchasers will make an offering of the Units purchased by the Initial
Purchasers hereunder on the terms to be set forth in the Final Memorandum, as
soon as practicable after this Agreement is entered into as in your judgment is
advisable.
4. Payment and Delivery. Payment for the Units shall be made to the
Company (which will immediately deposit a portion of the proceeds sufficient to
purchase the Pledged Securities with the Trustee pursuant to the Pledge
Agreement) in Federal or other funds immediately available in New York City
against delivery of such Units for the respective accounts of the several
Initial Purchasers at the office of Shearman & Sterling, 000 Xxxxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, at 10:00 a.m., New York City time, on April 13, 1998 or at
such other time on the same or such other date, not later than April 27, 1998,
as shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Closing Date."
Certificates for the Notes and the Warrants shall be in definitive
form or global form, as specified by you, and registered in such names and in
such denominations as you shall request in writing not later than one full
business day prior to the Closing Date. The certificates evidencing the Notes
and the Warrants shall be delivered to you on the Closing Date for the
respective accounts of the Initial Purchasers, with any transfer taxes payable
in connection with the transfer of the Units, the Notes and the Warrants to the
Initial Purchasers duly paid, against payment of the Purchase Price therefor.
5. Conditions to the Initial Purchasers' Obligations. The several
obligations of the Initial Purchasers to purchase and pay for the Units on the
Closing Date are subject to the following conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
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(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's securities by
any "nationally recognized statistical rating organization," as such term
is defined for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations, of the Company and its
subsidiaries, taken as a whole, from that set forth in the Final
Memorandum (exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement) that, in your judgment, is material and
adverse and that makes it, in your judgment, impracticable to market the
Units on the terms and in the manner contemplated in the Final Memorandum.
(b) The representations and warranties of the Company contained in
this Agreement shall be true and correct as of the Closing Date and the Company
shall have complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before the
Closing Date. The Initial Purchasers shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the
Company, to the effect above and to the effect of Section 5(a)(i) above.
The officer signing and delivering such certificate may rely upon
the best of his or her knowledge as to proceedings threatened.
(c) The Initial Purchasers shall have received on the Closing Date
an opinion of Loeb & Loeb LLP and Xxxxxx, Xxxxxxxx & Xxxxxxxx, outside counsel
and Florida counsel for the Company, respectively, dated the Closing Date, to
the effect set forth in Exhibit A and Exhibit B, respectively.
(d) The Initial Purchasers shall have received on the Closing Date
an opinion of Piper & Marbury, U.S. regulatory counsel for the Company, dated
the Closing Date, to the effect set forth in Exhibit C.
(e) The Initial Purchasers shall have received on the Closing Date
opinions of Rakisons Solicitors and Studio Legale Xxxxxxx, UK and EU counsel,
and Italian counsel, respectively, for the Company, dated the Closing Date, to
the effect set forth in Exhibits D and E, respectively.
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The opinions of Loeb & Loeb LLP, Xxxxxx, Xxxxxxxx & Xxxxxxxx and
each counsel referred to in clauses 5(d) and 5(e) above shall be rendered to you
at the request of the Company and shall so state therein.
(f) The Initial Purchasers shall have received on the Closing Date
an opinion of Shearman & Sterling, counsel for the Initial Purchasers, dated the
Closing Date, in form and substance reasonably satisfactory to you.
(g) The Initial Purchasers shall have received on each of the date
hereof and the Closing Date a letter, dated the date hereof or the Closing Date,
as the case may be, in form and substance reasonably satisfactory to the Initial
Purchasers, from Ernst & Young, the Company's independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in or incorporated by
reference into each Memorandum; provided that the letter delivered on the
Closing Date shall use a "cut-off date" not earlier than the date hereof.
(h) Waivers of the rights of shareholders subject to the
Shareholders Agreement dated as of July 22, 1994, the Shareholders Agreement
dated as of September 1994 and the Preemptive Rights Agreement dated as of July
28, 1997, with respect to the exercise by any of such shareholders of any
preemptive rights provided therein shall have been obtained and be in full force
and effect.
(i) The articles of incorporation of the Company shall have been
amended in form and substance reasonably satisfactory to the Initial Purchasers
and such amendment (the "Amendment"), shall have been filed with the Secretary
of State of the State of Florida and be in full force and effect.
(j) Waivers of the registration rights by (1) a majority of the
holders of the Series A Preferred Stock, (2) the Advent Entities (as such term
is defined in the Final Memorandum) and (3) Messrs. Xxxxxxxxx and Xxxxxxxx,
shall have been obtained and be in full force and effect.
(k) Consent to the offering of Units from the requisite number of
holders of Series A Preferred Stock and Series B Preferred Stock shall have been
obtained and be in full force and effect.
(l) Each of the Notes Registration Rights Agreement, the Pledge
Agreement and the Warrants Registration Rights Agreement shall be executed and
in full force and effect.
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(m) The Initial Purchasers shall have received such other
certificates and documents as they or their counsel may reasonably request.
6. Covenants of the Company. In further consideration of the
agreements of the Initial Purchasers contained in this Agreement, the Company
covenants with each Initial Purchaser as follows:
(a) To furnish to you in New York City, without charge, prior to
10:00 a.m. New York City time on the business day next succeeding the date
of this Agreement and during the period mentioned in Section 6(c), as many
copies of the Final Memorandum and any supplements or amendments thereto
as you may reasonably request.
