EXHIBIT 1.2
FORM OF INTERNATIONAL UNDERWRITING AGRMT
1,440,000 Shares
TELEGROUP, INC.
Common Stock
FORM OF
INTERNATIONAL UNDERWRITING AGREEMENT
June , 1997
XXXXX XXXXXX INC.
XXXX. XXXXX & SONS INCORPORATED
XXXXX & COMPANY
As Lead Managers for the Several Managers
c/o XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Telegroup, Inc., an Iowa corporation (the "Company"), proposes to
issue and sell an aggregate of 1,440,000 shares of its common stock, no par
value per share (the "Firm Shares") to the several Underwriters named in
Schedule I hereto (the "Managers") for whom Xxxxx Xxxxxx Inc., Alex. Xxxxx &
Sons Incorporated and Xxxxx & Company are acting as representatives (the "Lead
Managers"). In addition, solely for the purpose of covering over-allotments,
the persons named in Schedule II hereto (the "Selling Shareholders") propose
to sell to the Managers, upon the terms and conditions set forth in Section 2
hereof, up to an additional 216,000 shares (the "Additional Shares") of common
stock of the Company. The Company and the Selling Shareholders are
hereinafter sometimes referred to as the "Sellers." The Additional Shares to
be sold by Greenwich Street Capital Partners, L.P., Greenwich Street Capital
Offshore Fund, Ltd., TRV Employees Fund, L.P., The Travelers Insurance Company
and The Travelers Life and Annuity Company (collectively the "Greenwich Street
Affiliates"), are issuable upon exercise of warrants to purchase common stock
of the Company (the "Warrants"). Each Warrant entitles the holder thereof to
purchase ______ shares of Common Stock (as defined herein) at an exercise
price of $0.01 per share. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "Shares." The Company's common
stock, no par value per share, including the Shares and the U.S. Shares (as
defined herein), is hereinafter referred to as the "Common Stock."
It is understood that the Company and the Selling Shareholders are
concurrently entering into a U.S. Underwriting Agreement, dated the date
hereof (the "U.S. Underwriting Agreement"), providing for the sale of
5,760,000 shares of the Common Stock (the "Firm U.S. Shares"), plus an option
granted by certain of the Selling Shareholders to purchase up to an additional
864,000 shares of Common Stock (the "Additional U.S. Shares") solely for the
purpose of covering over-allotments) through arrangements with certain
underwriters in the United States and Canada (the "U.S. Underwriters"), for
whom Xxxxx Xxxxxx Inc., Xxxx. Xxxxx & Sons Incorporated and Xxxxx & Company
are acting as representatives (the "Representatives"). All shares of Common
Stock proposed to be offered to U.S. Underwriters pursuant to the U.S.
Underwriting Agreement, including the Firm U.S. Shares and the Additional U.S.
Shares, are herein referred to as the "U.S. Shares"; the U.S. Shares and the
Shares, collectively, are herein referred to as the "Underwritten Shares."
The Company and the Selling Shareholders also understand that the
Lead Managers and the Representatives have entered into an agreement (the
"Agreement Between U.S. Underwriters and Managers") contemplating the
coordination of certain transactions between the Managers and the U.S.
Underwriters and that, pursuant thereto and subject to the conditions set
forth therein, the Managers may purchase from U.S. Underwriters a portion of
the U.S. Shares or sell to the Managers a portion of the Shares. The Company
and the Selling Shareholders understand that any such purchases and sales
between the Managers and the U.S. Underwriters shall be governed by the
Agreement Between U.S. Underwriters and Managers and shall not be governed by
the terms of this Agreement or the U.S. Underwriting Agreement.
The Company and the Selling Shareholders wish to confirm as follows
their respective agreements with you and the other several Managers on whose
behalf you are acting, in connection with the several purchases of the Shares
by the Underwriters.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared
and filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-1, including prospectuses subject
to completion, relating to the Underwritten Shares. The term "Registration
Statement" as used in this Agreement means the registration statement
(including all financial schedules and exhibits), as amended at the time it
becomes effective, and as thereafter amended by post-effective amendment. The
term "Prospectuses" as used in this Agreement means the prospectuses in the
forms included in the Registration Statement, or, if the prospectuses included
in the Registration Statement omit information in reliance on Rule 430A under
the Act and such information is included in prospectuses filed with the
Commission
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pursuant to Rule 424(b) under the Act, the term "Prospectuses" as used in this
Agreement means the prospectuses in the forms included in the Registration
Statement as supplemented by the addition of the Rule 430A information
contained in the prospectuses filed with the Commission pursuant to Rule
424(b). The term "Prepricing Prospectuses" as used in this Agreement means
the prospectuses subject to completion in the forms included in the
Registration Statement at the time of the initial filing of the Registration
Statement with the Commission, and as such prospectuses shall have been
amended from time to time prior to the date of the Prospectuses.
It is understood that two forms of Prepricing Prospectus and two forms of
Prospectus are to be used in connection with the offering and sale of the
Underwritten Shares: a Prepricing Prospectus and a Prospectus relating to the
U.S. Shares that are to be offered and sold in the United States (as defined
herein) or Canada (as defined herein) to U.S. or Canadian Persons (the "U.S.
Prepricing Prospectus" and the "U.S. Prospectus," respectively), and a
Prepricing Prospectus and a Prospectus relating to the Shares which are to be
offered and sold outside the United States or Canada to persons other than U.S.
or Canadian Persons (the "International Prepricing Prospectus" and the
"International Prospectus," respectively). The U.S. Prospectus and the
International Prospectus are herein collectively called the "Prospectuses," and
the U.S. Prepricing Prospectus and the International Prepricing Prospectus are
herein called the "Prepricing Prospectuses." For purposes of this Agreement,
"Exchange Act" means the Securities Exchange Act of 1934, as amended and the
rules and regulations of the Commission thereunder; "U.S. or Canadian Person"
means any resident or national of the United States or Canada, any corporation,
partnership or other entity created or organized in or under the laws of the
United States or Canada or any estate or trust the income of which is subject to
United States or Canadian income taxation regardless of the source of its income
(other than the foreign branch of any U.S. or Canadian Person), and includes any
United States or Canadian branch of a person other than a U.S. or Canadian
Person; "United States" means the United States of America (including the states
thereof and the District of Columbia) and its territories, its possessions and
other areas subject to its jurisdiction; and "Canada" means Canada and its
territories, its possessions and other areas subject to its jurisdiction.
the U.S. Prepricing Prospectus and the International Prepricing Prospectus are
herein called the "Prepricing Prospectuses." For purposes of this Agreement,
"Exchange Act" means the Securities Exchange Act of 1934, as amended and the
rules and regulations of the Commission thereunder; "U.S. or Canadian Person"
means any resident or national of the United States or Canada, any corporation,
partnership or other entity created or organized in or under the laws of the
United States or Canada or any estate or trust the income of which is subject to
United States or Canadian income taxation regardless of the source of its income
(other than the foreign branch of any U.S. or Canadian Person), and includes any
United States or Canadian branch of a person other than a U.S. or Canadian
Person; "United States" means the United States of America (including the states
thereof and the District of Columbia) and its territories, its possessions and
other areas subject to its jurisdiction; and "Canada" means Canada and its
territories, its possessions and other areas subject to its jurisdiction.
2. AGREEMENTS TO SELL AND PURCHASE. Upon the basis of the
representations, warranties and agreements contained herein and subject to all
the terms and conditions set forth herein, and to such adjustments as you may
determine to avoid fractional shares, the Company hereby agrees, to issue and
sell to each Manager and each Manager agrees, severally and not jointly, to
purchase from the Company, at a purchase price of $ ______ per share (the
"purchase price per share"), the number of Firm Shares that bears the same
proportion to the aggregate number of Firm Shares to be
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issued and sold by the Company as the number of Firm Shares set forth opposite
the name of such Manager in Schedule I hereto (or such number of Firm Shares
increased as set forth in Section 12 hereof) bears to the aggregate number of
Firm Shares to be sold by the Company.
Upon the basis of the representations, warranties and agreements
contained herein and subject to all the terms and conditions set forth herein,
the Selling Shareholders listed in Schedule II hereto agree to sell to the
Managers, and the Managers shall have the right to purchase from such Selling
Shareholders listed in Schedule II hereto, at the purchase price per share,
pursuant to an option (the "over-allotment option") which may be exercised
prior to 5:00 p.m., New York City time, on the 30th day after the date of the
International Prospectus (or, if such 30th day shall be a Saturday or Sunday
or a holiday, on the next business day thereafter when the New York Stock
Exchange is open for trading), up to an aggregate of 216,000 Additional Shares
from the Selling Shareholders listed in Schedule II hereto (the maximum number
of Additional Shares that each of them agrees to sell upon the exercise by the
Managers of the over-allotment option is set forth opposite their respective
names in Schedule II). The number of Additional Shares that the Managers
elect to purchase upon any exercise of the over-allotment option shall be
provided by each Selling Shareholder who has agreed to sell Additional Shares
in proportion to the respective maximum numbers of Additional Shares that each
such Selling Shareholder has agreed to sell. Additional Shares may be
purchased only for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. Upon any exercise of the over-allotment
option, each Manager, severally and not jointly, agrees to purchase from each
Selling Shareholder who has agreed to sell Additional Shares the number of
Additional Shares (subject to such adjustments as you may determine in order
to avoid fractional shares) that bears the same proportion to the number of
Additional Shares to be sold by each Selling Shareholder who has agreed to
sell Additional Shares as the number of Firm Shares set forth opposite the
name of such Manager in Schedule II hereto (or such number of Firm Shares
increased as set forth in Section 12 hereof) bears to the aggregate number of
Firm Shares to be sold by the Company.
