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