EXHIBIT 1.1
$25,000,000
TELEGROUP, INC.
8% Convertible Senior Subordinated Notes due 2005
PURCHASE AGREEMENT
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September 30, 1997
XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Telegroup, an Iowa corporation (the "Company"), proposes, upon the
terms and conditions set forth herein, to issue and sell to you, as the initial
purchaser (the "Initial Purchaser"), $25,000,000 aggregate principal amount of
its 8% Convertible Senior Subordinated Notes due 2005 (the "Notes"). The Notes
will be issued pursuant to the provisions of an Indenture, to be dated as of
September 30, 1997 (the "Indenture"), between the Company and State Street Bank
and Trust Company, as Trustee (the "Trustee"). The Company's common stock, no
par value per share, is hereinafter referred to as the "Common Stock."
The Company wishes to confirm as follows its agreement with the
Initial Purchaser in connection with the purchase and resale of the Notes.
1. Preliminary Offering Memorandum and Offering Memorandum. The
Notes will be offered and sold to the Initial Purchaser without registration
under the Securities Act of 1933, as amended (the "Act"), in reliance on an
exemption pursuant to Section 4(2) under the Act. The Company has prepared a
preliminary offering memorandum, dated September 26, 1997 (the "Preliminary
Offering Memorandum"), and an offering memorandum, dated September
30, 1997 (the "Offering Memorandum"), setting forth information regarding the
Company and the Notes. Any references herein to the Preliminary Offering
Memorandum and the Offering Memorandum shall be deemed to include all amendments
and supplements thereto and (i) the Form 10-Q for the quarterly period ended
June 30, 1997 (the "10-Q") previously filed by the Company under the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission (the "Commission") thereunder (collectively,
the "Exchange Act") and (ii) the Company's Prospectus dated July 9, 1997 (the
"Prospectus") relating to the Company's initial public offering of 4,450,000
shares of Common Stock. The 10-Q and the Prospectus are hereinafter collectively
referred to as the "Incorporated Documents." The Company hereby confirms that it
has authorized the use of the Preliminary Offering Memorandum and the Offering
Memorandum in connection with the offering and resale of the Notes by the
Initial Purchaser.
The Company understands that the Initial Purchaser proposes to make
offers and sales (the "Exempt Resales") of the Notes purchased by the Initial
Purchaser hereunder only on the terms and in the manner set forth in the
Offering Memorandum and Section 2 hereof, as soon as the Initial Purchaser deems
advisable after this Agreement has been executed and delivered, (i) to persons
in the United States whom the Initial Purchaser reasonably believes to be
qualified institutional buyers ("Qualified Institutional Buyers") as defined
in Rule 144A under the Act, as such rule may be amended from time to time ("Rule
144A"), in transactions under Rule 144A and (ii) to a limited number of other
institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) and
(7) under Regulation D of the Act) ("Accredited Investors") in private sales
exempt from registration under the Act (such persons specified in clauses (i)
and (ii) being referred to herein as the "Eligible Purchasers").
It is understood and acknowledged that upon original issuance thereof,
and until such time as the same is no longer required under the applicable
requirements of the Act, the Notes (and all securities issued in exchange
therefor, in substitution thereof upon conversion thereof (including the Common
Stock)) shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS
(A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON THE
HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (A)(2), (A)(3) OR
(A)(7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY
FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR
FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S
AND THE TRUSTEE'S AND THE TRANSFER AGENT'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED
AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE OR THE TRANSFER AGENT. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE THEN HOLDER OF THIS SECURITY
AFTER THE RESALE RESTRICTION TERMINATION DATE.
It is also understood and acknowledged that holders (including
subsequent transferees) of the shares of Common Stock issuable upon conversion
of the Notes will have the registration rights set forth in the registration
rights agreement (the "Registration Rights Agreement"), to be dated the date
hereof, in substantially the form of Exhibit A hereto, for so long as such
shares of Common Stock constitute "Transfer Restricted Securities" (as defined
in the Registration Rights Agreement). Pursuant to the Registration Rights
Agreement, the Company will agree (i) to file with the Commission under the
circumstances set forth therein, a registration statement on the appropriate
form under the Act relating to the resale of the Common Stock by certain holders
thereof from time to time in accordance with the methods of distribution set
forth in such registration statement and Rule 415 under the Act (the "Shelf
Registration Statement") and (ii) to use its reasonable best efforts to cause
such Shelf Registration Statement to be declared effective. This Agreement, the
Indenture and the Registration Rights Agreement are hereinafter referred to
collectively as the "Operative Documents".
Capitalized terms used herein without definition have the respective
meanings specified therefor in the Indenture or the Offering Memorandum.
2. Agreements to Sell, Purchase and Resell. (a) The Company hereby
agrees, subject to all the terms and conditions set forth herein, to issue and
sell to the Initial Purchaser and, upon the basis of the representations,
warranties and agreements of the Company herein contained and subject to all the
terms and conditions set forth herein, the Initial Purchaser agrees to purchase
from the Company, at a purchase price of 97% of the principal amount thereof,
the principal amount of Notes set forth opposite the name of the Initial
Purchaser in Schedule I hereto.
(b) The Initial Purchaser has advised the Company that it proposes to
offer the Notes for sale upon the terms and conditions set forth in this
Agreement and in the Offering Memorandum. The Initial Purchaser hereby
represents and warrants to, and agrees with, the Company that the Initial
Purchaser (i) is purchasing the Notes pursuant to a private sale exempt from
registration under the Act, (ii) will not solicit offers for, or offer or sell,
the Notes by means of any form of general solicitation or general advertising or
in any manner involving a public offering within the meaning of Section 4(2) of
the Act, and
(iii) will solicit offers for the Notes only from, and will offer, sell or
deliver the Notes as part of its initial offering, only to (A) persons in the
United States whom the Initial Purchaser reasonably believes to be Qualified
Institutional Buyers, or if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to the Initial Purchaser that each such
account is a Qualified Institutional Buyer, to whom notice has been given that
such sale or delivery is being made in reliance on Rule 144A, in each case, in
transactions under Rule 144A and (B) to a limited number of Accredited Investors
that make the representations to and agreements with the Company specified in
Annex A to the Offering Memorandum in private sales exempt from registration
under the Act. The Initial Purchaser has advised the Company that it will offer
the Notes to Eligible Purchasers at a price initially equal to 100% of the
principal amount thereof, plus accrued interest, if any, from the date of
issuance of the Notes. Such price may be changed by the Initial Purchaser at any
time thereafter without notice.