Certificates in transferable form for the Additional Shares that each
of Xxxx Xxxxxxx and Xxxxxxx X. Xxxxx-Xxxxxxx as joint tenants (each of Xxxx
Xxxxxxx and Xxxxxx X. Xxxxx-Xxxxxxx, collectively the "Gratzons") agrees to sell
pursuant to this Agreement have been placed in custody with Xxxxxxx & Berlin,
Chartered (the "Custodian") for delivery under this Agreement pursuant to a
Custody Agreement and Power of Attorney (the "GR Custody Agreement") executed by
each of the Graztons and Xxxxxxxx Xxxx appointing and , as
agents and attorneys-in-fact (the "Attorneys-in-Fact"). Each of the Graztons and
Xxxxxxxx Xxxx agrees that (i) the Additional Shares represented by the
certificates held in custody pursuant to
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the GR Custody Agreement are subject to the interests of the Managers, the
Company and each other Selling Shareholder, (ii) the arrangements made by the
Graztons and Xxxxxxxx Xxxx for such custody are, except as specifically
provided in the GR Custody Agreement, irrevocable, and (iii) the obligations
of the Graztons and Xxxxxxxx Xxxx hereunder and under the GR Custody Agreement
shall not be terminated by any act of such Selling Shareholder or by operation
of law, whether by the death or incapacity of any of the Graztons or Xxxxxxxx
Xxxx or the occurrence of any other event. If any of the Graztons or Xxxxxxxx
Xxxx shall die or be incapacitated or if any other event shall occur before
the delivery of the additional Shares of the Gratzons and Xxxxxxxx Xxxx to be
sold hereunder, certificates for the Additional Shares of such Selling
Shareholders shall be delivered to the Underwriters by the Attorneys-in-Fact
in accordance with the terms and conditions of this Agreement and the GR
Custody Agreement as if such death or incapacity or other event had not
occurred, regardless of whether or not the Attorneys-in-Fact or any Manager
shall have received notice of such death, incapacity or other event. Each
Attorney-in-Fact is authorized, on behalf of each of the Graztons and Xxxxxxxx
Xxxx, to execute this Agreement and any other documents necessary or desirable
in connection with the sale of the Additional Shares to be sold hereunder by
the Graztons or Xxxxxxxx Xxxx, to make delivery of the certificates for such
Additional Shares, to receive the proceeds of the sale of such Additional
Shares, to give receipts for such proceeds, to pay therefrom any expenses to
be borne by the Graztons and Xxxxxxxx Xxxx in connection with the sale and
public offering of such Additional Shares, to distribute the balance thereof
to the Gratzons and Xxxxxxxx Xxxx, and to take such other action as may be
necessary or desirable in connection with the transactions contemplated by
this Agreement. Each Attorney-in-Fact agrees to perform his duties under the
Custody Agreement.
Certificates in transferable form for the Additional Shares that each of
Xxxxx Xxxxx and Xxxxx Xxxxxx agrees to sell pursuant to this Agreement have been
placed in custody with the Custodian for delivery under this Agreement pursuant
to a Custody Agreement and Power of Attorney (the "RF Custody Agreement")
executed by Xx. Xxxxx and Xx. Xxxxxx appointing [ ] and [ ]
as agents and attorneys-in-fact (the "RF Attorneys-in-Fact"). Each of Xxxxxx
Xxxxx and Xxxxxx Xxxxxx agrees that (i) the Additional Shares represented by the
certificates held in custody pursuant to the RF Custody Agreement are subject to
the interests of the Managers, the Company and each other Selling Shareholder,
(ii) the arrangements made by Xxxxxx Xxxxx and Xxxxxx Xxxxxx, for such custody
are, except as specifically provided in the RF Custody Agreement, irrevocable,
and (iii) the obligations of Xxxxxx Xxxxx and Xxxxxx Xxxxxx hereunder and under
the RF Custody Agreement shall not be terminated by any act of such Selling
Shareholder or by operation of law, whether by the death or incapacity of any of
Xxxxxx Xxxxx or Xxxxxx
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Xxxxxx or the occurrence of any other event. If any of Xxxxxx Xxxxx or Xxxxxx
Xxxxxx shall die or be incapacitated or if any other event shall occur before
the delivery of the Additional Shares of Xxxxxx Xxxxx and Xxxxxx Xxxxxx to be
sold hereunder, certificates for the Additional Shares of such Selling
Shareholder shall be delivered to the Managers by the RF Attorneys-in-Fact in
accordance with the terms and conditions of this Agreement and the RF Custody
Agreement, respectively, as if such death or incapacity or other event had not
occurred, regardless of whether or not the respective Attorneys-in-Fact or any
Manager shall have received notice of such death, incapacity or other event.
The RF Attorneys-in-Fact are authorized, on behalf of Xxxxxx Xxxxx and Xxxxxx
Xxxxxx, to execute this Agreement and any other documents necessary or
desirable in connection with the sale of the Additional Shares to be sold
hereunder by Xxxxxx Xxxxx and Xxxxxx Xxxxxx to make delivery of the
certificates for such Additional Shares, to receive the proceeds of the sale
of such Additional Shares, to give receipts for such proceeds, to pay
therefrom any expenses to be borne by Xxxxxx Xxxxx and Xxxxxx Xxxxxx in
connection with the sale and public offering of such Additional Shares, to
distribute the balance thereof to Xxxxxx Xxxxx and Xxxxxx Xxxxxx and to take
such other action as may be necessary or desirable in connection with the
transactions contemplated by this Agreement. Each RF Attorney-in-Fact agrees
to perform his duties under the RF Custody Agreement.
Certificates in transferable form for the Warrants which are
exercisable for the Additional Shares that the Greenwich Street Affiliates
agree to sell pursuant to this Agreement have been placed in custody with the
Custodian for delivery under this Agreement pursuant to a Custody Agreement
(the "Greenwich Street Custody Agreement" and collectively with the GR Custody
Agreement and the RF Custody Agreement, the "Custody Agreements"). The
Greenwich Street Affiliates agree that (i) the Warrants and Additional Shares
represented by the certificates held in custody pursuant to the Greenwich
Street Custody Agreement are subject to the interests of the Managers, the
Company and each other Selling Shareholder, (ii) the arrangements made by the
Greenwich Street Affiliates are, except as specifically provided in the
Greenwich Street Custody Agreement, irrevocable, and (iii) the obligations of
the Greenwich Street Affiliates hereunder and under the Greenwich Street
Custody Agreement shall not be terminated by any act of the Greenwich Street
Affiliates or by operation of law, whether upon any dissolution, winding up,
distribution of assets or other event affecting the legal existence of any of
the Greenwich Street Affiliates. If any event shall occur before the delivery
of the Additional Shares to be sold by the Greenwich Street Affiliates
hereunder or if any of the Greenwich Street Affiliates shall dissolve, wind
up, distribute assets or if any other event affecting the legal existence of
any of the Greenwich Street Affiliates shall occur before the delivery of the
Additional Shares to be sold by the Greenwich Street Affiliates hereunder, the
Warrants shall be exercised for the Additional Shares to be sold by the
Greenwich Street Affiliates hereunder and certificates evidencing such
Additional Shares shall be delivered to the
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Managers by the Custodian in accordance with the terms and conditions of this
Agreement and the Greenwich Street Custody Agreement as if such dissolution,
winding up or distribution of assets or other event had not occurred,
regardless of whether or not any Manager shall have received notice of such
dissolution, winding up or distribution of assets or other event.
3. TERMS OF PUBLIC OFFERING. The Sellers have been advised by you
that the Managers propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable and initially
to offer the Shares upon the terms set forth in the International Prospectus.
4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR. Delivery to the
Managers of and payment for the Firm Shares shall be made at the office of
Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, X.X. 00000, at 10:00 A.M.,
New York City time, on , 1997 (the "Closing Date"). The place
of closing for the Firm Shares and the Closing Date may be varied by agreement
among you, the Company and the Attorneys-in-Fact.
Delivery to the Managers of and payment for any Additional Shares to be
purchased by the Managers shall be made at the aforementioned office of Xxxxx
Xxxxxx Inc. at such time on such date (the "Option Closing Date"), which may
be the same as the Closing Date but shall in no event be earlier than the
Closing Date nor earlier than two nor later than ten business days after the
giving of the notice hereinafter referred to, as shall be specified in a
written notice from you on behalf of the Managers to the Company and the
Attorneys-in-Fact of the Managers' determination to purchase a number,
specified in such notice, of Additional Shares. The place of closing for any
Additional Shares and the Option Closing Date, if any, for such Shares may be
varied by agreement among you, the Company and the Attorneys-in-Fact.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such
denominations as you shall request by written notice, it being understood that
a facsimile transmission shall be deemed written notice, prior to 9:30 A.M.,
New York City time, on the second business day preceding the Closing Date or
the Option Closing Date, as the case may be. Such certificates shall be made
available to you 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 or the Option Closing Date, as the case may be. The certificates and
stock powers evidencing the Firm Shares and any Additional Shares to be
purchased hereunder shall be delivered to you on the Closing Date or the
Option Closing Date, as the case may be, against payment of the purchase price
therefor in immediately available funds.
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5. AGREEMENTS OF THE COMPANY. The Company agrees with the several
Managers as follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
Company will endeavor to cause the Registration Statement or such
post-effective amendment to become effective as soon as possible and will
advise you promptly and, if requested by you, will confirm such advice in
writing, when the Registration Statement or such post-effective amendment has
become effective.
(b) The Company will advise you promptly and, if requested by you,
will confirm such advice in writing: (i) of any request by the Commission of
which the Company has knowledge for amendment of or a supplement to the
Registration Statement, any Prepricing Prospectuses or the Prospectuses or for
additional information; (ii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of the
suspension of qualification of the Shares for offering or sale in any
jurisdiction or the initiation of any proceeding for such purpose of which the
Company has knowledge; and (iii) within the period of time referred to in
paragraph (f) below, of any change in the Company's condition (financial or
other), business, prospects, properties, net worth or results of operations,
or of the happening of any event, that makes any statement of a material fact
made in the Registration Statement or the Prospectuses (as then amended or
supplemented) untrue or which requires the making of any additions to or
changes in the Registration Statement or the Prospectuses (as then amended or
supplemented) in order to state a material fact required by the Act or the
regulations thereunder to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or supplement
the Prospectuses (as then amended or supplemented) to comply with the Act or
any other law. If at any time the Commission shall issue any stop 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 time.
(c) The Company will furnish to you, without charge four (4) signed
copies of the Registration Statement as originally filed with the Commission
and of each amendment thereto, including financial statements and all exhibits
to the Registration Statement and will also furnish to you, without charge,
such number of conformed copies of the Registration Statement as originally
filed and of each amendment thereto, but without exhibits, as you may
reasonably request.
(d) The Company will not (i) file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectuses of which you
shall not previously have been advised or
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to which you shall reasonably object in writing after being so advised or (ii)
so long as, in the written opinion of counsel for the Managers a prospectus is
required to be delivered in connection with sales by any Manager or dealer,
file any information, documents or reports pursuant to the Exchange Act,
without delivering a copy of such information, documents or reports, to you,
as Lead Managers for the Managers, prior to or concurrently with such filing.