(b) Before amending or supplementing either Memorandum, to furnish
to you a copy of each such proposed amendment or supplement and not to use
any such proposed amendment or supplement to which you reasonably object.
(c) If, during such period after the date hereof and prior to the
date on which all of the Units shall have been sold by the Initial
Purchasers, any event shall occur or condition exist as a result of which
it is necessary to amend or supplement the Final Memorandum in order to
make the statements therein, in the light of the circumstances when the
Final Memorandum is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Initial Purchasers, it is necessary to
amend or supplement the Final Memorandum to comply with applicable law,
forthwith to prepare and furnish, at its own expense, to the Initial
Purchasers, either amendments or supplements to the Final Memorandum so
that the statements in the Final Memorandum as so amended or supplemented
will not, in the light of the circumstances when the Final Memorandum is
delivered to a purchaser, be misleading or so that the Final Memorandum,
as amended or supplemented, will comply with applicable law.
(d) To endeavor to qualify the Units, the Notes and the Warrants for
offer and sale under the securities or Blue Sky laws of such jurisdictions
as you shall reasonably request.
(e) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of its obligations under
this Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and the Company's accountants in connection with the
issuance and sale of the Units and all other fees or expenses in
connection with the preparation of each Memorandum and all amendments and
supplements thereto, including all printing costs associated therewith,
and the
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delivering of copies thereof to the Initial Purchasers, in the quantities
herein above specified, (ii) all costs and expenses related to the
transfer and delivery of the Units, the Notes and the Warrants to the
Initial Purchasers, including any transfer or other taxes payable thereon,
(iii) the cost of printing or producing any Blue Sky or legal investment
memorandum in connection with the offer and sale of the Units, the Notes
and the Warrants under state securities laws and all expenses in
connection with the qualification of the Units, the Notes and the Warrants
for offer and sale under state securities laws as provided in Section 6(d)
hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Initial Purchasers in connection with such qualification
and in connection with the Blue Sky or legal investment memorandum, (iv)
any fees charged by rating agencies for the rating of the Units and the
Notes, (v) the fees and expenses, if any, incurred in connection with the
admission of the Units, the Notes, the Warrants and the Warrant Shares for
trading in PORTAL or any appropriate market system, (vi) the costs and
charges of the Trustee, the Warrant Agent and any transfer agent,
registrar or depositary, (vii) the cost of the preparation, issuance and
delivery of the Units, the Notes and the Warrants (viii) the costs and
expenses of the Company relating to investor presentations on any "road
show" undertaken in connection with the marketing of the offering of the
Units, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with
the prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, and
(ix) all other costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not otherwise
made in this Section. It is understood, however, that except as provided
in this Section, Section 8, and the last paragraph of Section 10, the
Initial Purchasers will pay all of their costs and expenses, including
fees and disbursements of their counsel, transfer taxes payable on resale
of any of the Units, the Notes and the Warrants by them and any
advertising expenses connected with any offers they may make.
(f) Neither the Company nor any Affiliate will sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the Securities Act) which could be integrated with the sale
of the Units, the Notes or the Warrants in a manner which would require
the registration under the Securities Act of the Units, the Notes or the
Warrants.
(g) Not to solicit any offer to buy or offer or sell the Units, the
Notes or the Warrants by means of any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.
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(h) While any of the Units, the Notes or the Warrants remain
"restricted securities" within the meaning of the Securities Act, to make
available, upon request, to any seller of such Units, Notes or Warrants
the information specified in Rule 144A(d)(4) under the Securities Act,
unless the Company is then subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(i) None of the Company, its Affiliates or any person acting on its
or their behalf (other than the Initial Purchasers) will engage in any
directed selling efforts (as that term is defined in Regulation S) with
respect to the Units, the Notes or the Warrants, and the Company and its
Affiliates and each person acting on its or their behalf (other than the
Initial Purchasers) will comply with the offering restrictions requirement
of Regulation S.
(j) During the period of two years after the Closing Date, the
Company will not, and will not permit any of its affiliates (as defined in
Rule 144 under the Securities Act) to resell any of the Units, the Notes
or the Warrants which constitute "restricted securities" under Rule 144
that have been reacquired by any of them.
(k) The Company will, and will cause the Trustee to, refuse to
register any transfer of the Notes sold pursuant to Regulation S if such
transfer is not made in accordance with the provisions of Regulation S.
(l) The Company will, and will cause the Warrant Agent with respect
to the Warrants and cause the transfer agent with respect to the Warrant
Shares to, refuse to register any transfer of Warrants or Warrant Shares,
as applicable, sold pursuant to Regulation S if such transfer is not made
in accordance with the provisions of Regulation S.
(m) To use the proceeds from the sale of the Units in the manner set
forth in the Final Memorandum.
(n) To use its best efforts to permit the Units, the Notes and the
Warrants to be designated PORTAL securities in accordance with the rules
and regulations adopted by the National Association of Securities Dealers,
Inc. relating to trading in the PORTAL Market.