3. Delivery of the Notes and Payment Therefor. Delivery to the
Initial Purchaser of and payment for the Notes shall be made at the office of
Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, at 10:00 A.M., New
York City time, on September 30, 1997 (the "Closing Date"). The place of
closing for the Notes and the Closing Date may be varied by agreement between
the Initial Purchaser and the Company.
The Notes will be delivered to the Initial Purchaser against payment
of the purchase price therefor in immediately available funds. The Notes will
be evidenced by securities in definitive form in such names and in such
denominations as the Initial Purchaser shall request prior to 1:00 p.m., New
York City time, on the third business day preceding the Closing Date, or such
other time as otherwise agreed by the parties hereto. The Notes to be delivered
to the Initial Purchaser shall be made available to the Initial Purchaser in New
York City for inspection and packaging not later than 9:30 a.m., New York City
time, on the business day next preceding the Closing Date.
4. Agreements of the Company. The Company agrees with the Initial
Purchaser as follows:
(a) The Company will advise the Initial Purchaser
promptly and, if requested by it, will confirm such advice in writing, within
the period of time referred to in paragraph (e) below, of any change in the
Company's financial condition, business, prospects, properties, net worth or
results of operations, or of the happening of any event which makes any
statement made in the Offering Memorandum (as then amended or supplemented)
untrue or which requires the making of any additions to or changes in the
Offering Memorandum (as then amended or supplemented) in order to make the
statements therein not misleading, or of the necessity to amend or supplement
the Offering Memorandum (as then amended or supplemented) to comply with any
law.
(b) The Company will furnish to the Initial Purchaser, without charge,
as of the date of the Offering Memorandum, such number of copies of the Offering
Memorandum as may then be amended or supplemented as it may reasonably request.
(c) The Company will not make any amendment or supplement to the
Preliminary Offering Memorandum or to the Offering Memorandum of which the
Initial Purchaser shall not previously have been advised or to which it shall
reasonably object in writing after being so advised.
(d) Prior to the execution and delivery of this Agreement, the Company
has delivered or will deliver to the Initial Purchaser, without charge, in such
quantities as the Initial Purchaser shall have reasonably requested or may
hereafter reasonably request, copies of the Preliminary Offering Memorandum. The
Company consents to the use, in accordance with the securities or Blue Sky laws
of the jurisdictions in which the Notes are offered by the Initial Purchaser and
by dealers, prior to the date of the Offering Memorandum, of each Preliminary
Offering Memorandum so furnished by the Company. The Company consents to the
use of the Offering Memorandum (and of any amendment or supplement thereto) in
accordance with the securities or Blue Sky laws of the jurisdictions in which
the Notes are offered by the Initial Purchaser and by all dealers to whom Notes
may be sold, in connection with the offering and sale of the Notes.
(e) If, at any time prior to completion of the resale of the Notes by
the Initial Purchaser to Eligible Purchasers, any event shall occur that in the
judgment of the Company or in the opinion of counsel for the Initial Purchaser
should be set forth in
the Offering Memorandum (as then amended or supplemented) in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary to supplement or amend the Offering
Memorandum to comply with any law, the Company will forthwith prepare an
appropriate supplement or amendment thereto, and will expeditiously furnish to
the Initial Purchaser and dealers a reasonable number of copies thereof. In the
event that the Company and the Initial Purchaser agree that the Offering
Memorandum should be amended or supplemented, the Company, if requested by the
Initial Purchaser, will promptly issue a press release announcing or disclosing
the matters to be covered by the proposed amendment or supplement.
(f) The Company will cooperate with the Initial Purchaser and with its
counsel in connection with the qualification of the Notes and the Common Stock
issuable upon conversion of the Notes for offering and sale by the Initial
Purchaser and by dealers under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchaser may reasonably designate and will file
such consents to service of process or other documents necessary or appropriate
in order to effect such qualification; provided that in no event shall the
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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 service of
process in suits, other than those arising out of the offering or sale of the
Notes, in any jurisdiction where it is not now so subject.
(g) So long as any of the Notes are outstanding, the Company will
furnish to the Initial Purchaser (i) as soon as available, a copy of each report
of the Company mailed to stockholders or filed with the Commission or the Nasdaq
National Market, and (ii) from time to time such other information concerning
the Company as the Initial Purchaser may reasonably request.
(h) If this Agreement shall terminate or shall be terminated after
execution and delivery pursuant to any provisions hereof (otherwise than by
notice given by the Initial Purchaser terminating this Agreement pursuant to
Section 9 or Section 10 hereof) or if this Agreement shall be terminated by the
Initial Purchaser because of any failure or refusal on the part of the Company
to comply, in any material respect, with the terms or fulfill, in any material
respect, any of the conditions of this Agreement, the Company agrees to
reimburse the Initial Purchaser
for all reasonable out-of-pocket expenses (including reasonable fees and
expenses of its counsel) incurred by it in connection herewith.
(i) The Company will apply the net proceeds from the sale of the Notes
to be sold by it hereunder substantially in accordance with the description set
forth in the Offering Memorandum.
(j) Except as stated in this Agreement and in the Preliminary Offering
Memorandum and Offering Memorandum, the Company has not taken, nor will it take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Notes to facilitate the sale or resale of the Notes. Except as permitted by the
Act, the Company will not distribute any offering material in connection with
the Exempt Resales.