(e) Prior to the execution and delivery of this Agreement, the
Company has delivered or will deliver to you, without charge, in such
quantities as you have reasonably requested or may hereafter reasonably
request, copies of each form of the International Prepricing Prospectus. The
Company consents to the use, in accordance with the provisions of the Act and
with the securities laws of the jurisdictions in which the Shares are offered
by the several Managers and by dealers, prior to the date of the International
Prospectus, of each International Prepricing Prospectus so furnished by the
Company.
(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the written
opinion of counsel for the Managers (a copy of which shall be delivered to the
Company) an International Prospectus is required by the Act to be delivered in
connection with sales by any Manager or dealer, the Company will expeditiously
deliver to each Manager and each dealer, without charge, as many copies of the
International Prospectus (and of any amendment or supplement thereto) as you
may reasonably request. The Company consents to the use of the International
Prospectus (and of any amendment or supplement thereto) in accordance with the
provisions of the Act and with the securities laws of the jurisdictions in
which the Shares are offered by the several Managers and by all dealers to
whom Shares may be sold, both in connection with the offering and sale of the
Shares and for such period of time thereafter as the International Prospectus
is required by the Act to be delivered in connection with sales by any Manager
or dealer. If during such period of time any event shall occur that in the
judgment of the Company or in the written opinion of counsel for the Managers
(a copy of which shall be delivered to the Company) is required to be set
forth in the International Prospectus (as then amended or supplemented) or
should be set forth therein 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 International Prospectus in to
comply with the Act or any other law, the Company will forthwith prepare and,
subject to the provisions of paragraph (d) above, file with the Commission an
appropriate supplement or amendment thereto, and will expeditiously furnish to
the Managers and dealers a reasonable number of copies thereof. In the event
that the Company and you, as Lead Managers for the several Managers, agree
that the International Prospectus should be amended or supplemented, the
Company, if requested by you, will promptly issue a press release
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announcing or disclosing the matters to be covered by the proposed amendment
or supplement.
(g) The Company will cooperate with you and with counsel for the
Managers in connection with the registration or qualification of the Shares
for offering and sale by the several Managers and by dealers under the
securities laws of such jurisdictions as you may reasonably designate and will
file such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification; 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 that
would subject it to service of process in suits, other than those arising out
of the offering or sale of the Shares, in any jurisdiction where it is not now
so subject.
(h) The Company will make generally available to its security
holders a consolidated earnings statement, which need not be audited, covering
a twelve-month period commencing after the effective date of the Registration
Statement and ending not later than 15 months thereafter, as soon as
reasonably practicable after the end of such period, which consolidated
earnings statement shall satisfy the provisions of Section 11(a) of the Act.
(i) During the period of five years hereafter, the Company will
furnish to you (i) as soon as available, a copy of each report of the Company
mailed to Shareholders or filed with the Commission or the Nasdaq National
Market, and (ii) from time to time such other information concerning the
Company as you may reasonably request.
(j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 12 hereof or by notice given by you terminating
this Agreement pursuant to Section 12 or Section 13 hereof) or if this
Agreement shall be terminated by the Managers because of any failure or
refusal on the part of the Company or any of the Selling Shareholders 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 Lead Managers for all reasonable out-of-pocket expenses
(including reasonable fees and expenses of counsel for the Managers) incurred
by you in connection herewith.
(k) The Company will apply the net proceeds from the sale of the
Shares to be sold by it hereunder substantially in accordance with the
description set forth in the Prospectuses.
(l) If Rule 430A of the Act is employed, the Company will timely
file the Prospectuses pursuant to Rule 424(b) under the Act and will advise
you of the time and manner of such filing.
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(m) For a period of 180 days after the date hereof (the "Lock-Up
Period"), the Company will not, without the prior written consent of Xxxxx
Xxxxxx Inc., offer, sell, contract to sell or otherwise dispose of any Common
Stock (or any securities convertible into or exercisable or exchangeable for
Common Stock) or grant any options or warrants to purchase Common Stock,
except for (i) the Company's issuance of shares of Common Stock in connection
with the reclassification of its Common Stock, (ii) the Company's issuance of
shares of its Common Stock in connection with the approximate 5.51 for 1 stock
split, (iii) the Company's issuance of shares of Common Stock upon exercise of
the Warrants, (iv) the issuance of Common Stock upon the exercise of stock
options granted, or the grant of stock options under the Company's Stock
Option Plan (and the filing of a Form S-8 Registration Statement with respect
to such shares of common stock), and (v) the sale to the U.S. Underwriters
pursuant to the U.S. Underwriting Agreement and to the Managers pursuant to
this Agreement.
(n) The Company has furnished or will furnish to you "lock-up"
letters, in form and substance reasonably satisfactory to you, signed by each
of its current officers and directors and each of ( ).
(o) Except as stated in this Agreement and in the U.S. Underwriting
Agreement and in the Prepricing Prospectuses and Prospectuses, 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 Common Stock to facilitate the sale or resale
of the Shares.
(p) The Company will use its reasonable best efforts to have the
Common Stock listed, subject to notice of issuance, on the Nasdaq National
Market concurrently with the effectiveness of the registration statement.
(q) The Company will use its best efforts to satisfy on or before
the Closing Date or any Option Closing Date, as the case may be, all
conditions to the Managers' obligations to purchase the Shares.
6. AGREEMENTS OF THE SELLING SHAREHOLDERS. Each of the Selling
Shareholders agrees severally and not jointly with the several Managers as
follows:
(a) Messrs. Gratzon and Xxxx will cooperate to the extent necessary
to cause the registration statement or any post-effective amendment thereto to
become effective at the earliest possible time and each of the other Selling
Shareholders will cooperate to the extent necessary in furnishing all
information with respect to itself of a type referred to in Item 507 of
Regulation S-K under the Act so as to permit the
11
Registration Statement or any post-effective amendment thereto to become
effective at the earliest possible time.
(b) Such Selling Shareholder will pay all Federal and other taxes,
if any on the transfer or sale of such Additional Shares that are sold by the
Selling Shareholder to the Managers.
(c) Such Selling Shareholder will do or perform all things required
to be done or performed by the Selling Shareholder under this Agreement prior
to the Closing Date or any Option Closing Date, as the case may be, to satisfy
all conditions precedent to the delivery of the Additional Shares pursuant to
this Agreement.
(d) For a period of 180 days after the date hereof, such Selling
Shareholder will not, without the prior written consent of Xxxxx Xxxxxx Inc.,
offer, sell, contract to sell or otherwise dispose of any Common Stock (or any
securities convertible into or exercisable or exchangeable for Common Stock)
or grant any options or warrants to purchase Common Stock, except for sales of
Additional Shares to the Managers pursuant to this Agreement and sales to the
U.S. Underwriters under the U.S. Underwriting Agreement.
(e) Except as stated in this Agreement and the U.S. Underwriting
Agreement and in the Prepricing Prospectuses and the Prospectuses, such
Selling Shareholder 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 Common Stock to
facilitate the sale or resale of the Shares.
(f) Such Selling Shareholder will advise you promptly upon becoming
aware, and if requested by you, will confirm such advice in writing, within
the period of time referred to in Section 5(f) hereof, of any change in the
Company's condition (financial or other), business, prospects, properties, net
worth or results of operations, or of the happening of any event that makes
any statement of a material fact made in the Registration Statement or the
Prospectuses (as then amended or supplemented) untrue or which requires the
making of any additions to or changes in the Registration Statement or the
Prospectuses (as then amended or supplemented) in order to state a material
fact required by the Act or the regulations thereunder to be stated therein or
necessary in order to make the statements therein not misleading, or of the
necessity to amend or supplement the Prospectuses (as then amended or
supplemented) to comply with the Act or any other law. If at any time the
Commission shall issue any stop 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 time.
12
7. REPRESENTATIONS AND WARRANTIES OF XXXX XXXXXXX AND XXXXXXXX XXXX
AND THE COMPANY. Each of the Company, Xxxx Xxxxxxx and Xxxxxxxx Xxxx
represents and warrants to each Manager that:
(a) Each International Prepricing Prospectus included as part of
the registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act, complied when
so filed in all material respects with the provisions of the Act; except that
this representation and warranty does not apply to statements in or omissions
from such International Prepricing Prospectus (or any amendment or supplement
thereto) made in reliance upon and in conformity with information relating to
any Manager furnished to the Company in writing by a Manager through the Lead
Managers or by a Manager through the Lead Managers expressly for use therein.
The Commission has not issued any order preventing or suspending the use of
any Prepricing Prospectus.
(b) The Registration Statement in the form in which it became or
becomes effective and also in such form as it may be when any post-effective
amendment thereto shall become effective and the Prospectuses and any
supplement or amendment thereto when filed with the Commission under Rule
424(b) under the Act, complied or will comply in all material respects with
the provisions of the Act and will not at any such 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 Registration Statement or the Prospectuses made in
reliance upon and in conformity with information relating to any Manager
furnished to the Company in writing by or on behalf of a Manager through the
Lead Managers or by a U.S. Underwriter through the Representatives expressly
for use therein.
(c) All the outstanding shares of Common Stock of the Company
(including the Additional Shares to be sold by the Gratzons and Xxxxxxxx Xxxx)
have been duly authorized and validly issued, are fully paid and nonassessable
and are free of any preemptive or similar rights; the Firm Shares to be issued
and sold by the Company have been duly authorized and, when issued and
delivered to the Managers against payment therefor in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable and free of
any preemptive or similar rights; the Additional Shares issuable upon exercise
of the Warrants have been duly authorized for issuance and, when delivered to
the Greenwich Street Affiliates by the Company upon exercise of the Warrants
against payment of the exercise price therefor, will be validly issued, fully
paid and nonassessable and free of any preemptive or similar rights and the
capital stock of the Company conforms in all material respects to the
description thereof in the Registration Statement and the Prospectuses.
13
(d) Each of the Warrants has been duly and validly authorized by
the Company and constitutes the valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
as (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 or other obligees
generally and (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.
(e) The Company is a corporation duly organized and validly
existing 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 Registration Statement and the
Prospectuses, and is duly registered and qualified to conduct its business and
is in good standing in each jurisdiction 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 condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company and the
Subsidiaries (as hereinafter defined) (a "Material Adverse Effect") taken as a
whole.
(f) All of the Company's subsidiaries (collectively, the
"Subsidiaries") are listed in Exhibit 21.1 to the Registration Statement.
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 Registration Statement and the Prospectus, 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, except as set forth in the Prospectus, are 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.