7. Offering of Units; Restrictions on Transfer. (a) Each Initial
Purchaser, severally and not jointly, represents and warrants that such Initial
Purchaser is a qualified institutional buyer as defined in Rule 144A under the
Securities Act (a "QIB"). Each Initial Purchaser, severally and not jointly,
agrees with the Company that (i) it will not solicit offers
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for, or offer or sell, the Units, Notes or Warrants by any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Securities Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act and (ii) it will solicit
offers for such Units, Notes and Warrants only from, and will offer such Units,
Notes and Warrants only to, persons that it reasonably believes to be (A) in the
case of offers inside the United States, (1) QIBs or (2) other institutional
accredited investors (as defined in Rule 501(a) (1), (2), (3) or (7) under the
Securities Act) ("institutional accredited investors") that, prior to their
purchase of the Units, the Notes or the Warrants deliver to such Initial
Purchaser a letter containing the representations and agreements set forth in
Appendix A to the Memorandum and (B) in the case of offers outside the United
States, to persons other than U.S. persons ("foreign purchasers," which term
shall include dealers or other professional fiduciaries in the United States
acting on a discretionary basis for foreign beneficial owners (other than an
estate or trust)) in reliance upon Regulation S under the Securities Act that,
in each case, in purchasing such Units, Notes or Warrants are deemed to have
represented and agreed as provided in the Final Memorandum under the caption
"Transfer Restrictions."
(b) Each Initial Purchaser, severally and not jointly, represents,
warrants, and agrees with respect to offers and sales outside the United States
that:
(i) such Initial Purchaser understands that no action has been or
will be taken in any jurisdiction by the Company that would permit a
public offering of the Units, the Notes or the Warrants, or possession or
distribution of either Memorandum or any other offering or publicity
material relating to the Units, the Notes or the Warrants, in any country
or jurisdiction where action for that purpose is required;
(ii) such Initial Purchaser will comply with all applicable laws and
regulations in each jurisdiction in which it acquires, offers, sells or
delivers Units, Notes or Warrants or has in its possession or distributes
either Memorandum or any such other material, in all cases at its own
expense;
(iii) the Units, the Notes and the Warrants have not been registered
under the Securities Act and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons, except in
accordance with Rule 144A or Regulation S under the Securities Act or
pursuant to another exemption from the registration requirements of the
Securities Act;
(iv) such Initial Purchaser has offered the Units, the Notes and the
Warrants and will offer and sell the Units, the Notes and the Warrants (A)
as part of their distribution at any time and (B) otherwise (i) until 40
days after the later of the commencement of the offering of the Units and
the Closing Date with respect to the Notes and (ii) until one year after
the later of the commencement of the offering of the
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Units and the Closing Date with respect to the Units and the Warrants,
only in accordance with Rule 903 of Regulation S or as otherwise permitted
in Section 7(a); accordingly, neither such Initial Purchaser, its
Affiliates nor any persons acting on its or their behalf have engaged or
will engage in any directed selling efforts (within the meaning of
Regulation S) with respect to the Units, the Notes or the Warrants, and
any such Initial Purchaser, its Affiliates and any such persons have
complied and will comply with the offering restrictions requirement of
Regulation S;
(v) such Initial Purchaser has (A) not offered or sold and, prior to
the date six months after the Closing Date, will not offer or sell any
Units, Notes or Warrants to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations
1995; (B) complied and will comply with all applicable provisions of the
Financial Services Xxx 0000 with respect to anything done by it in
relation to the Units, Notes or Warrants in, from or otherwise involving
the United Kingdom; and (C) only issued or passed on and will only issue
or pass on in the United Kingdom any document received by it in connection
with the issue of the Units, the Notes or the Warrants to a person who is
of a kind described in Article 11(3) of the Financial Services Xxx 0000
(Investment Advertisements) (Exemptions) Order 1996 or is a person to whom
such document may otherwise lawfully be issued or passed on;
(vi) such Initial Purchaser understands that the Units, the Notes and
the Warrants have not been and will not be registered under the Securities
and Exchange Law of Japan, and represents that it has not offered or sold,
and agrees not to offer or sell, directly or indirectly, any Units, Notes
or Warrants in Japan or for the account of any resident thereof except
pursuant to any exemption from the registration requirements of the
Securities and Exchange Law of Japan and otherwise in compliance with
applicable provisions of Japanese law; and
(vii) such Initial Purchaser agrees that, at or prior to confirmation
of sales of the Units, the Notes or the Warrants, it will have sent to
each distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases Units, Notes or Warrants from it during
the restricted period a confirmation or notice to substantially the
following effect:
"The Units, the Notes and the Warrants covered hereby have not been
registered under the U.S. Securities Act of 1933 (the "Securities Act")
and may not be offered and sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part
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of their distribution at any time or (ii) otherwise until 40 days after
the later of the commencement of the offering and the closing date with
respect to the Notes and one year after the later of the commencement of
the offering and the closing date with respect to the Units and the
Warrants, except in either case in accordance with Regulation S (or Rule
144A, if available) under the Securities Act. Terms used above have the
meaning given to them by Regulation S."
Terms used in this Section 7(b) have the meanings given to them by Regulation S.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Initial Purchaser, and each person, if any, who
controls any Initial Purchaser within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, or is under common control
with, or is controlled by, such Initial Purchaser, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in either Memorandum (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Initial Purchaser furnished to the Company in
writing by such Initial Purchaser through Xxxxxx Xxxxxxx & Co. Incorporated
expressly for use therein; provided, however, that the foregoing indemnity shall
not inure to the benefit of any Initial Purchaser to the extent that any such
losses, claims, damages or liabilities result from the fact that such Initial
Purchaser sold securities to a person to whom there was not sent or given by or
on behalf of such Initial Purchaser a copy of the Final Memorandum at or prior
to the written confirmation of the sale of the securities to such person, and if
the losses, claims, damages or liabilities result from an untrue statement or
alleged untrue statement or an omission or alleged omission contained in the
Preliminary Memorandum that was corrected in the Final Memorandum.