(k) To the extent necessary, the Company will use its best efforts as
soon as possible after such time as it becomes necessary, to submit to its
stockholders for approval, an amendment to its articles of incorporation to
increase the authorized number of shares of Common Stock, such that, if such
proposal is approved, the Company will have, as of the close of business on such
date, available free from pre-emptive rights, and reserved for issuance upon
conversion of the Notes, a number of authorized but unissued shares of Common
Stock which, when added to the number of shares of Common Stock held in its
treasury, will be sufficient to honor the conversion in full of all outstanding
Notes.
(l) From and after the Closing Date, so long as any of the Notes are
outstanding and are "Restricted Securities" within the meaning of Rule 144(a)(3)
under the Act or, if earlier, until two years after the Closing Date, and during
any period in which the Company is not subject to Section 13 or 15(d) of the
Exchange Act, the Company will furnish to holders of the Notes and prospective
purchasers of Notes designated by such holders, upon request of such holders or
such prospective purchasers, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Act to permit compliance with Rule 144A in
connection with resale of the Notes.
(m) The Company has complied and will comply with all provisions of
Florida Statutes Section 517.075 relating to issuers
doing business with Cuba.
(n) The Company agrees not to sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Notes in a manner that would
require the registration under the Act of the sale to the Initial Purchaser or
the Eligible Purchasers of the Notes.
(o) The Company agrees to comply with all of the terms and conditions
of the Registration Rights Agreement.
5. Representations and Warranties of the Company. The Company
represents and warrants to the Initial Purchaser that:
(a) The Preliminary Offering Memorandum and Offering Memorandum with
respect to the Notes have been prepared by the Company for use by the Initial
Purchaser in connection with the Exempt Resales. No order or decree preventing
the use of the Preliminary Offering Memorandum or the Offering Memorandum or any
amendment or supplement thereto, or any order asserting that the transactions
contemplated by this Agreement are subject to the registration requirements of
the Act has been issued and no proceeding for that purpose has commenced or is
pending or, to the knowledge of the Company, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum as
of their respective dates and the Offering Memorandum as of the Closing Date,
did not or will not at any time contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, except that this representation and
warranty does not apply to statements in or omissions from the Preliminary
Offering Memorandum and Offering Memorandum made in reliance upon and in
conformity with information relating to the Initial Purchaser furnished to the
Company in writing by or on behalf of the Initial Purchaser expressly for use
therein.
(c) The Incorporated Documents, as applicable, heretofore filed were
filed in a timely manner and, when they were filed (or, if any amendment with
respect to any such document was filed, when such document was filed), conformed
in all material respects to the requirements of the Exchange Act and did not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
(d) The Indenture has been duly and validly authorized by the Company
and, upon its execution, delivery and performance by the Company and assuming
due authorization, execution, delivery and performance by the Trustee, will be a
valid and binding agreement of the Company, enforceable in accordance with its
terms, except (i) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to rights of creditors and other
obligees generally, (ii) the remedy of specific performance and other forms of
equitable relief may be subject to certain equitable defenses and principles and
to the discretion of the court before which the proceedings may be brought and
(iii) rights to indemnity and contribution thereunder may be limited by federal
or state securities laws or the public policy underlying such laws; The
Indenture conforms in all material respects to the description thereof in the
Offering Memorandum and no qualification of the Indenture under the 1939 Act is
required in connection with the offer and sale of the Notes contemplated hereby
or in connection with the Exempt Resales.
(e) The Notes have been duly authorized by the Company and, when
executed by the Company and authenticated by the Trustee in accordance with the
Indenture and delivered to the Initial Purchaser against payment therefor in
accordance with the terms hereof, will have been validly issued and delivered,
and will constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable in accordance with their terms, except
as enforcement thereof may be limited by except (i) the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to rights
of creditors and other obligees generally, (ii) the remedy of specific
performance and other forms of equitable relief may be subject to certain
equitable defenses and principles and to the discretion of the court before
which the proceedings may be brought and (iii) rights to indemnity and
contribution thereunder may be limited by federal or state securities laws or
the public policy underlying such laws; the Notes will conform in all material
respects to the description thereof in the Offering Memorandum.
(f) All the outstanding shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and are free of any preemptive or, except as set forth in the
Offering Memorandum, similar rights and were issued and sold in compliance with
all applicable Federal and state securities laws; the Common Stock to be issued
upon conversion of the Notes will be, prior to its issuance, duly authorized and
reserved for issuance and, when delivered upon conversion of the Notes, will be
validly issued, fully paid and nonassessable and free of any preemptive or
similar rights; and the authorized capital stock of the Company conforms to the
description thereof in the Offering Memorandum.
(g) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Iowa with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum, and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify does not have a material adverse effect on the financial
condition, business, properties, net worth or results of operations of the
Company and the Subsidiaries (as hereinafter defined), taken as a whole (a
"Material Adverse Effect").
(h) All the Company's subsidiaries (collectively, the "Subsidiaries")
are listed on Schedule II hereto. Each Subsidiary is a corporation duly
organized, validly existing and in good standing in the jurisdiction of its
incorporation, with full corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Offering
Memorandum, and is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does not have
a Material Adverse Effect. All the outstanding shares of capital stock of each
of the Subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable, and are wholly owned by the Company directly or indirectly
through one of the other Subsidiaries, free and clear of any lien, adverse
claim, security interest, equity or other encumbrance, except as described in
the Offering Memorandum.
(i) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened, against the Company or any of the
Subsidiaries which are materially adverse to the Company, or to which the
Company or any of the Subsidiaries, or to which any of their respective
properties, is subject, which are material to the Company or its Subsidiaries,
taken as a whole, that are not disclosed in the Offering Memorandum and which,
if adversely decided, are reasonably likely to cause a Material Adverse Effect
or materially affect the issuance of the Notes or the consummation of the
transactions contemplated by the Operative Documents. There are no material
agreements, contracts, indentures, leases, licenses or other instruments or
documents relating to the Company or the Subsidiaries that are not described in
the Offering Memorandum. The descriptions of the terms of any such agreements,
indentures, leases, licenses, instruments, contracts or documents contained in
the Offering Memorandum are correct in all material respects. Neither the
Company nor any Subsidiary is involved in any strike, job action or labor
dispute with any group of employees, and, to the Company's knowledge, no such
action or dispute is threatened.