(g) 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 and its Subsidiaries,
taken as a whole, 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 and its Subsidiaries taken as a whole, that are required to be
described in the Registration Statement or the Prospectuses but are
14
not described as required, and there are no agreements, contracts, indentures,
leases, licenses, or other instruments or documents relating to the Company or
the Subsidiaries that are required to be described in the Registration
Statement or the Prospectuses or to be filed as an exhibit to the Registration
Statement that are not described or filed as required by the Act or the
Exchange Act. The descriptions of the terms of any such agreements,
indentures, leases, licenses, instruments, contracts or documents contained in
the Registration Statement or the Prospectuses are correct in all material
respects.
(h) Neither the Company nor any of the Subsidiaries is in
(i) 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).
(i) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or the U.S. Underwriting Agreement
by the Company nor the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the inclusion
in the Registration Statement of the Additional Shares to be sold by the
Selling Shareholders) (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 for the registration of the Shares under the Act and
compliance with the securities or Blue Sky laws of various jurisdictions, all
of which have been or will be effected in accordance with this Agreement) (ii)
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
(iii) conflicts or will conflict with or constitutes or will constitute a
breach of, or a default under any agreement, indenture, lease, license, on
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 any statute, law, regulation or filing or judgment,
injunction, order
15
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 except in the case of
clauses (i) and (iii) where the failure to obtain such consent, approval,
authorization or order, or to effect such filing or registration, or such
conflicts, defaults, violations or other action will not have, individually or
in the aggregate, a Material Adverse Effect.
(j) The accountants, KPMG Peat Marwick LLP, who have certified or
shall certify the financial statements filed or to be filed as part of the
Registration Statement or the Prospectuses (or any amendment or supplement
thereto) are independent public accountants as required by the Act.
(k) The financial statements, together with related schedules and
notes forming part of the Registration Statement and the Prospectuses (and any
amendment or supplement thereto), present fairly the consolidated financial
position, results of operations, cash flows and changes in stockholders'
equity of the Company and the Subsidiaries on the basis stated in the
Registration Statement 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 Registration Statement and the Prospectuses (and any amendment or
supplement thereto) are accurately presented in all material respects and
prepared on a basis consistent in all material respects with such financial
statements and the books and records of the Company and its Subsidiaries.
(l) The execution and delivery of, and the performance by the
Company of its obligations under, each of this Agreement and the U.S.
Underwriting Agreement have been duly and validly authorized by the Company,
and each of this Agreement and the U.S. Underwriting Agreement has been duly
executed and delivered by the Company and constitutes the valid and legally
binding agreement of the Company, enforceable against the Company in
accordance with its 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
16
by federal or state securities laws or the public policy underlying such laws.
(m) Except as disclosed in the Registration Statement and the
Prospectuses (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectuses (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 debt or
long-term debt of the Company or any of the Subsidiaries, or any material
adverse change, or any development having or which would reasonably be
expected to have, a prospective Material Adverse Effect.
(n) Each of the Company and the Subsidiaries has good and
marketable title to all property (real and personal) described in the
Prospectuses as being owned by it, free and clear of all liens, claims,
security interests or other encumbrances except such as are described in the
Registration Statement and the Prospectuses or in a document filed as an
exhibit to the Registration Statement, except where the failure to have such
title would not have a Material Adverse Effect and all the property described
in the Prospectuses 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.
(o) The Company has not distributed and, prior to the later to
occur of (i) the Closing Date or the Option Closing Date, if any, and (ii)
completion of the distribution of the Shares, will not distribute any offering
material in connection with the offering and sale of the Shares other than the
Registration Statement, the Prepricing Prospectuses, the Prospectuses or other
materials, if any, permitted by the Act.
(p) 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 Prospectuses except where the failure to have any such
License would not have a Material Adverse Effect and subject
17
to such qualifications as may be set forth in the Prospectuses; 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
Prospectuses; and, except as described in the Prospectuses, 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 7(p):
(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 Prospectuses, 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
Prospectuses 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 Prospectuses,
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,
18
proceeding or investigation pending before the FCC or any state PUC, or,
to the best of 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 Common Stock;
(v) Neither the issuance and sale of the Common Stock nor the
performance by the Company or the Subsidiaries of their obligations under
the U.S. Underwriting Agreement or the International Underwriting Agreement
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 Prospectuses.
(q) 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.
(r) To the Company's knowledge, neither the Company nor any of its
Subsidiaries nor 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 payment,
receipt or retention of funds is of a character required to be disclosed in
the Prospectuses.
(s) Except as disclosed in the Prospectuses, the Company and each
of the Subsidiaries have filed all material tax returns required to be filed,
which returns are true and correct in all material respects, and neither the
Company nor any Subsidiary
19
is in default in the payment of any taxes which were payable pursuant to said
returns or any assessments with respect thereto.
(t) Except as described in the Prospectuses, no holder of any
security of the Company has any right to require registration of shares of
Common Stock or any other security of the Company because of the filing of the
Registration Statement or consummation of the transactions contemplated by
this Agreement or the U.S. Underwriting Agreement, or otherwise. No such
rights with respect to shares of Common Stock not listed in Schedule II hereto
were exercised nor will be exercised in connection with the sale of the Shares
and for a period of 180 days after the date hereof. Except as described in or
contemplated by the Prospectuses, there are no outstanding options, warrants
or other rights calling for the issuance of, and there are no commitments,
plans or arrangements to issue, any shares of Common Stock of the Company or
any security convertible into or exchangeable or exercisable for Common Stock
of the Company.
(u) 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 Prospectuses as being owned by them or any of them or
necessary for the conduct of their respective businesses except where the lack
of such ownership or possession 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.
(v) The Company is not and, upon sale of the Shares to be issued
and sold in accordance herewith and upon application of the net proceeds to
the Company from such sale as described in the Prospectuses under the caption
"Use of Proceeds," will not be an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(w) The Company has complied with all provisions of Florida
Statutes, Section 517.075, relating to issuers doing business with Cuba.
(x) The Recapitalization (as defined in the Prospectus) and the
Stock Split (as defined in the Prospectus) will be, prior to or simultaneously
with the consummation of the public offering of the Shares contemplated
hereby, consummated in the manner described in the Prospectus.
(y) 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 all other risks
customarily
20
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.
8. Representations and Warranties of the Selling
Shareholders.
A. Each of the Selling Shareholders, other than the Greenwich
Street Affiliates severally and not jointly represents and warrants to each
Manager that:
(a) Such Selling Shareholder now has, and on the Closing Date
and the Option Closing Date, if any, will have, valid and marketable title to
the Additional Shares to be sold by such Selling Shareholder, free and clear
of any lien, claim, security interest or other encumbrance, including, without
limitation, any restriction on transfer.
(b) Such Selling Shareholder now has, and on the Closing Date
and the Option Closing Date, if any, will have, full legal right, power and
authorization, and any approval required by law, to sell, assign, transfer and
deliver such Additional Shares in the manner provided in this Agreement and
the U.S. Underwriting Agreement, and upon delivery of and payment for such
Additional Shares hereunder, the several Managers will acquire valid and
marketable title to such Additional Shares free and clear of any lien, claim,
security interest, or other encumbrance (other than any lien, claim or
security interest placed thereon by the U.S. Underwriters or Managers).
(c) This Agreement, the U.S. Underwriting Agreement and the Custody
Agreement entered into by such Selling Shareholder have been duly authorized,
executed and delivered by or on behalf of such Selling Shareholder and are the
valid and binding agreements of such Selling Shareholder enforceable against
such Selling Shareholder in accordance with their terms, except that (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 or 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.
(d) Neither the sale of the Additional Shares, the execution,
delivery or performance of this Agreement, the U.S. Underwriting Agreement or
the Custody Agreement entered into by such Selling Shareholder by or on behalf
of such Selling Shareholder nor the consummation by or on behalf of such
Selling Shareholder of the transactions contemplated hereby and thereby (i)
21
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
for the registration of the Shares under the Act and compliance with the
securities or Blue Sky laws of various jurisdictions, all of which have been
or will be effected in accordance with this Agreement), or (ii) conflicts or
will conflict with or constitutes or will constitute a breach of, or a default
under, any agreement, indenture, lease or other instrument to which such
Selling Shareholder is a party or by which such Selling Shareholder is or may
be bound, or violates or will violate any statute, law, regulation or filing
or judgment, injunction, order or decree applicable to such Selling
Shareholder, or will result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of such Selling Shareholder
pursuant to the terms of any agreement or instrument to which such Selling
Shareholder is a party or by which such Selling Shareholder may be bound or to
which any of the property or assets of such Selling Shareholder is subject
except where the failure to obtain such consent, approval, authorization or
order, or effect such filing or registration, or such conflicts, defaults,
violations or other action will not have, individually or in the aggregate, a
Material Adverse Effect.
(e) The information pertaining to such Selling Shareholder under
the caption "Principal and Selling Shareholders" in the Prospectuses does not
and will not contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
(f) The representations and warranties of such Selling Shareholder in
the Custody Agreement entered into by such Selling Shareholder are, and on the
Closing Date and any Option Closing Date will be, true and correct.
(g) Such Selling Shareholder has not taken, 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 Common Stock to facilitate
the sale or resale of the Shares, except for the lock-up arrangements referred
to in the Prospectuses.
B. Each Greenwich Street Affiliate represents and warrants to each
Manager that:
(a) Such Selling Shareholder now has, and on the Closing Date and the
Option Closing Date, if any, will have, valid and marketable title to the
Warrants exercisable for the Additional Shares to be sold by such Selling
Shareholder hereunder, free and clear of any lien, claim, security interest or
other encumbrance, including, without limitation, any restriction on transfer,
and on the Closing Date and the Option Closing Date, if any, such Selling
Shareholder
22
will have, valid and marketable title to the Additional Shares issuable upon
exercise of the Warrants and to be sold by such Selling Shareholder hereunder,
free and clear of any lien, claim, security interest or other encumbrance,
including, without limitation, any restriction on transfer.
(b) Such Selling Shareholder now has, and on the Closing Date and the
Option Closing Date, if any, will have, full legal right, power and
authorization, and any approval required by law, to exercise the Warrants for
the Additional Shares and sell, assign, transfer and deliver such Additional
Shares in the manner provided in this Agreement and the U.S. Underwriting
Agreement, and upon delivery of and payment for such Additional Shares
hereunder, the several Managers will acquire valid and marketable title to
such Additional Shares free and clear of any lien, claim, security interest,
or other encumbrance.
(c) This Agreement, the U.S. Underwriting Agreement and the Greenwich
Street Custody Agreement have been duly authorized, executed and delivered by
or on behalf of such Selling Shareholder and are the valid and binding
agreements of such Selling Shareholder enforceable against such Selling
Shareholder in accordance with their terms, except that (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.