(b) Each Initial Purchaser agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers and each
person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Initial Purchaser, but only
with reference to information relating to such Initial Purchaser furnished to
the Company in writing by such Initial Purchaser through Xxxxxx Xxxxxxx & Co.
Incorporated expressly for use in either Memorandum or any amendments or
supplements thereto.
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(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 8(a) or 8(b), such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Xxxxxx Xxxxxxx & Co. Incorporated, in the case of
parties indemnified pursuant to Section 8(a) above, and by the Company, in the
case of parties indemnified pursuant to Section 8(b). The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section 8(a)
or 8(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of
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indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Initial
Purchasers on the other hand from the offering of the Units or (ii) if the
allocation provided by clause 8(d)(i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause 8(d)(i) above but also the relative fault of the Company
on the one hand and of the Initial Purchasers on the other hand in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Initial
Purchasers on the other hand in connection with the offering of the Units shall
be deemed to be in the same respective proportions as the net proceeds from the
offering of the Units (before deducting expenses) received by the Company and
the total discounts and commissions received by the Initial Purchasers in
respect thereof bear to the aggregate offering price of the Units. The relative
fault of the Company on the one hand and of the Initial Purchasers on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or by the Initial Purchasers and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Initial Purchasers' respective obligations to contribute pursuant to this
Section 8 are several in proportion to the respective number of Units they have
purchased hereunder, and not joint.
(e) The Company and the Initial Purchasers agree that it would not
be just or equitable if contribution pursuant to this Section 8 were determined
by pro rata allocation (even if the Initial Purchasers were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 8(d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in Section 8(d) shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8, no Initial Purchaser shall be required to contribute any amount in
excess of the amount by which the total price at which the Units resold by it in
the initial placement of such Units were offered to investors exceeds the amount
of any damages that such Initial Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 8 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
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(f) The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Initial Purchasers or any person
controlling any Initial Purchasers or by or on behalf of the Company, its
officers or directors or any person controlling the Company and (iii) acceptance
of and payment for any of the Units.
9. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 9(a)(i) through 9(a)(iv), such event singly or
together with any other such event makes it, in your judgment, impracticable to
market the Units on the terms and in the manner contemplated in the Final
Memorandum.
10. Effectiveness; Defaulting Initial Purchasers. This Agreement
shall become effective upon the execution and delivery hereof by the parties
hereto.
If, on the Closing Date, any one or more of the Initial Purchasers
shall fail or refuse to purchase Units that it or they have agreed to purchase
hereunder on such date, and the number of Units which such defaulting Initial
Purchaser or Initial Purchasers agreed but failed or refused to purchase is not
more than one-tenth of the aggregate number of Units to be purchased on such
date, the other Initial Purchasers shall be obligated severally in the
proportions that the number of Units set forth opposite their respective names
in Schedule I bears to the aggregate number of Units set forth opposite the
names of all such non-defaulting Initial Purchasers, or in such other
proportions as you may specify, to purchase the Units which such defaulting
Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase
on such date; provided that in no event shall the number of Units that any
Initial Purchaser has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 10 by an amount in excess of one-ninth of such number
of Units without the written consent of such Initial Purchaser. If on the
Closing Date any Initial Purchaser or Initial Purchasers shall fail or refuse to
purchase Units which it or they have agreed to purchase hereunder on such date
and the aggregate number of Units with respect to which such default
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21
occurs is more than one-tenth of the aggregate number of Units to be purchased
on such date and arrangements satisfactory to you and the Company for the
purchase of such Units are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any non-defaulting
Initial Purchaser or of the Company. In any such case either you or the Company
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Final
Memorandum or in any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Initial Purchaser
from liability in respect of any default of such Initial Purchaser under this
Agreement.
If this Agreement shall be terminated by the Initial Purchasers, or
any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement, the Company will reimburse the Initial Purchasers or such
Initial Purchasers as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by such Initial Purchasers
in connection with this Agreement or the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
13. Notice. All notices and other communications under this
Agreement shall be in writing, and, if sent to the Initial Purchasers, be
mailed, delivered or sent by facsimile transmission to:
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: High Yield New Issues Group
Facsimile Number: (000) 000-0000
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or, if sent to the Company, be mailed, delivered or sent by facsimile
transmission to the Company at:
Long Distance International Inc.
000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxxx
Facsimile Number: (000) 000-0000
14. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
23
Very truly yours,
LONG DISTANCE INTERNATIONAL INC.
By
-----------------------------------
Name:
Title:
Agreed, as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
SBC Warburg Dillon Read Inc.
By Xxxxxx Xxxxxxx & Co.