(j) Neither the Company nor any of the Subsidiaries is (i) in
violation of its certificate or articles of incorporation or by-laws or other
organizational documents, (ii) in violation of any law, ordinance,
administrative or governmental rule or regulation applicable to the Company or
any of the Subsidiaries or of any decree of any court or governmental agency or
body having jurisdiction over the Company or any of the Subsidiaries, except
where any such violation or violations in the aggregate would not have a
Material Adverse Effect or (iii) in default in the performance of any
obligation, agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any agreement, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties may be bound, and no
condition or state of facts exists which with the passage of time or the giving
of notice or both, would constitute such a default (except where any such
default or defaults in the aggregate would not have a Material Adverse Effect)
except as may be disclosed in the Offering Memorandum.
(k) Neither the issuance, offer, sale or delivery of the Notes, the
issuance of Common Stock upon conversion of the Notes or the payment to holders
of Notes of an amount of cash equal to the
market price of the underlying Common Stock in lieu of conversion into Common
Stock in accordance with the terms of the Indenture, the execution, delivery or
performance of this Agreement, the Indenture or the Registration Rights
Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby or thereby (i) requires any consent, approval, authorization
or other order of, or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency or official (except
such as may be required in connection with the registration under the Act of the
Common Stock in accordance with the Registration Rights Agreement, and except
for compliance with the securities or Blue Sky laws of various jurisdictions) or
conflicts or will conflict with or constitutes or will constitute a breach of,
or a default under, the certificate or articles of incorporation or bylaws, or
other organizational documents, of the Company or any of the Subsidiaries or
(ii) conflicts or will conflict with or constitutes or will constitute a breach
of, or a default under, in any material respect, any material agreement,
indenture, lease or other instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their respective
properties may be bound, or violates or will violate in any material respect any
statute, law, regulation or filing or judgment, injunction, order or decree
applicable to the Company or any of the Subsidiaries or any of their respective
properties, or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject.
(l) The accountants, KPMG Peat Marwick LLP, who have certified or
shall certify the financial statements included as part of the Offering
Memorandum (or any amendment or supplement thereto), each are independent public
accountants under Rule 101 of the AICPA'a Code of Professional Conduct, and its
interpretation and rulings.
(m) The financial statements, together with related schedules and
notes forming part of the Offering Memorandum (and any amendment or supplement
thereto), present fairly the consolidated financial position, results of
operations and changes in stockholders' equity and cash flows of the Company and
the Subsidiaries on the basis stated in the Offering Memorandum at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein and the other financial and
statistical information and data set forth in the Offering Memorandum (and any
amendment or supplement thereto) are accurately presented in all material
respects and prepared on a basis consistent in all material respects with the
books and records of the Company and its Subsidiaries.
(n) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement and the Registration
Rights Agreement; the execution and delivery of, and the performance by the
Company of its obligations under, this Agreement and the Registration Rights
Agreement have been duly and validly authorized by the Company, and this
Agreement and the Registration Rights Agreement have been duly executed and
delivered by the Company and constitute the valid and legally binding agreements
of the Company, enforceable against the Company in accordance with their terms,
except (i) the enforceability hereof or thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to rights of creditors and other
obligees generally, (ii) the remedy of specific performance and other forms of
equitable relief may be subject to certain equitable defenses and principles and
to the discretion of the court before which the proceedings may be brought and
(iii) rights to indemnity and contribution hereunder or thereunder may be
limited by federal or state securities laws or the public policy underlying such
laws.
(o) Except as disclosed in the Offering Memorandum (or any amendment
or supplement thereto), subsequent to the date as of which such information is
given in the Offering Memorandum (or any amendment or supplement thereto),
neither the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any change in the capital
stock of the Company, or material increase in the short-term or long-term debt,
of the Company or any of the Subsidiaries, or any material adverse change, or
any development involving or which could reasonably be expected to have a
Material Adverse Effect.
(p) Each of the Company and the Subsidiaries has good and marketable
title to all property (real and personal) described in the Offering Memorandum
as being owned by it, free and clear of all liens, claims, security interests or
other encumbrances except such as are described in the Offering Memorandum,
except where the failure to have such title would not, individually or in the
aggregate, have a Material Adverse Effect and all the property described in the
Offering Memorandum as being held under lease by each of the Company and the
Subsidiaries is held by it under valid, subsisting and enforceable leases,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to rights of creditors and other obligees generally
or by general equitable principles with only such exceptions as in the aggregate
are not materially burdensome and do not interfere in any material respect with
the conduct of the business of the Company and the Subsidiaries, taken as a
whole.
(q) Except as permitted by the Act, the Company has not distributed
and, prior to the later to occur of the Closing Date and completion of the
distribution of the Notes, will not distribute any offering material in
connection with the offering and sale of the Notes other than the Preliminary
Offering Memorandum and Offering Memorandum.