(d) None of the exercise of the Warrants for the Additional Shares to
be sold by such Selling Shareholder hereunder, the sale of such Additional
Shares, the execution, delivery or performance of this Agreement, the U.S.
Underwriting Agreement or the Greenwich Street Custody Agreement by or on behalf
of such Selling Shareholder nor the consummation by or on behalf of such Selling
Shareholder of the transactions contemplated hereby and 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 for the registration of
the Shares under the Act or compliance with the securities or Blue Sky laws of
various jurisdictions), or (ii) conflicts or will conflict with or constitutes
or will constitute a breach of, or a default under, any agreement, indenture,
lease or other instrument to which such Selling Shareholder is a party or by
which such Selling Shareholder is or may be bound, or violates or will violate
any statute, law, regulation or filing or judgment, injunction, order or decree
applicable to such Selling Shareholder, or will result in the
23
creation or imposition of any lien, charge or encumbrance upon any property or
assets of such Selling Shareholder pursuant to the terms of any agreement or
instrument to which such Selling Shareholder is a party or by which such
Selling Shareholder may be bound or to which any of the property or assets of
such Selling Shareholder is subject.
(e) The information pertaining to such Selling Shareholder under the
caption "Principal and Selling Shareholders" in the Prospectuses, does not and
will not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(f) The representations and warranties of such Selling Shareholder in
the Greenwich Street Custody Agreement are, and on the Closing Date and the
Option Closing Date, if any, will be, true and correct.
(g) Such Selling Shareholder has not taken, 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 Common Stock to facilitate
the sale or resale of the Shares, except for the lock-up arrangements referred
to in the Prospectuses.
9. INDEMNIFICATION AND CONTRIBUTION. (a) The Company, Xxxx Xxxxxxx
and Xxxxxxxx Xxxx (the "Indemnifying Selling Shareholders"), jointly and
severally, agree to indemnify and hold harmless you and each other Manager and
each person, if any, who controls any Manager within the meaning of Section 15
of the Act or Section 20(a) 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 any International Prepricing
Prospectus or in the Registration Statement or the International Prospectus 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 such Manager
furnished in writing to the Company by or on behalf of any Manager through you
or by or on behalf of any Lead Manager expressly for use in connection
therewith; provided, however, that the indemnification contained in this
paragraph (a) with respect to any International Prepricing Prospectus shall
not inure to the benefit of any Manager (or to the benefit of any person
controlling such Manager) on account of any such loss, claim, damage,
liability or expense arising from the sale of the Shares by such Manager to
24
any person if a copy of the International Prospectus shall not have been
delivered or sent to such person within the time required by the Act and the
regulations thereunder, and the untrue statement or alleged untrue statement
or omission or alleged omission of a material fact contained in such
International Prepricing Prospectus was corrected in the International
Prospectus, provided that the Company has delivered the corrected
International Prospectus to the several Managers in requisite quantity on a
timely basis to permit such delivery or sending.
(b) If any action, suit or proceeding shall be brought against any
Manager or any person controlling any Manager in respect of which indemnity
may be sought against the Company or any Indemnifying Selling Shareholder such
Manager 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. Such Manager 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 such
Manager 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 such Manager or such controlling person and the
indemnifying parties and such Manager 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 such Manager 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 all such Managers and controlling persons not
having actual or potential differing interests with you 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.
The indemnifying parties shall not be liable for any settlement of any such
action, suit or proceeding effected without their 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 any Manager, to the
25
extent provided in the preceding paragraph and any such controlling person
from and against any loss, claim, damage, liability or expense by reason of
such settlement or judgment.
(c) Each other Selling Shareholder agrees, severally and not jointly,
to indemnify and hold harmless each of you and each other Manager and each
person, if any, who controls any Manager within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, the Company, its directors, its
officers who sign the Registration Statement, and any person who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act to the same extent as the foregoing indemnity from the Company
and the Indemnifying Selling Shareholders to each Manager, but only with
respect to the information furnished in writing by or on behalf of such
Selling Shareholder expressly for use in the Registration Statement, the
Prospectus or any Prepricing Prospectus, or any amendment or supplement
thereto. If any action, suit or proceeding shall be brought against any
Manager, any such controlling person of any Manager, the Company, any of its
directors, any such officer, or any such controlling person of the Company,
based on the Registration Statement, the Prospectus or any Prepricing
Prospectus or any amendment or supplement thereto, and in respect of which
indemnity may be sought against any Selling Shareholder pursuant to this
paragraph (c), such Selling Shareholder 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 such Selling Shareholder 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 such Selling
Shareholder's expense), and each Manager, each such controlling person of any
Manager, the Company, its directors, any such officer, and any such
controlling person of the Company shall have the rights and duties given to
the Managers by paragraph (b) above. The foregoing indemnity agreement shall
be in addition to any liability which any Selling Shareholder may otherwise
have.
(d) Each Manager agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the
Registration Statement, any person who controls the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act and the Selling
Shareholders, to the same extent as the foregoing indemnity from the Company
and the Indemnifying Selling Shareholder to each Manager, but only with
respect to information relating to such Manager furnished in writing by or on
behalf of such Manager through you expressly for use in the Registration
Statement, the International Prospectus or any International Prepricing
Prospectus, or any amendment or
26
supplement thereto. If any action, suit or proceeding shall be brought
against the Company, any of its directors, any such officer, any such
controlling person or any Selling Shareholder based on the Registration
Statement, the International Prospectus or any International Prepricing
Prospectus, or any amendment or supplement thereto, and in respect of which
indemnity may be sought against any Manager pursuant to this paragraph (d),
such Manager shall have the rights and duties given to the Company and the
Indemnifying Selling Shareholder by paragraph (b) above (except that if the
Company or the Selling Shareholders shall have assumed the defense thereof
such Manager 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 such Manager's expense), and the Company, its
directors, any such officer, any such controlling person and the Selling
Shareholders shall have the rights and duties given to the Managers by
paragraph (b) above.
(e) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under paragraphs (a) or (c) or (d) 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 and the Selling Shareholders on the one hand and the Managers on the
other hand from the offering of the Shares, 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 and the Selling Shareholders on
the one hand and the Managers on the other hand 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 and the Selling Shareholders on
the one hand and the Managers on the other hand shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Shareholders bear to the total
underwriting discounts and commissions received by the Managers, in each case as
set forth in the table on the cover page of the International Prospectus;
provided that, in the event that the Managers shall have purchased any
Additional Shares hereunder, any determination of the relative benefits received
by the Company, the Selling Shareholders or the Managers from the offering of
the Shares shall include the net proceeds (before deducting expenses) received
by the Selling Shareholders, and the underwriting discounts and commissions
received by the Managers, from the sale of such Additional Shares, in each case
computed on the basis of the respective amounts set forth in the notes to the
table on the cover page of the International Prospectus. The relative fault of
the Company and the Selling Shareholders on the one hand and the Managers on the
other hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the
27
Selling Shareholders on the one hand or by the Managers on the other hand and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
(f) The Company, the Selling Shareholders and the Managers agree that
it would not be just and equitable if contribution pursuant to this Section 9
were determined by a pro rata allocation (even if the Managers were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in paragraph (e) 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 (e) 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 9, no Manager shall
be required to contribute any amount in excess of the amount by which the total
price of the Shares underwritten by it and distributed to the public exceeds the
amount of any damages which such Manager has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission and none of the Greenwich Street Affiliates shall be required to
contribute an amount hereunder with respect to any loss, claim, damage,
liability or expense in excess of the amount such Selling Shareholder would have
been required to pay under Sections 9 hereof with respect thereto if the
indemnification provided for in Section 9 had been available with respect to
such loss, claim, damage, liability or expense. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Managers' obligations to contribute pursuant to this
Section 9 are several in proportion to the respective numbers of Firm Shares set
forth opposite their names in Schedule I hereto (or such numbers of Firm Shares
increased as set forth in Section 12 hereof) and not joint.
(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.
(h) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 9 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 9 and the
28
representations and warranties of the Company and the Selling Shareholders 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 any Managers or
any person controlling any Manager, the Company, its directors or officers or
the Selling Shareholders or any director, partner or officer of a Selling
Shareholder, any person controlling the Company or any Selling Shareholder,
(ii) acceptance of any Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to any Manager or any person
controlling any Manager, or to the Company, its directors or officers, or to a
Selling Shareholder, any director, officer or partner of a Selling
Shareholder, any person controlling the Company or any Selling Shareholder,
shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 9.
10. CONDITIONS OF MANAGERS' OBLIGATIONS. The several obligations of the
Managers to purchase the Firm Shares hereunder are subject to the following
conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
Registration Statement or such post-effective amendment shall have become
effective not later than 5:30 P.M. New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by you, and
all filings, if any, required by Rules 424 and 430A under the Act shall have
been timely made; no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for that
purpose shall have been instituted or, to the knowledge of the Company or any
Manager, threatened by the Commission, and any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectuses or otherwise) shall have been complied with to your reasonable
satisfaction.
(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
condition (financial or other), business, prospects, properties, net worth or
results of operations of the Company or the Subsidiaries not contemplated by
the Prospectuses, which in your opinion, as Lead Managers of the several
Managers, would materially, adversely affect the market for the Shares, or
(ii) any event or development relating to or involving the Company or any
officer or director of the Company or any Selling Shareholder which makes any
statement made in the Prospectuses untrue in any material respect or which, in
the opinion of the Company and its counsel or the Managers and their counsel,
requires the making of any addition to or change in the Prospectuses in order
to state a material fact required by the Act
29
or any other law to be stated therein or necessary in order to make the
statements therein not misleading, if amending or supplementing the
Prospectuses to reflect such event or development would, in your opinion, as
Lead Managers for the several Managers, materially adversely affect the market
for the Shares.
(c) You shall have received on the Closing Date an opinion of
Xxxxxxx & Berlin, Chartered, counsel for the Company, the Gratzons, Xxxxxxxx
Xxxx, Xxxxx Xxxxx and Xxxxx Xxxxxx (the "TG Selling Shareholders"), dated the
Closing Date and addressed to you, as Lead Managers of the several Managers,
to the effect that:
(i) The Registration Statement and all post-effective
amendments, if any, have become effective under the Act and, to the knowledge
of such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose are
pending before or contemplated by the Commission; and any required filing of
the Prospectuses pursuant to Rule 424(b) has been made in accordance with Rule
424(b);
(ii) Neither the issuance, sale or delivery of the
Underwritten Shares, nor the execution, delivery or performance of the U.S.
Underwriting Agreement or the International Underwriting Agreement, or
compliance by the Company with all provisions of this Agreement and the U.S.