Incorporated
By
--------------------------------
Name:
Title:
24
SCHEDULE I
Number of Units
Initial Purchaser To Be Purchased
----------------- -----------------
Xxxxxx Xxxxxxx & Co. Incorporated 168,750
SBC Warburg Dillon Read Inc. 56,250
-------
Total..................... 225,000
=======
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SCHEDULE II
[Company to provide -- list of material agreements]
26
EXHIBIT A
Opinion of Outside Counsel
for the Company
Opinion of the counsel for the Company to be delivered pursuant to
Section 5(c) of the Purchase Agreement shall be to the effect that:
(A) the Notes, when executed and authenticated in accordance with
the provisions of the Indenture and delivered to and paid for by the
Initial Purchasers in accordance with the terms of the Purchase Agreement,
will be valid and binding obligations of the Company, enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally and general
principles of equity, and will be entitled to the benefits of the
Indenture and the Notes Registration Rights Agreement;
(B) the Indenture is a valid and binding agreement of the Company,
enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity;
(C) the Notes Registration Rights Agreement and is a valid and
binding agreement of, the Company enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles of equity and
except as rights to indemnification and contribution may be limited under
applicable law;
(D) the Warrants when countersigned by the Warrant Agent as provided
in the Warrant Agreement, and delivered to and paid for by the Initial
Purchasers in accordance with the terms of the Purchase Agreement, will be
valid and binding obligations of the Company, enforceable in accordance
with their terms subject to applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally and general principles of
equity and will be entitled to the benefits of the Warrant Agreement and
the Warrants Registration Rights Agreement;
(E) the Warrant Agreement is a valid and binding agreement of the
Company enforceable in accordance with its terms subject to applicable
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity;
A-1
27
(F) the Warrants Registration Rights Agreement is a valid and
binding agreement of the Company enforceable in accordance with its terms
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity and except as
rights to indemnification and contribution may be limited under applicable
law;
(G) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Purchase
Agreement, the Indenture, the Notes Registration Rights Agreement, the
Warrant Agreement, the Warrants Registration Rights Agreement, the Notes
and the Warrants and the issuance by the Company of the Warrant Shares
upon exercise of the Warrants will not contravene (i) any provision of law
applicable to the Company, (ii) any of the agreements lised on Schedule II
to the Purchase Agreement, or (iii) to the best of our knowledge, any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company or any subsidiary;
(H) no permit, license, consent, approval, authorization or order
of, or filing, declaration or qualification with, any governmental body or
agency is required for the performance by the Company of its obligations
under the Purchase Agreement, the Indenture, the Notes Registration Rights
Agreement, the Warrant Agreement, the Warrants Registration Rights
Agreement, the Notes or the Warrants, except such as may be required by
the securities or Blue Sky laws of the various states in connection with
the offer and sale of the Units, the Notes and the Warrants and by Federal
and state securities laws with respect to the Company's obligations under
the Notes Registration Rights Agreement and the Warrants Registration
Rights Agreement;
(I) such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company
or any of its subsidiaries is subject other than proceedings which such
counsel believes are not likely to have a material adverse effect on the
Company and its subsidiaries, taken as a whole, or on the power or ability
of the Company to perform its obligations under the Purchase Agreement,
the Indenture, the Notes Registration Rights Agreement, the Warrant
Agreement, the Warrants Registration Rights Agreement, the Notes or the
Warrants or to consummate the transactions contemplated by the Final
Memorandum;
(J) the Company is not, and after giving effect to the offering and
sale of the Units and the application of the proceeds thereof as described
in the Final Memorandum, will not be an "investment company" as such term
is defined in the Investment Company Act of 1940, as amended;
A-2
28
(K) the statements in the Final Memorandum under the captions
"Certain Transactions," "Description of Certain Indebtedness,"
"Description of the Units," "Description of the Notes," "Description of
the Warrants,""Private Placement" and "Transfer Restrictions," insofar as
such statements constitute a summary of the legal matters, documents or
proceedings referred to therein, fairly summarize the matters referred to
therein;
(L) the statements in the Final Memorandum under the caption
"Certain United States Federal Tax Considerations," insofar as such
statements constitute a summary of the United States federal tax laws
referred to therein, are accurate and fairly summarize in all material
respects the United States federal tax laws referred to therein;
(M) based upon the representations, warranties, and agreements of
the Company and the Initial Purchasers in the Purchase Agreement, it is
not necessary in connection with the offer, sale and delivery of the Notes
to the Initial Purchasers under the Purchase Agreement or in connection
with the initial resale of such Units by the Initial Purchasers in
accordance with the Purchase Agreement to register the Units, the Notes or
the Warrants under the Securities Act of 1933 or to qualify the Indenture
under the Trust Indenture Act of 1939, it being understood that no opinion
is expressed as to any subsequent resale of any Unit, Note or Warrant; and
(N) such counsel has no reason to believe that (except for financial
statements and schedules and other financial and statistical data included
therein as to which such counsel need not express any belief) the Final
Memorandum when issued contained, or as of the date such opinion is
delivered contains, any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
With respect to paragraph (N) above, counsel may state that their
opinion and belief are based upon their participation in the preparation of the
Final Memorandum (and any amendments or supplements thereto) and review and
discussion of the contents thereof, but are without independent check or
verification except with respect to paragraphs (K) and (L) above.
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EXHIBIT B
Opinion of Florida Counsel
for the Company
(A) the Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Florida, has
the corporate power and authority under Florida law to own its property
and to conduct its business as described in the Final Memorandum, and is
duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole;
(B) each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority
to own its property and to conduct its business as described in the Final
Memorandum and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole; all of the issued shares of capital stock
of each subsidiary of the Company have been duly and validly authorized
and issued, are fully paid and non-assessable and are owned directly by
the Company, free and clear of all liens, encumbrances, equities or
claims.