(r) The Company and each of the Subsidiaries have such consents,
approvals, permits, licenses, franchises and authorizations of and from all
United States and foreign, federal, state or provincial, local and other
governmental or regulatory authorities (collectively, the "Licenses") as are
necessary to own its respective properties and to conduct its business in the
manner described in the Offering Memorandum, except where the failure to have
any such Licenses would not have a Material Adverse Effect and subject to such
qualifications as may be set forth in the Offering Memorandum; the Company and
each of the Subsidiaries has fulfilled and performed all its material
obligations with respect to such Licenses and no event has occurred that allows,
or after notice or lapse of time or both would allow, revocation or termination
thereof or results in any other material impairment of the rights of the holder
of any such Licenses, except where any of the foregoing would not have,
individually or in the aggregate, a Material Adverse Effect and subject in each
case to such qualification as may be set forth in the Offering Memorandum; and,
except as described in the Offering Memorandum, none of such Licenses contains
any restriction or
conditions that is materially burdensome to the Company or any of the
Subsidiaries. Without limiting the generality of this paragraph 5(r):
(i) The Company and each of the Subsidiaries hold all
telecommunications regulatory licenses, permits, authorizations, consents
and approvals (the "Telecommunications Licenses") required from the Federal
Communications Commission (the "FCC") for the Company and the Subsidiaries
to conduct their business in the manner described in or contemplated by the
Offering Memorandum, except as would not have, individually or in the
aggregate, a Material Adverse Effect; the Telecommunications Licenses have
been duly and validly issued and are in full force and effect, except where
the failure to be in full force and effect would not have, individually or
in the aggregate, a Material Adverse Effect; no proceedings to revoke or
restrict the Telecommunications Licenses are pending or, to the best of our
knowledge, threatened; neither the Company nor the Subsidiaries are in
violation of any of the terms and conditions of any of the
Telecommunications Licenses, are in violation of the Communications Act of
1934, as amended (the "Communications Act"), or are in violation of any FCC
rules and regulations, except as would not have, individually or in the
aggregate, a Material Adverse Effect; and the Company and the Subsidiaries
have in effect with the FCC all international and domestic service tariffs
necessary to conduct their business in the manner described in or
contemplated by the Offering Memorandum except as would not have,
individually or in the aggregate, a Material Adverse Effect;
(ii) The Company and the Subsidiaries have obtained all state
Telecommunications Licenses and filed all tariffs required for the
provision of telecommunications services in any state to conduct their
business in the manner described in or contemplated by the Offering
Memorandum, except where the failure to do so would not have, individually
or in the aggregate, a Material Adverse Effect;
(iii) There is no outstanding adverse judgment, injunction, decree or
order that has been issued by the FCC or any state public utility
commission or similar state agency ("PUC") against the Company or the
Subsidiaries or any action, proceeding or investigation pending before the
FCC or any state PUC, or, to the Company's knowledge, threatened by the FCC
or any state PUC against the Company or the Subsidiaries which, if
the subject of any unfavorable decision, ruling or finding, would have a
Material Adverse Effect on the Company or the Subsidiaries;
(iv) No license, permit, consent, approval, order or
authorization of, or filing with, the FCC or with any state PUC on the part
of the Company or the Subsidiaries is required in connection with the
issuance or sale of the Notes or the shares of Common Stock received upon
conversion thereof;
(v) Neither the issuance and sale of the Notes or the shares of
Common Stock received upon conversion thereof nor the performance by the
Company or the Subsidiaries of their obligations under this Agreement, the
Registration Rights Agreement or the Indenture will result in a violation
in any material respect of the Communications Act or any applicable FCC
rules or regulations, or any order, writ, judgment, injunction, decree or
award of the FCC binding on the Company or the Subsidiaries; and
(vi) Neither the Company nor the Subsidiaries are in non-
compliance in the provision of international call-back service with the
laws of any foreign jurisdiction that would constitute a violation of the
Telecommunications Licenses, except where such non-compliance would not
have a Material Adverse Effect and subject to such qualifications as may be
set forth in the Offering Memorandum.
(s) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific 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.
(t) Neither the Company nor any of the 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, which violation would have a Material Adverse Effect.
(u) Except as disclosed in the Offering Memorandum, the Company and
each of the Subsidiaries have filed all tax returns required to be filed, which
returns are true and correct in all material respects, and neither the Company
nor any Subsidiary is in default in the payment of any taxes which were payable
pursuant to said returns or any assessments with respect thereto.
(v) Except as described in the Offering Memorandum, no holder of any
security of the Company (other than holders of the Notes with respect to shares
of Common Stock upon conversion thereof and holders of shares of Common Stock
received upon conversion thereof) has any right to request or demand
registration of shares of Common Stock or any other security of the Company
because of the consummation of the transactions contemplated by this Agreement
or the Registration Rights Agreement, except as described in the Offering
Memorandum under the caption "Description of Capital Stock--Registration
Rights."
(w) The Company and the Subsidiaries own or possess all patents,
trademarks, trademark registration, service marks, service xxxx registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Offering Memorandum as being owned by any of them or necessary
for the conduct of their respective businesses, except where the lack of such
ownership would not have a Material Adverse Effect, and the Company is not aware
of any claim to the contrary or any challenge by any other person to the rights
of the Company and the Subsidiaries with respect to the foregoing.
(x) The Company is not and, upon sale of the Notes to be issued and
sold thereby in accordance herewith and the application of the net proceeds to
the Company of such sale as described in the Offering Memorandum under the
caption "Use of Proceeds," will not be an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(y) When the Notes are issued and delivered pursuant to this
Agreement, such Notes will not be of the same class (within the meaning of Rule
144A(d)(3) under the Act) as any security of the Company that is listed on a
national securities exchange registered under Section 6 of the Exchange Act or
that is quoted in
a United States automated interdealer quotation system.
(z) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D ("Regulation D") under the Act) of the Company has directly, or
through any agent (provided that no representation is made as to the Initial
Purchaser or any person acting on its behalf), (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any security (as
defined in the Act) which is or will be integrated with the offering and sale of
the Notes in a manner that would require the registration of the Notes under the
Act or (ii) engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offering of the
Notes.
(aa) The Company is not required to deliver the information specified
in Rule 144A(d)(4) in connection with the offering and resale of the Notes by
the Initial Purchaser.
(bb) Assuming (i) that the representations and warranties in Section
5 hereof are true, (ii) the Initial Purchaser complies with the covenants set
forth in Section 2 hereof and (iii) that each person to whom the Initial
Purchaser offers, sells or delivers the Notes is a Qualified Institutional Buyer
or an Accredited Investor, the purchase and sale of the Notes pursuant hereto
(including the Initial Purchaser's proposed offering of the Notes on the terms
and in the manner set forth in the Offering Memorandum and Section 2 hereof) is
exempt from the registration requirements of the Act.