Underwriting Agreement, nor consummation by the Company of the transactions
contemplated hereby or by the U.S. Underwriting Agreement constitutes or will
constitute a breach of, or a default under, the certificate or articles of
incorporation or bylaws of the Company or its Subsidiaries or any material
agreement, indenture, lease or other instrument to which the Company or any
Subsidiary is a party or by which they or any of their properties is bound and
that is made an exhibit to the Registration Statement, or, except as disclosed
in the Registration Statement, will result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company or
any Subsidiary under any such agreement, indenture, lease or other instrument,
which breach default or other event would have a Material Adverse Effect, nor
will any such action result in any violation of any existing law, regulation,
ruling (assuming compliance with all applicable state securities and Blue Sky
laws), judgment, injunction, order or decree known to such counsel after
reasonable inquiry, to be applicable to the Company, any Subsidiary or any of
their properties, which violation would have a Material Adverse Effect;
(iii) No consent, approval, authorization or other order,
or registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency, or official is required on the part
of the Company (except as have been obtained under the Act or such as may be
required under state securities or Blue Sky laws governing the purchase and
distribution of the Shares) for the valid issuance and sale of the Shares to
the
30
Managers or Underwriters as contemplated by the U.S. Underwriting Agreement
and this Agreement;
(iv) The Registration Statement and the Prospectuses and
any supplements or amendments thereto (except for the financial statements,
schedules, and notes thereto and other financial and statistical data included
therein or omitted therefrom, as to which such counsel need not express any
opinion) comply as to form in all material respects with the requirements of
the Act;
(v) To the knowledge of such counsel, (A) other than as
described in the Prospectuses, there are no legal or governmental proceedings
pending or threatened against the Company or any Subsidiary or to which the
Company's or any Subsidiary's properties are subject, which, if adversely
determined, would reasonably be expected to have a Material Adverse Effect,
and (B) there are no agreements, contracts, indentures, leases or other
instruments relating to the Company or any Subsidiary, of a character that are
required to be described in the Registration Statement or the Prospectuses or
to be filed as an exhibit to the Registration Statement that are not described
or filed as required, as the case may be;
(vi) The U.S. Underwriting Agreement, the International
Underwriting Agreement and the Custody Agreements have each been duly executed
and delivered by or on behalf of each of the TG Selling Shareholders and are
valid and binding agreements of each TG Selling Shareholder enforceable
against each TG Selling Shareholder in accordance with their respective terms
except that (i) enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyances, 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;
(vii) Each TG Selling Shareholder has full legal right,
power and authority, and any approval required by law, to sell, assign,
transfer and deliver good and marketable title to the Additional Shares which
such TG Selling Shareholder has agreed to sell pursuant to the U.S.
Underwriting Agreement and the International Underwriting Agreement;
(viii) The execution and delivery of the U.S. Underwriting
Agreement, the International Underwriting Agreement and the Custody Agreement
by the TG Selling Shareholders and the consummation of the transactions
contemplated thereby will not conflict with, constitute a breach of, or a
default under any material agreement, indenture, lease or other instrument
known to such counsel to which any TG Selling Shareholder is a party or by
31
which any of them or any of their assets or property is bound, or violate any
statute, law, regulation, court order or decree known to such counsel to be
applicable to any TG Selling Shareholder or to any of the property or assets
of any TG Selling Shareholder, except for any such conflicts, breaches,
defaults or violations that would not have a Material Adverse Effect on the
ability of such TG Selling Shareholder to consummate the transactions
contemplated by the Underwriting Agreements;
(ix) (A) Each TG Selling Shareholder has full right power,
and authority to enter into this Agreement, the U.S. Underwriting Agreement,
the respective Powers of Attorneys and the Custody Agreements, and (B) upon
delivery of the Additional Shares to be sold by such TG Selling Shareholder
hereunder and payment of the purchase price therefor as herein contemplated,
each of the Managers will receive good and marketable title to its ratable
share of the Additional Shares purchased by it from such TG Selling
Shareholder, free and clear of any pledge, lien, security interest,
encumbrance, claim or equity, assuming the Managers acquire the Additional
Shares without notice of any adverse claim as such term is used in Section 8-302
of the Uniform Commercial Code in effect in the State of New York;
(x) The Section 214 Switched Voice Authorization, the
Section 214 Private Line Authorization, and the Section 214 Facilities
Authorization (as such terms are defined in the Prospectus) are the only
telecommunications regulatory licenses, permits, authorizations, consents and
approvals ("Telecommunications Licenses") required from the Federal
Communications Commission (the "FCC") for each of the Company and the
Subsidiaries to conduct its business in the manner described in the
Prospectus. The FCC Telecommunications Licenses currently held by each of the
Company and the Subsidiaries have been duly and validly issued and are in full
force and effect, and no proceedings to revoke or restrict such FCC
Telecommunications Licenses are pending or, to our knowledge, threatened.
Each of the Company and the Subsidiaries is not in violation of any of the
terms and conditions of any of its FCC Telecommunications Licenses, is not in
violation of the Communications Act of 1934, as amended, and is not in
violation of any FCC rules and regulations, except to the extent that such
violation is disclosed in the Registration Statement and would not have a
Material Adverse Effect. Each of the Company and the Subsidiaries has in
effect with the FCC all international switched, international private line
and/or United States domestic interexchange service tariffs necessary to
conduct its business in the manner described in the Prospectus;
(xi) To the extent they constitute a summary of legal matters,
documents or proceedings referred to therein, the statements in the Prospectuses
under the captions "Risk Factors - Substantial Government Regulation-United
States" and "Business-Government Regulation" are accurate in all material
respects and
32
fairly summarize in all material respects all matters referred to therein, and
there are no material omissions under such captions with respect to such legal
matters, documents and proceedings;
(xii) Each of the Company and the Subsidiaries has obtained
all state Telecommunications Licenses and filed all tariffs required for the
provision of telecommunications services in any state to conduct its business
in the manner described in or contemplated by the Prospectus except where the
failure to obtain such licenses and/or file such tariffs would not have,
individually or in the aggregate, a Material Adverse Effect;
(xiii) There is no outstanding adverse judgment,
injunction, decree or order that has been issued by the FCC against the
Company or any Subsidiary or any action, proceeding or investigation pending
before the FCC or, to such counsel's knowledge, threatened by the FCC against
the Company or any Subsidiary or otherwise which, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect;
(xiv) There is no outstanding adverse judgment, injunction,
decree or order that has been issued by any state public utility commission
("PUC") against the Company or any Subsidiary or any action, proceeding or
investigation pending before or, to counsel's knowledge, threatened by any
state PUC against the Company or any Subsidiary which, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect;
(xv) 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 any Subsidiary is required in connection with the issuance or
sale of the Common Stock;
(xvi) Neither the issuance and sale of the Common Stock nor
the performance by the Company of its obligations under the U.S. Underwriting
Agreement or the International Underwriting Agreement will result in a
violation of the Communications Act, or any applicable rules or the
regulations promulgated under the Communications Act, or, to counsel's
knowledge, any order, writ, judgment, injunction, decree or award of the FCC
binding on the Company or any Subsidiary; and
(xvii) The Section 214 Switched Voice Authorization, the
Section 214 Private Line Authorization and the Section 214 Facilities
Authorization require the Company and its Subsidiaries to provide any
international call-back service using uncompleted call signaling in a manner
that is consistent with the laws of the countries in which they operate.
Although we do not provide legal services to the Company or its Subsidiaries
regarding the application or interpretation of any non-U.S. law and although
we have performed no due diligence in this regard other than
33
discussing with management of the Company the Company's operations and
compliance with applicable FCC requirements and reviewing any portions of the
opinions of local counsel of Australia, France, Germany, Hong Kong, Japan, the
Netherlands, Sweden, Switzerland, and the United Kingdom specifically
regarding the provision of international call-back service in certain
jurisdictions in which the Company operates, we are not aware of any non-
compliance in the provision of international call-back service by the Company
with the laws of any of these foreign jurisdictions in which the Company
operates that would constitute a violation of the Section 214 Switched Voice
Authorization, the Section 214 Private Line Authorization, or the Section 214
Facilities Authorization and have a Material Adverse Effect on the Company and
its Subsidiaries, taken as a whole, except as described in the Prospectuses
under the captions "Risk Factors -- Substantial Government Regulation" and
"Business -- Government Regulation Overview." For the purpose of making this
statement, we have relied upon our discussions with management of the Company
and our review of any portions of the opinions of local counsel of Australia,
France, Germany, Hong Kong, Japan, the Netherlands, Sweden, Switzerland, and the
United Kingdom specifically regarding the provision of international call-back
service provided by the Company, without any further inquiry or any independent
review of any laws of any such jurisdictions.
In addition, such counsel shall state that although counsel has not
undertaken, except as otherwise indicated in their opinion, to determine
independently, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements in the Registration Statement, such
counsel has participated in the preparation of the Registration Statement and
the Prospectuses, including general review and discussion of the contents
thereof but has made no independent check or verification thereof (relying as
to materiality to a large extent upon the opinions of officers and other
representatives of the Company), and no facts have come to the attention of
such counsel that would lead them to believe that the Registration Statement
at the time the Registration Statement became effective, or the Prospectuses,
as of their respective dates and as of the Closing Date or the Option Closing
Date, as the case may be, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated in the Prospectuses or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading or that any amendment or supplement
to the Prospectuses, as of its respective date, and as of the Closing Date or
the Option Closing Date, as the case may be, contained any untrue statement of
a material fact or omitted to state a material fact required to be stated in
the Prospectuses or necessary in order to make the statements in the
Prospectuses, in the light of the circumstances under which they were made,
not misleading (it being understood that such counsel need express no
statement with respect to the financial statements, schedules, pro forma
financial statements and the notes thereto and other financial and
34
statistical data included in or omitted from the Registration Statement or the
Prospectuses).
In rendering their opinion as aforesaid, counsel may, as to factual
matters, rely upon written certificates or statements of officers of the
Company and the Selling Shareholders and, as to matters of law, may rely upon
an opinion or opinions, each dated the Closing Date, of other counsel retained
by them or the Company as to laws of any jurisdiction other than the United
States, the State of Delaware or the State of New York provided that (1) each
such local counsel is reasonably acceptable to the Lead Managers, (2) such
reliance is expressly authorized by each opinion so relied upon and a copy of
each such opinion is delivered to the Lead Managers and is, in form and
substance reasonably satisfactory to them and their counsel, and (3) counsel
shall state in their opinion that they believe that they and the Managers are
justified in relying thereon.