(C) the Purchase Agreement has been duly authorized, executed and
delivered by the Company;
(D) the shares of Common Stock outstanding on the Closing Date have
been duly authorized and are validly issued, fully paid and
non-assessable;
(E) the Notes have been duly authorized by the Company and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the terms of the Purchase Agreement, will be valid and
binding obligations of the Company, enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles of equity,
and will be entitled to the benefits of the Indenture and the Notes
Registration Rights Agreement;
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(F) the Indenture has been duly authorized, executed and delivered
by, and is a valid and binding agreement of, the Company, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles
of equity;
(G) the Notes Registration Rights Agreement has been duly
authorized, executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity and except as
rights to indemnification and contribution may be limited under applicable
law;
(H) the Warrants have been duly authorized and executed by the
Company, and when countersigned by the Warrant Agent as provided in the
Warrant Agreement, and delivered to and paid for by the Initial Purchasers
in accordance with the terms of the Purchase Agreement, will be valid and
binding obligations of the Company, enforceable in accordance with their
terms subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles of equity and
will be entitled to the benefits of the Warrant Agreement and the Warrants
Registration Rights Agreement;
(I) the Warrant Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company,
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
general principles of equity;
(J) the Warrants Registration Rights Agreement has been duly
authorized, executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable in accordance with its terms
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity and except as
rights to indemnification and contribution may be limited under applicable
law;
(K) the Warrant Shares have been duly authorized and reserved by the
Company and, when issued and delivered upon exercise of the Warrants in
accordance with the terms of the Warrants, will be validly issued, fully
paid and non-assessable and will not be subject to any preemptive or
similar rights;
(L) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Purchase
Agreement, the Indenture, the Notes Registration Rights Agreement, the
Warrant Agreement, the Warrants Registration Rights Agreement, the Notes
and the Warrants and the issuance by the
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Company of the Warrant Shares upon exercise of the Warrants will not
contravene (i) any provision of applicable Florida law, (ii) the
certificate of incorporation or by-laws of the Company, (iii) to the best
of such counsel's knowledge, any agreement or other instrument binding
upon the Company or any of its subsidiaries that is material to the
Company and its subsidiaries, taken as a whole, or (iv) to the best of
such counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or
any subsidiary;
(M) the statements in the Final Memorandum under the captions
"Description of the Units," "Description of the Notes," "Description of
the Warrants" and "Description of Capital Stock," insofar as such
statements constitute a summary of the legal matters, documents or
proceedings referred to therein, fairly summarize the matters referred to
therein;
(N) the Amendment has been filed with the Secretary of State of the
State of Florida and is in full force and effect.
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EXHIBIT C
Opinion of U.S. Regulatory Counsel
for the Company
(i) (A) the execution and delivery by the Company of, and performance of
its obligations under, the Placement Agreement, the Indenture, the Notes
Registration Rights Agreement, the Notes, the Warrant Agreement, the Warrants
Registration Rights Agreement and the Warrants do not violate (1) the Federal
Communications Act of 1934, as amended, and the rules, regulations and published
opinions of the Federal Communications Commission ("FCC") thereunder
(collectively, the "Act") and (2) to the best of such counsel's knowledge after
due inquiry, any decree from any court or tribunal, and (B) no authorization of
or filing with the FCC is necessary for the execution and delivery by the
Company of, and the performance of its obligations under, the Placement
Agreement, the Indenture, the Notes Registration Rights Agreement, the Notes,
the Warrant Agreement, the Warrants Registration Rights Agreement or the
Warrants;
(ii) the Company and its subsidiaries are nondominant carriers authorized
by the FCC to provide interstate interexchange telecommunications services. The
Company and its subsidiaries have been granted Section 214 authority by the FCC
to provide international message telecommunications services through the resale
of international switched voice and, in certain instances, private line services
and each of the Company and such subsidiaries has on file with the FCC tariffs
applicable to its domestic interstate and international services. No further FCC
authority is required by the Company or any of such subsidiaries to conduct its
business as described in the Final Memorandum;
(iii) the Company and its subsidiaries are certified and/or registered to
resell intrastate interexchange telecommunications service in __________, and
are not required to be certified or registered to resell intrastate
interexchange telecommunications services in _____________. Each of the Company
and its subsidiaries has a tariff on file in each state and the federal district
in which it resells telecommunications services. No further authority is
required from any of the state or District of Columbia governmental authorities
that regulate telecommunications services ("State Authorities") by the Company
or any of its subsidiaries to conduct its business as described in the Final
Memorandum;
(iv) (A) each of the Company and its subsidiaries (1) has made all reports
and filings, and paid all fees, required by the FCC and the State Authorities;
and (2) has all certificates, orders, permits, licenses, authorizations,
consents and approvals of and from, and has made all filings and registrations,
with the FCC necessary to own, lease, license and use its properties and assets
and to conduct its business in the manner described in the Final Memorandum; and
(B) neither the Company nor any of its subsidiaries has received any notice
B-1
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of proceedings relating to the revocation, modification or non-renewal of any
such certificates, orders, permits, licenses, authorizations, consents or
approvals, or the qualification or rejection of any such filing or registration,
the effect of which, singly or in the aggregate, would have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(v) to the best of such counsel's knowledge after due inquiry (A) no
decree or order of the FCC or any State Authority has been issued against the
Company or any of its subsidiaries and (B) no litigation, proceeding, inquiry or
investigation has been commenced or threatened, and no notice of violation or
order to show cause has been issued, against the Company or any of its
subsidiaries before or by the FCC; and
(vi) the statements in the Offering Memorandum under the captions "Risk
Factors -- Regulatory Restrictions" and "Business -- Regulation -- United
States," insofar as such statements constitute a summary of the legal matters,
documents or proceedings referred to therein, are accurate in all material
respects and fairly summarize all matters referred to therein.