(cc) The execution and delivery of this Agreement, the other
Operative Documents and the sale of the Notes to the Initial Purchaser or by the
Initial Purchaser to Eligible Purchasers will not involve any prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of the
Code. The representation made by the Company in the preceding sentence is made
in reliance upon and subject to the accuracy of, and compliance with, the
representations and covenants made or deemed made by the Eligible Purchasers as
set forth in the Offering Memorandum under the section entitled "Transfer
Restrictions."
(dd) Except for the stockholder approval, to the extent necessary, of
the increase in the authorized number of shares of Common Stock necessary in
order for the Notes to be convertible into Common Stock, the Company is not
required to obtain
stockholder consent or approval pursuant to the rules of the Nasdaq National
Market in connection with the offering and sale of the Notes.
(ee) Each of the Company and the Subsidiaries maintains insurance of
the types and in the amounts reasonably adequate for its business, including,
but not limited to, business interruption insurance and insurance covering real
and personal property owned or leased by the Company or such Subsidiary against
theft, damage, destruction, acts of vandalism and other risks customarily
insured against by corporations of established reputation engaged in the same or
similar businesses and similarly situated, all of which insurance is in full
force and effect.
6. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless the Initial Purchaser and each person, if any, who
controls the Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in the Preliminary Offering Memorandum or Offering
Memorandum or in any amendment or supplement thereto, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information relating to the Initial
Purchaser furnished in writing to the Company by or on behalf of the Initial
Purchaser expressly for use in connection therewith; provided, however, that the
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indemnification contained in this paragraph (a) with respect to the Preliminary
Offering Memorandum shall not inure to the benefit of the Initial Purchaser (or
to the benefit of any person controlling the Initial Purchaser) on account of
any such loss, claim, damage, liability or expense arising from the sale of the
Notes by the Initial Purchaser to any person if the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact contained in
the Preliminary Offering Memorandum was corrected in the Offering Memorandum and
the Initial Purchaser sold Notes to that person without sending or giving at or
prior to the
written confirmation of such sale, a copy of the Offering Memorandum (as then
amended or supplemented) if the Company has previously furnished sufficient
copies thereof to the Initial Purchaser on a timely basis. The foregoing
indemnity agreement shall be in addition to any liability which the Company may
otherwise have.
(b) If any action, suit or proceeding shall be brought against the
Initial Purchaser or any person controlling the Initial Purchaser in respect of
which indemnity may be sought against the Company, the Initial Purchaser or such
controlling person shall promptly notify the parties against whom
indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. The Initial Purchaser or any
such controlling person shall have the right to employ separate counsel in any
such action, suit or proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the Initial
Purchaser or such controlling person unless (i) the indemnifying parties have
agreed in writing to pay such fees and expenses, (ii) the indemnifying parties
have failed to assume the defense and employ counsel, or (iii) the named parties
to any such action, suit or proceeding (including any impleaded parties) include
both the Initial Purchaser or such controlling person and the indemnifying
parties and the Initial Purchaser or such controlling person shall have been
advised by its counsel in writing that representation of such indemnified party
and any indemnifying party by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such representation
by the same counsel has been proposed) due to actual or potential differing
interests between them (in which case the indemnifying party shall not have the
right to assume the defense of such action, suit or proceeding on behalf of the
Initial Purchaser or such controlling person). It is understood, however, that
the indemnifying parties shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
the Initial Purchaser and controlling persons not having actual or potential
differing interests with the Initial Purchaser or among themselves, which firm
shall be designated in writing by Xxxxx Xxxxxx Inc., and that all such
reasonable fees and expenses shall be reimbursed as they are incurred upon
submission to the indemnifying party of invoices or other evidence of payment.
The indemnifying parties shall not be liable for any settlement of any such
action, suit or proceeding effected without their express prior written consent,
but if settled with such written consent, or if there be a final judgment for
the plaintiff in any such action, suit or proceeding, the indemnifying parties
agree to indemnify and hold harmless the Initial Purchaser, to the extent
provided in paragraph (a), and any such controlling person from and against any
loss, claim, damage, liability or expense by reason of such settlement or
judgment.
(c) The Initial Purchaser agrees to indemnify and hold harmless the
Company, and its directors and officers, and any person who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act to
the same extent as the indemnity from the Company to the Initial Purchaser set
forth in paragraph (a) hereof, but only with respect to information relating to
the Initial Purchaser furnished in writing by or on behalf of the Initial
Purchaser expressly for use in the Preliminary Offering Memorandum or Offering
Memorandum or any amendment or supplement thereto. If any action, suit or
proceeding shall be brought against the Company, any of its directors or
officers, or any such controlling person based on the Preliminary Offering
Memorandum or Offering Memorandum, or any amendment or supplement thereto, and
in respect of which indemnity may be sought against the Initial Purchaser
pursuant to this paragraph (c), the Initial Purchaser shall have the rights and
duties given to the Company by paragraph (b) above (except that if the Company
shall have assumed the defense thereof the Initial Purchaser shall not be
required to do so, but may employ separate counsel therein and participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
Initial Purchaser's expense), and the Company, its directors and officers, and
any such controlling person shall have the rights and duties given to the
Initial Purchaser by paragraph (b) above.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Initial Purchaser on the other
hand from the offering of the Notes, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the Initial
Purchaser on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Initial Purchaser 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 Initial Purchaser. The
relative fault of the Company on the one hand and the Initial Purchaser on the
other hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or by the Initial Purchaser on the other hand and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(e) The Company and the Initial Purchaser agree that it would not be
just and equitable if contribution pursuant to this Section 6 were determined by
a pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 6, the Initial
Purchaser shall not be required to contribute any amount in excess of the amount
by which the total price of the Notes purchased by it and resold exceeds the
amount of any damages which the Initial Purchaser has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 6 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of the Initial Purchaser or any person
controlling the Initial Purchaser, the Company, its directors or officers or any
person controlling the Company, (ii) acceptance of any Notes and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor to
the Initial Purchaser or any person controlling the Initial Purchaser, or to the
Company, its directors or officers or any person controlling the Company, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 6.