(d) You shall have received on the Closing Date an opinion of
Debevoise & Xxxxxxxx, counsel for the Greenwich Street Affiliates, dated the
Closing Date and addressed to you, as Lead Managers of the several Managers,
to the effect that:
(i) The U.S. Underwriting Agreement, the International
Underwriting Agreement and the Greenwich Street Custody Agreement have each
been duly executed and delivered by or on behalf of each of the Greenwich
Street Affiliates and are valid and binding agreements of each of the
Greenwich Street Affiliates enforceable against each Greenwich Street
Affiliate in accordance with their respective terms except that (i)
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyances, 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;
(ii) Each Greenwich Street Affiliate has full legal right,
power and authority, and any approval required by law, to exercise the
Warrants for the Additional Shares to be sold by it, and to sell, assign,
transfer and deliver good and marketable title to the Additional Shares which
such Affiliate has agreed to sell pursuant to the U.S. Underwriting Agreement
and the International Underwriting Agreement;
(iii) The execution and delivery of the U.S. Underwriting
Agreement, the International Underwriting Agreement and the Greenwich Street
Custody Agreement by the Greenwich Street Affiliates and the consummation of
the transactions contemplated thereby will not conflict with, constitute a
breach of, or a
35
default under any material agreement, indenture, lease or other instrument
known to such counsel to which any Greenwich Street Affiliate is a party or by
which any of them or any of their assets or property is bound, or violate any
statute, law, regulation, court order or decree known to such counsel to be
applicable to any Greenwich Street Affiliate or to any of the property or
assets of any Greenwich Street Affiliate, except for any such conflicts,
breaches, defaults or violations that would not have a Material Adverse Effect
on the ability of such Greenwich Street Affiliate to consummate the
transactions contemplated by the Underwriting Agreements;
(iv) (A) Each Greenwich Street Affiliate has full right
power, and authority to enter into this Agreement, the U.S. Underwriting
Agreement and the Greenwich Street Custody Agreement, and (B) upon delivery of
the Additional Shares to be sold by such Greenwich Street Affiliate hereunder
and payment of the purchase price therefor as herein contemplated, each of the
Managers will receive good and marketable title to its ratable share of the
Additional Shares purchased by it from such Greenwich Street Affiliate, free
and clear of any pledge, lien, security interest, encumbrance, claim or
equity, assuming the Managers acquire the Additional Shares without notice of
any adverse claim as such term is used in Section 8-302 of the Uniform
Commercial Code in effect in the State of New York;
In rendering their opinion as aforesaid, counsel may, as to factual
matters, rely upon written certificates or statements of officers of the
Company and the Selling Shareholders and, as to matters of law, may rely upon
an opinion or opinions, each dated the Closing Date, of other counsel retained
by them or the Company as to laws of any jurisdiction other than the United
States, the State of Delaware or the State of New York provided that (1) each
such local counsel is reasonably acceptable to the Lead Managers, (2) such
reliance is expressly authorized by each opinion so relied upon and a copy of
each such opinion is delivered to the Lead Managers and is, in form and
substance reasonably satisfactory to them and their counsel, and (3) counsel
shall state in their opinion that they believe that they and the Managers are
justified in relying thereon.
(e) You shall have received on the Closing Date an opinion of
Marcus & Xxxxxxxx, special counsel for the Company and the TG Selling
Shareholders in connection with matters relating to Iowa law, dated the
Closing Date and addressed to you, as Lead Managers of the several Managers,
to the effect that:
(i) The Company is a corporation duly incorporated and validly
existing 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 Registration Statement and the
Prospectuses, and is duly qualified and in good standing in all other
jurisdictions in which
36
the nature of the business transacted or property owned or leased by it makes
such qualification necessary, except where the failure so to qualify or be in
good standing would not have, individually or in the aggregate, a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole;
(ii) (A) The Company has the corporate power and authority
to enter into the U.S. Underwriting Agreement and the International
Underwriting Agreement and to issue, sell and deliver the Shares to be sold by
it to the U.S. Underwriters and Managers as provided therein, and (B) each of
the U.S. Underwriting Agreement and the International Underwriting Agreement
have been duly authorized, executed and delivered by the Company and is a
legal, valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except that (1) enforceability 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, (2) 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 (3) rights to indemnity and
contribution thereunder may be limited by Federal or state securities laws or
the public policy underlying such laws;
(iii) The authorized capital stock of the Company is as set
forth under the caption "Capitalization" in the Prospectuses; and the
authorized capital stock of the Company conforms in all material respects as
to legal matters to the description thereof contained in the Prospectuses
under the caption "Description of Capital Stock";
(iv) All the shares of capital stock of the Company outstanding
prior to the issuance of the Shares to be issued and sold by the Company
pursuant to the U.S. Underwriting Agreement and the International Underwriting
Agreement (including the Shares to be sold by the Gratzons, Xxxxxxxx Xxxx, Xxxxx
Xxxxx and Xxxxx Xxxxxx) have been duly authorized and validly issued, are fully
paid, nonassessable and free of preemptive or similar rights;
(v) Each of the Warrants has been duly and validly authorized
by the Company and constitutes the valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms, except as
(i) the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to rights of creditors and other obligees generally and (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.
37
(vi) The Shares to be issued and sold to the U.S. Underwriters
and Managers by the Company under the U.S. Underwriting Agreement and the
International Underwriting Agreement have been duly authorized and when issued
and delivered to the U.S. Underwriters and Managers against payment therefor in
accordance with the terms of the U.S. Underwriting Agreement and the
International Underwriting Agreement, will be (A) duly authorized and validly
issued, fully paid and nonassessable and (B) free of any preemptive or similar
rights; and
(vii) The Additional Shares and the Additional International
Shares to be issued and sold to the U.S. Underwriters and Managers by the
Greenwich Street Affiliates under the U.S. Underwriting Agreement and the
International Underwriting Agreement have duly authorized for issuance upon
exercise of the Warrants and, when issued and delivered to the Greenwich Street
Affiliates by the Company upon exercise of the Warrants against payment of the
exercise price therefor, will be validly issued, fully paid and non-assessable
and free of any preemptive or similar rights.
(viii) The form of certificates for the Shares conforms to
the requirements of the Business Corporation Act of the State of Iowa.
(f) You shall have received on the Closing Date opinions of Xxxxx &
XxXxxxxx (Australia) in the form attached hereto as exhibit , Xxxxx &
XxXxxxxx (Hong Kong) in the form attached hereto as exhibit , Xxxxx &
XxXxxxxx (Germany) in the form attached hereto as exhibit , Coudert Freres
(France) in the form attached hereto as exhibit , TMI Associates (Japan) in
the form attached hereto as exhibit , Stibbe Simont Xxxxxxx Duhot (The
Netherlands) in the form attached hereto as exhibit ,[ ] (United
Kingdom) in the form attached hereto as exhibit , [ ] (Sweden) in
the form attached hereto as exhibit and [ ] (Switzerland) in the
form attached hereto as exhibit , special regulatory counsel for the Company
in each of the jurisdictions described above, each dated the Closing Date and
addressed to you, as Lead Managers of the several Managers:
(g) You shall have received on the Closing Date an opinion from
Xxxxxxx Xxxxxxxx, Esq., Corporate Counsel for the Company, dated the Closing
Date and addressed to you, as Lead Managers of the several Managers, to the
effect that:
(i) Each of the Subsidiaries 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 Registration
Statement and the Prospectuses; and all the outstanding shares of capital stock
of each of the Subsidiaries that is a corporation have been duly authorized and
validly issued, are fully paid and nonassessable,
38
and, except for director's qualifying shares and as otherwise disclosed in the
Prospectuses, are 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; and
(ii) None of the Company or its Subsidiaries is (A) in violation
of its certificate or articles of incorporation or bylaws, or other
organizational documents or (B) to the best knowledge of such counsel after
reasonable inquiry, in default in any material respect in the performance of any
material obligation, agreement or condition contained in any bond, debenture,
note or other evidence of indebtedness, except as may be disclosed in the
Prospectuses or where any such default or defaults in the aggregate would not
have a Material Adverse Effect.
In addition, the Company's Corporate Counsel shall state that although
Counsel has not undertaken, except as otherwise indicated in its opinion, to
determine independently, and does not assume any responsibility for, the
accuracy, completeness or fairness of the statements in the Registration
Statement, such counsel has participated in the preparation of the
Registration Statement and the Prospectuses, including general review and
discussion of the contents thereof but has made no independent check or
verification thereof (relying as to materiality to a large extent upon the
opinions of officers and other representatives of the Company), and no facts
have come to the attention of such Counsel that would lead him to believe that
the Registration Statement at the time the Registration Statement became
effective, or the Prospectuses, as of their respective dates and as of the
Closing Date or the Option Closing Date, as the case may be, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated in the Prospectuses or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading or that any amendment or supplement to the Prospectuses, as of its
respective date, and as of the Closing Date or the Option Closing Date, as the
case may be, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated in the Prospectuses or necessary
in order to make the statements in the Prospectuses, in the light of the
circumstances under which they were made, not misleading (it being understood
that the Company's Corporate Counsel need express no statement with respect to
the financial statements, schedules, pro forma financial statements and the
notes thereto and other financial and statistical data included in or omitted
from the Registration Statement or the Prospectuses).
In rendering such opinion as aforesaid, the Company's Corporate
Counsel may, as to factual matters, rely upon written certificates or
statements of officers of the Company and the Subsidiaries and, as to matters
of law, may rely upon an opinion or opinions, each dated the Closing Date, of
other counsel retained by
39
him or the Company as to laws of any jurisdiction other than the United States
or the State of Iowa provided that (1) each such local counsel is reasonably
acceptable to the Lead Managers, (2) such reliance is expressly authorized by
each opinion so relied upon and a copy of each such opinion is delivered to
the Representatives and is, in form and substance reasonably satisfactory to
them and their counsel, and (3) Xxxxxxx Xxxxxxxx shall state in his opinion
that he believes that they and the Managers are justified in relying thereon.
(h) You shall have received on the Closing Date an opinion of
Xxxxxxxxxx & Xxxxx LLP, counsel for the U.S. Underwriters, dated the Closing
Date, with respect to the matters referred to in clauses (c)(i), (c)(iv),
(c)(ix)(B), the paragraph immediately following clause (xvii) of the foregoing
paragraph (c) and (d)(iv)(B) and such other related matters as you may
request.
(i) You shall have received letters addressed to you, as Lead
Managers of the several Managers, 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 you.