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EXHIBIT D
Opinion of UK and EU Counsel
for the Company
With respect to UK matters, the opinion of regulatory counsel for
the Company to be delivered pursuant to Section 5(e) of the Purchase Agreement
shall be to the effect that:
1. each of Long Distance International Limited ("LDI UK"), LDI
Communications Limited ("LDI Comm") and Dynamic Telecom International
Limited ("DTI") (collectively, the "UK Subsidiaries") has been duly
incorporated and validly exists as a corporation under the laws of England
and Wales, ahs corporate power and authority to own its own property and
to conduct its business as described in the Final Memorandum and is duly
qualified to transact business in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified
would not have a material adverse effect on the Company and its
subsidiaries taken as a whole;
2. the descriptions in the Final Memorandum of current statutes of
the United Kingdom ("UK") relating to telecommunications, and the
respective rules and regulations promulgated thereunder (collectively, the
"UK Communications Law"), including, without limitation, the
Telecommunications Act of 1984 (the "1984 Act"), and the statements in the
Final Memorandum discussing matters related to the UK Communications Law,
including, without limitation, those under the captions "Risk Factors --
Regulatory Restrictions," "Risk Factors -- Competition,""Business --
Competition" and Business -- Regulation -- United Kingdom," are accurate
in all material respects and fairly summarize all matters described
therein insofar as they relate to UK Communications Law;
3. (A) LDI UK is the holder of a license issued by or on behalf of
the Secretary of State for Trade and Industry (the "Department"), dated 31
December 1997 issued under Section 7 of the 1984 Act, relating to the
provision of international simple resale services (the "ISVR License");
(B) LDI Comm is the holder of a license issued by or on behalf of the
Secretary of State for Trade and Industry dated 18 December 1996 issued
under Section 7 of the 1984 Act relating to the provision of international
facilities-based services (the "IFL License"); and (C) to the best of our
knowledge after due inquiry, each of the ISVR License and IFL License are
in full force and effect and there is no pending or existing notice of
proceedings relating to revocation or modification of either of the ISVR
License or the IFL License;
4. (A) the execution and delivery of the Purchase Agreement by the
Company, and the consummation of the transactions (including, without
limitation,
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issuance of the Units and the related Notes and Warrants and execution of
the Indenture, the Warrant Agreement, the Notes Registration Rights
Agreement and the Warrants Registration Rights Agreement) contemplated
thereby do not violate (1) the UK Communications Law, (2) any
determinations or orders of the Director-General of Telecommunications
("DG-OFTEL") applicable to the Company and the UK Subsidiaries; and (3)
and direction of the Department applicable to the Company and the UK
Subsidiaries; (B) no authorization of or filing with the Office of
Telecommunications ("OFTEL") or the Department is necessary for the
execution and delivery of the Purchase Agreement by the Company and the
consummation of the transactions (including, without limitation, the
issuance of the Units and the related Notes and Warrants and execution of
the Indenture, the Warrant Agreement, the Notes Registration Rights
Agreement and the Warrants Registration Rights Agreement) contemplated
thereby in accordance with the terms thereof;
5. (A) the UK Subsidiaries have all certificates, orders, permits,
licenses, authorizations, consents and approvals of and from OFTEL and the
Department necessary to own, lease, license and use its properties and
assets and to conduct its business in the UK in the manner described in
the Final Memorandum; and (B) to the best of our knowledge, neither the
Company nor any of the UK Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
certificates, orders, permits, licenses, authorizations, consents or
approvals, or the qualification or rejection of any such filing or
registration, the effect of which, singly or in the aggregate, would have
a material adverse effect on the prospects, condition, financial or
otherwise, or in the earnings, business or operations of the Company and
the UK Subsidiaries, taken as a whole;
6. to the best of our knowledge, (A) each of the Company and the UK
Subsidiaries is conducting its business in accordance with the
authorizations listed in Paragraph 5 above and (B) neither the Company nor
any of the UK Subsidiaries is in breach of UK Communications Law or any
determination or order of DG-OFTEL or any direction of the Department, the
effect of which, singly or in the aggregate, would have a material adverse
effect on the Company and the UK Subsidiaries, taken as a whole; and
7. to the best of our knowledge, (A) no decree or order of the
Department or DG-OFTEL has been issued against the Company or any of the
UK Subsidiaries; (B) no litigation, proceeding, inquiry or investigation
has been commenced or threatened, and no notice of violation or order to
show cause has been issued, against the Company or any of its subsidiaries
before or by the Department or OFTEL and (C) there are no administrative
proceedings pending before the Department or OFTEL, (i) which are
generally applicable to telecommunications services or the resale thereof
and (ii) which, if decided adversely to the interest of the Company or any
of the UK Subsidiaries,
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would have a material adverse effect on the Company and the UK
Subsidiaries, taken as a whole.