(g) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
7. Conditions of the Initial Purchaser's Obligations. The
obligations of the Initial Purchaser to purchase the Notes hereunder are subject
to the following conditions:
(a) At the time of execution of this Agreement and on the Closing
Date, no order or decree preventing the use of the Offering Memorandum or any
amendment or supplement thereto, or any order asserting that the transactions
contemplated by this Agreement are subject to the registration requirements of
the Act shall have been issued and no proceedings for that purpose shall have
been commenced or shall be pending or, to the knowledge of the Company, be
contemplated. No stop order suspending the sale of the Notes in any
jurisdiction designated by the Initial Purchaser shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending or,
to the knowledge of the Company, shall be contemplated.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change, or any development involving a prospective
change, that would have a Material Adverse Effect in or affecting the financial
condition, business, prospects, properties, net worth, or results of operations
of the Company or the Subsidiaries not contemplated by the Offering Memorandum,
which in the opinion of the Initial Purchaser, would materially adversely affect
the market for the Notes, or (ii) any event or development relating to or
involving the Company or any officer or director of the Company which makes any
statement made in the Offering Memorandum untrue in any material respect or
which, in the opinion of the Company and its counsel or the Initial Purchaser
and its counsel, requires the making of any addition to or change in the
Offering Memorandum in order to state a material fact required by any law to be
stated therein or necessary in order to make the statements therein not
misleading, if amending or supplementing the Offering Memorandum to reflect such
event or development would, in the opinion of the Initial Purchaser, materially
adversely affect the market for the Notes.
(c) The Initial Purchaser shall have received on the Closing Date a
corporate opinion of Xxxxxxx & Berlin, Chartered, counsel for the Company, dated
the Closing Date and addressed to the Initial Purchaser, in the form attached
hereto as Exhibit A.
(d) The Initial Purchaser shall have received on the Closing Date a
regulatory opinion from Xxxxxxx & Berlin, Chartered, special regulatory counsel
to the Company, dated the Closing Date and addressed to the Initial Purchaser,
in the form attached hereto as Exhibit B.
(e) The Initial Purchaser shall have received on the Closing Date an
opinion from Marcus & Xxxxxxxx, P.C., local counsel to the Company, dated the
Closing Date and addressed to the Initial Purchaser, in the form attached hereto
as Exhibit C.
(f) The Initial Purchaser shall have received on the Closing Date an
opinion of Xxxxxxx X. Xxxxxxxx, Esq., Corporate Counsel of the Company, dated
the Closing Date and addressed to the Initial Purchaser in the form attached
hereto as Exhibit D.
(g) You shall have received on the Closing Date opinions of Xxxxx &
XxXxxxxx (Australia) in the form attached hereto as Exhibit E, Xxxxx & XxXxxxxx
(Hong Kong) in the form attached hereto
as Exhibit F, Xxxxx & XxXxxxxx (Germany) in the form attached hereto as Exhibit
G, Coudert Freres (France) in the form attached hereto as Exhibit H, TMI
Associates (Japan) in the form attached hereto as Exhibit I, Stibbe Simont
Xxxxxxx Duhot (The Netherlands) in the form attached hereto as Exhibit J, Xxxxxx
Xxxxxxx Xxxxxxx (United Kingdom) in the form attached hereto as Exhibit K,
Advokatfirman Xxxxxxx (Sweden) in the form attached hereto as Exhibit L and
Xxxxx & XxXxxxxx (Switzerland) in the form attached hereto as Exhibit M, special
regulatory counsel for the Company in each of the jurisdictions described above,
each dated the Closing Date and addressed to you, as Initial Purchaser.
(h) The Initial Purchaser shall have received on the Closing Date an
opinion of Xxxxxxxxxx & Xxxxx LLP, counsel for the Initial Purchaser, dated the
Closing Date, and addressed to the Initial Purchaser, with respect to certain
matter referred to above and such other related matters as the Initial Purchaser
may request.
(i) The Initial Purchaser shall have received letters addressed to the
Initial Purchaser, and dated the date hereof and the Closing Date from KPMG Peat
Marwick LLP, independent certified public accountants, substantially in the
forms heretofore approved by the Initial Purchaser.
(j) (i) There shall not have been any change in the capital stock of
the Company nor any material increase in the short-term or long-term debt of the
Company (other than in the ordinary course of business) from that set forth or
contemplated in the Offering Memorandum (or any amendment or supplement
thereto); (ii) there shall not have been, since the respective dates as of which
information is given in the Offering Memorandum (or any amendment or supplement
thereto), except as may otherwise be stated in the Offering Memorandum (or any
amendment or supplement thereto), any material adverse change in the financial
condition, business, prospects, properties, net worth or results of operations
of the Company and the Subsidiaries taken as a whole; (iii) the Company and the
Subsidiaries shall not have any liabilities or obligations, direct or contingent
(whether or not in the ordinary course of business), that are material to the
Company and the Subsidiaries, taken as a whole, other than those reflected in
the Offering Memorandum (or any amendment or supplement thereto); and (iv) all
the representations and warranties of the Company contained in this Agreement
shall be true and correct in all
material respects on and as of the date hereof and on and as of the Closing Date
as if made on and as of the Closing Date, and the Initial Purchaser shall have
received a certificate, dated the Closing Date and signed by the chief executive
officer and the chief accounting officer of the Company (or such other officers
as are acceptable to the Initial Purchaser), to the effect set forth in this
Section 7(j) and in Section 7(k) hereof.
(k) The Company shall not have failed at or prior to the Closing Date
to have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it hereunder at or prior to the
Closing Date.
(l) There shall not have been any announcement by any "nationally
recognized statistical rating organization," as defined for purposes of Rule
436(g) under the Act, that (i) it is downgrading its rating assigned to any
class of securities of the Company, or (ii) it is reviewing its ratings assigned
to any class of securities of the Company with a view to possible downgrading,
or with negative implications, or direction not determined.
(m) The Company shall have furnished or caused to be furnished to the
Initial Purchaser such further certificates and documents as the Initial
Purchaser shall reasonably have requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Initial Purchaser and counsel for the
Initial Purchaser.
Any certificate or document signed by any officer of the Company and
delivered to the Initial Purchaser, or to counsel for the Initial Purchaser,
shall be deemed a representation and warranty by the Company to the Initial
Purchaser as to the statements made therein.
8. Expenses. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction of the
Offering Memorandum (including financial statements thereto), and each amendment
or supplement to any of them, this Agreement and the Indenture; (ii) the
printing (or reproduction) and delivery (including postage, air freight charges
and charges for counting and packaging) of such
copies of the Offering Memorandum, the Preliminary Offering Memorandum, the
Incorporated Documents, and all amendments or supplements to any of them as may
be reasonably requested for use in connection with the offering and sale of the
Notes; (iii) the preparation, printing, authentication, issuance and delivery of
certificates for the Notes, including any stamp taxes in connection with the
original issuance and sale of the Notes; (iv) the printing (or reproduction) and
delivery of this Agreement, the preliminary and supplemental Blue Sky Memoranda
and all other agreements or documents printed (or reproduced) and delivered in
connection with the offering of the Notes; (v) the qualification of the Notes
and the shares of Common Stock issuable upon conversion of the Notes for offer
and sale under the securities or Blue Sky laws of the several states as provided
in Section 4(f) hereof (including the reasonable fees, expenses and
disbursements of counsel for the Initial Purchaser relating to the preparation,
printing or reproduction, and delivery of the preliminary and supplemental Blue
Sky Memoranda and such qualification); and (vi) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local and
special counsel) for the Company; provided that the fees and expenses of
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Xxxxxxxxxx & Xxxxx LLP shall be paid 50% by the Initial Purchaser and 50% by the
Company.
9. Effective Date of Agreement. This Agreement shall become
effective upon the execution and delivery hereof by all the parties hereto.
Until such time as this Agreement shall have become effective, it may be
terminated by the Company, by notifying the Initial Purchaser, or by the Initial
Purchaser, by notifying the Company.
Any notice under this Section 9 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
10. Termination of Agreement. This Agreement shall be subject to
termination in the absolute discretion of the Initial Purchaser, without
liability on the part of the Initial Purchaser to the Company, by notice to the
Company, if prior to the Closing Date (i) trading in securities generally on the
New York Stock Exchange, American Stock Exchange or the Nasdaq National Market
shall have been suspended or materially limited, (ii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or state authorities, or (iii) there shall have occurred any outbreak or
escalation of hostilities
or other international or domestic calamity, crisis or change in political,
financial or economic conditions, the effect of which on the financial markets
of the United States is such as to make it, in the judgment of the Initial
Purchaser, impracticable or inadvisable to commence or continue the offering of
the Notes on the terms set forth on the cover page of the Offering Memorandum or
to enforce contracts for the resale of the Notes by the Initial Purchaser.
Notice of such termination may be given to the Company by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.
11. Information Furnished by the Initial Purchaser. The statements
set forth in the last paragraph on the cover page and in the fourth and fifth
paragraphs under the caption "Private Placement" in the Preliminary Offering
Memorandum and Offering Memorandum, constitute the only information furnished by
or on behalf of the Initial Purchaser as such information is referred to in
Sections 5(b) and 6 hereof.
12. Miscellaneous. Except as otherwise provided in Sections 4, 9 and
10 hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company at 0000 Xxxxxx Xxxxxx, Xxxxxxxxx Xxxxxx 00000, Attention: Xxxx Xxxxxxx,
Chairman or (ii) if to the Initial Purchaser, to Xxxxx Xxxxxx Inc., 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Manager, Investment
Banking Division.
This Agreement has been and is made solely for the benefit of the
Initial Purchaser, the Company, its directors, its officers and the controlling
persons referred to in Section 6 hereof and their respective successors and
assigns, to the extent provided herein, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from the Initial Purchaser of any of the Notes in his
status as such purchaser.
13. Applicable Law; Counterparts. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts
which together constitute one and the same instrument. If signed in
counterparts, this Agreement shall not become effective unless at least one
counterpart hereof shall have been executed and delivered on behalf of each
party hereto.
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Initial Purchaser.
Very truly yours,
TELEGROUP, INC.
By:
Name: Xxxxxxx X. Xxxxx
Title: Vice President -
Finance, Chief
Financial Officer
and Treasurer
Confirmed as of the date first
above mentioned.
XXXXX XXXXXX INC.
By:
Name:
Title:
SCHEDULE I
TELEGROUP, INC.
Principal
Initial Purchaser Amount of Notes
----------------- ---------------
Xxxxx Xxxxxx Inc. $25,000,000
-----------
Total $25,000,000
===========
SCHEDULE II
SUBSIDIARIES OF TELEGROUP, INC.
Global Access Pty Ltd.
Telecontinent, S.A.
Telegroup Deutschland GmbH (Dusseldorf)
Telegroup Financial Services Pty Limited
A.C.N. 069159646
Telegroup Hong Kong Limited
Telegroup International Management Pty Limited
Australian Company Number 000 000 000
Telegroup Japan Kabushiki Kaisha
Telegroup Nederland B.V.
Telegroup Network Services Pty Limited
Australian Company Number 075 304 871
Telegroup Network Services New Zealand Limited
Telegroup Network Services, S.A.
Telegroup UK Limited
Telegroup UK (No. 2) Limited
Telegroup South Europe, Inc.
Telegroup Technologies, Inc.
Telegroup Technologies Limited