With respect to EU matters, opinion of regulatory counsel for the
Company to be delivered pursuant to Section 5(e) of the Purchase Agreement shall
be to the effect that:
We are of the opinion that:
1. the descriptions in the Final Memorandum of current law of the
European Union ("EU") relating to telecommunications, in the form of
Directives promulgated by European Commission (the "Commission") and the
Council of Ministers of the European Union (the "Council") (collectively,
the "EC Directives"), including, without limitation, the European
Commission Directive 90/388/EC of 29 June 1990 (the "1990 EC Directive"),
and the statements in the Final Memorandum discussing matters related to
the EC Directives, including, without limitation, those under the captions
"Risk Factors -- Regulatory Restrictions," Risk Factors -- Competition,"
"Risk Factors -- Substantial Price Declines," "Business -- Regulation
-- European Union," Business -- Competition" and "Business -- Regulations
-- World Trade Organization" are accurate in all material respects and
fairly summarize all matters described therein insofar as they relate to
the EC Directives; and
2. to the best of our knowledge, (A) no litigation or proceeding has
been commenced or threatened against the Company or any of the UK
Subsidiaries before the Commission or the Court of Justice of the European
Union and (B) there are no proceedings pending before the Commission, (i)
which are genearlly applicable to telecommunications services or the
resale thereof; and (ii) which, if decided adversely to the interest of
the Company or the UK Subsidiaries, would have a material adverse effect
on the Company and the UK Subsidiaries, taken as a whole.
* Unless otherwise defined herein, capitalized terms used herein have the
meanings assigned to such terms in the Purchase Agreement.
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EXHIBIT E
Opinion of Italian Counsel
for the Company
Opinion of regulatory counsel for the Company to be delivered
pursuant to Section 5(e) of the Purchase Agreement shall be to the effect that:
We are of the opinion that:
1. Pursuant to the declaration filed before the Italian
Communications Ministry on November 17, 1997, DTI is the holder of an
authorization to offer non real time voice telephony services in Italy
under Article 3 of Legislatvie Deree March 17, 1995 no. 103. Long Distance
International Ltd. is in the process of finalizing and submitting a
request for an individual license for fixed public voice telephony
services in Italy before the Italian Communications Ministry. To the best
of our knowledge nothing has come to our attention that caused us to
believe that the information to be filed for the public fixed voice
telephony services in Italy is not in conformity with the Italian
government requirements;
2. (A) the execution and delivery of the Purchase Agreement by the
Company, and the consummation of the transactions (including, without
limitation, issuance of the Units and the related Notes and Warrants and
execution of the Indenture, the Warrant Agreement, the Notes Registration
Rights Agreement and the Warrants Registration Rights Agreement)
contemplated thereby do not violate (1) the Italian Communications Law no.
189 of July 1, 1997, (2) any rules or regulations of the Communications
Ministry applicable to the Company and its subsidiaries and (3) to the
best of our knowledge any telecommunications related decree from any
Italian court, and (B) no authorization of or filing with the
Communications Ministry is necessary for the execution and delivery of the
Purchase Agreement by the Company and the consummation of the transactions
(including, without limitation, issuance of the Units and the related
Notes and Warrants and execution of the Indenture, the Warrant Agreement,
the Notes Registration Rights Agreement and the Warrants Registration
Rights Agreement) contemplated thereby in accordance with the terms
thereof;
3. (A) each of the Company and its subsidiaries has all
certificates, orders, permits, licenses, authorizations, consents and
approvals of and from the Communications Ministry necessary to own, lease,
license and use its properties and assets and to conduct its business in
the manner described in the Final Memorandum; and (B) to the best of our
knowledge after due inquiry, neither the Company nor any of
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38
its subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such certificates, orders, permits,
licenses, authorizations, consents or approvals, or the qualification or
rejection of any such filing or registration, the effect of which, singly
or in the aggregate, would have a material adverse effect on the
prospects, condition, financial or otherwise, or in the earnings, business
or operations of the Company and its subsidiaries, taken as a whole;
4. to the best of our knowledge after due inquiry, (A) each of the
Company and its subsidiaries is conducting its business in accordance with
the Italian Communications Misintry authorization listed in Paragraph 1
above and(B) neither the Company nor any of its subsidiaries is in
violation of or in default under the Italian Communications Law no 189 of
July 1, 1997 or the rules or regulations of the Communications Ministry
the effect of which, singly or in the aggregate, would have a material
adverse effect on the Company and its subsidiaries, taken as a whole; and
5. to the best of our knowledge after due inquiry, (A) no decree or
order of the Italian Communications Ministry has been issued against the
Company or any of its subsidiaries; (B) no litigation, proceeding, inquiry
or investigation has been commenced or threatened by the Italian
Communications Ministry and no notice of violation or order to show cause
has been issued, against the Company or any of its subsidiaries before or
by the Italian Communications Ministry and (C) there are no rulemakings or
other administrative proceedings pending before the Italian Communications
Ministry (i) which are generally applicable to telecommunications services
or the resale thereof and (ii) which, if decided adversely to the interest
of the Company or its subsidiaries, would have a material adverse effect
on the Company and its subsidiaries, taken as a whole.
* Unless otherwise defined herein, capitalized terms used herein have the
meanings assigned to such terms in the Purchase Agreement.
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