(j) (1) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (2) there
shall not have been any material 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 Registration Statement or the Prospectuses (or any
amendment or supplement thereto); (3) there shall not have been, since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses (or any amendment or Supplement thereto),
except as may otherwise be stated in the Registration Statement and
Prospectuses (or any amendment or supplement thereto), any material adverse
change in the condition (financial or other), business, prospects, properties,
net worth or results of operations of the Company and the Subsidiaries taken
as a whole; and (4) all the representations and warranties of the Company
contained in this Agreement shall be true and correct 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 you shall have received a certificate, dated the Closing Date and
signed by the chief executive officer and the chief financial officer of the
Company (or such other officers as are acceptable to you), to the effect set
forth in this Section 10(j) and in Section 10(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
40
agreements herein contained and required to be performed or complied with by
it hereunder at or prior to the Closing Date.
(l) All the representations and warranties of the Selling
Shareholders contained in this Agreement shall be true and correct, 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 you shall have received a certificate, dated the Closing
Date and signed by or on behalf of the Selling Shareholders to the effect set
forth in this Section 10(l) and in Section 10(m) hereof.
(m) The Selling Shareholders shall not have failed at or prior to
the Closing Date to have performed or complied with any of their agreements
contained in this Agreement or the International Underwriting Agreement and
required to be performed or complied with by them at or prior to the Closing
Date.
(n) The Sellers shall have furnished or caused to be furnished to
you such further certificates and documents as you shall have reasonably
requested.
(o) The Common Stock shall have been listed or approved for listing
subject to notice of issuance, on the Nasdaq National Market.
(p) The closing under the U.S. Underwriting Agreement shall have
occurred or shall be occurring concurrently with the closing hereunder on the
Closing Date.
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 you and your counsel.
Any certificate or document signed by any officer of the Company or any
Attorney-in-Fact or any Selling Shareholder and delivered to you, as Lead
Managers for the several Managers, or to counsel for the Managers, shall be
deemed a representation and warranty by the Company, the Selling Shareholders
or the particular Selling Shareholder, as the case may be, to each Manager as
to the statements made therein.
The several obligations of the Managers to purchase Additional Shares
hereunder are subject to the satisfaction on and as of the Option Closing
Date, if any, of the conditions set forth in this Section 10, except that, if
any Option Closing Date is other than the Closing Date, the certificates,
opinions and letters referred to in this Section 10 shall be dated the Option
Closing Date in question and the opinions or letters called for by paragraphs
(c), (d), (e), (f), (g), (h) and (i) shall be revised to reflect the sale of
Additional Shares.
41
11. EXPENSES. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by the
Sellers of their obligations hereunder: (i) the preparation, printing or
reproduction, and filing with the Commission of the registration statement
(including financial statements and exhibits thereto), each of the Prepricing
Prospectuses, the Prospectuses, and each amendment or supplement to any of
them; (ii) the printing (or reproduction) and delivery (including postage, air
freight (or reproduction) charges and charges for counting and packaging) of
such copies of the registration statement, each International Prepricing
Prospectus, the International Prospectus 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 Shares; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares,
including any stamp taxes in connection with the original issuance and sale of
the Shares; (iv) the printing (or reproduction) and delivery of this
Agreement, the U.S. Underwriting Agreement, the Supplemental Agreement Among
U.S. Underwriters, the Agreement Among Managers, the Agreement Between U.S.
Underwriters and Managers, the International Selling Agreement, the Managers'
Questionnaire, the Blue Sky Memorandum and all other agreements, memoranda,
correspondence and other documents printed (or reproduced) and delivered in
connection with the offering of the Underwritten Shares; (v) the registration
of the Common Stock under the Exchange Act and the listing of the Shares on
the Nasdaq National Market; (vi) the registration or qualification of the
Shares for offer and sale under the securities laws of the several
jurisdictions as provided in Section 5(g) hereof (including the reasonable
fees, expenses and disbursements of counsel for the U.S. Underwriters and
Managers relating Underwriters relating to the preparation, printing or
reproduction, and delivery of the Blue Sky Memorandum and such registration
and qualification, if any, up to $ ); (vii) the filing fees and the
fees and expenses of counsel for the Underwriters in connection with any
filings required to be made with the National Association of Securities
Dealers, Inc. including the fees and expenses of any qualified independent
underwriter; (viii) the transportation and other expenses incurred by or on
behalf of representatives of the Company in connection with presentations to
prospective purchasers of the Shares; and (ix) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local
and special counsel) for the Company and the Selling Shareholders.
12. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become effective:
(i) upon the execution and delivery hereof by the parties hereto; or (ii) if, at
the time this Agreement is executed and delivered, it is necessary for the
registration statement or a post-effective amendment thereto to be declared
effective before the offering of the Shares may commence, when notification of
the effectiveness of the registration statement or such post-effective amendment
has been released by the Commission. Until such time as this Agreement shall
have become effective, it may be terminated by
42
the Company, by notifying you, or by you, as Lead Managers for the several
Managers, by notifying the Company and the Selling Shareholders.
If any one or more of the Managers shall fail or refuse to purchase
Shares which it or they are obligated to purchase hereunder on the Closing
Date, and the aggregate number of Shares which such defaulting Manager or
Managers are obligated but fail or refuse to purchase is not more than
one-tenth of the aggregate number of Shares which the Managers are obligated
to purchase on the Closing Date, each non-defaulting Manager shall be
obligated, severally, in the proportion which the number of Firm Shares set
forth opposite its name in Schedule I hereto bears to the aggregate number of
Firm Shares set forth opposite the names of all non-defaulting Managers or in
such other proportion as you may specify in accordance with Section 20 of the
Master Agreement Among Underwriters of Xxxxx Xxxxxx Inc., to purchase the
Shares which such defaulting Manager or Managers are obligated, but fail or
refuse, to purchase. If any one or more of the Managers shall fail or refuse
to purchase Shares which it or they are obligated to purchase on the Closing
Date and the aggregate number of Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares which the
Managers are obligated to purchase on the Closing Date and arrangements
satisfactory to you and the Company for the purchase of such Shares by one or
more non-defaulting Managers or other party or parties approved by you and the
Company are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Manager or the
Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under
this paragraph shall not relieve any defaulting Manager from liability in
respect of any such default of any such Manager under this Agreement. The
term "Manager" as used in this Agreement includes, for all purposes of this
Agreement, any party not listed in Schedule I hereto who, with your approval
and the approval of the Company, purchases Shares which a defaulting Manager
is obligated, but fails or refuses, to purchase.
Any notice under this Section 12 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
13. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Manager to the Company or any Selling Shareholder, by notice to the Company,
if prior to the Closing Date or the Option Closing Date, if any (if different
from the Closing Date and then only as to the Additional Shares), as the case
may be, (i) trading in securities generally on the New York Stock
43
Exchange, the 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 your
judgment, impracticable or inadvisable to commence or continue the offering of
the Shares at the offering price to the public set forth on the cover page of
the International Prospectus or to enforce contracts for the resale of the
Shares by the Managers.
Notice of such termination may be given by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.
14. INFORMATION FURNISHED BY THE MANAGERS. The statements set forth
in the last paragraph on the cover page, the stabilization legend on the
inside front cover page, and the statements in the first, second, fourth,
seventh, eighth, ninth, tenth, eleventh (as it relates to the Managers),
fourteenth and seventeenth paragraphs under the caption "Underwriting" in any
International Prepricing Prospectus and in the International Prospectus,
constitute the only information furnished by or on behalf of the Managers
through you as such information is referred to in Sections 7(b) and 9 hereof.
15. MISCELLANEOUS. Except as otherwise provided in Sections 5, 12
and 13 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Company, Xxxx Xxxxxxx or
Xxxxxxxx Xxxx at the office of the Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxx,
Xxxx 00000, Attention: Xxxx Xxxxxxx, Chairman; (ii) if to the Greenwich Street
Affiliates, to Xxxxxxx X. Xxxxx at Xxxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx Xxx
Xxxx, Xxx Xxxx 00000 or (iii) if to you, as Lead Managers for the several
Managers, care of 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 several
Managers, the Company, its directors and officers, and the other controlling
persons referred to in Section 9 hereof and the Selling Shareholders 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 any Manager of any of the Shares
in his status as such purchaser.
16. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed
by and construed in accordance with the laws of the State
44
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
among the Company, the Selling Shareholders and the several Managers.
Very truly yours,
TELEGROUP, INC.
By:
----------------------------
Name:
----------------------
Title:
----------------------
XXXX XXXXXXX
By:
----------------------------
Name:
----------------------
Title:
----------------------
XXXXXXX X. XXXXX-XXXXXXX
By:
----------------------------
Name:
----------------------
Title:
----------------------
XXXXXXXX X. XXXX
By:
----------------------------
Name:
----------------------
Title:
----------------------
XXXXXX XXXXX
By:
----------------------------
Name:
----------------------
Title:
----------------------
45
XXXXXX XXXXXX
By:
----------------------------
Name:
----------------------
Title:
----------------------
GREENWICH STREET CAPITAL
PARTNERS, L.P.
By:
----------------------------
Name:
----------------------
Title:
----------------------
GREENWICH STREET CAPITAL
OFFSHORE FUND, LTD.
By:
----------------------------
Name:
----------------------
Title:
----------------------
TRV EMPLOYEES FUND, L.P.
By:
----------------------------
Name:
----------------------
Title:
----------------------
THE TRAVELERS INSURANCE COMPANY
By:
----------------------------
Name:
----------------------
Title:
----------------------
THE TRAVELERS LIFE AND
ANNUITY COMPANY
By:
----------------------------
Name:
----------------------
Title:
----------------------
46
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Managers named in Schedule I
hereto.
XXXXX XXXXXX INC.
ALEX. XXXXX & SONS INCORPORATED
XXXXX & COMPANY
As Lead Managers for the Several Managers
By XXXXX XXXXXX INC.
By ...................................
Managing Director
47
SCHEDULE I
Telegroup, Inc.
Number of Number of
Underwriter Firm Shares Underwriter Firm Shares
----------- ------------ ----------- -----------
Xxxxx Xxxxxx Inc. ...
Alex. Xxxxx & Sons
Incorporated
Xxxxx & Company
-----------
Total
-----------
48
SCHEDULE II
Telegroup, Inc.
Number of
Selling Shareholders Additional Shares
--------------------- -----------------
Xx. Xxxx Xxxxxxx and Xxxxxxx X. Xxxxx-Xxxxxxx,
as joint tenants
Xx. Xxxxxxxx X. Xxxx
Mr. Xxxxxx Xxxxx
Mr. Xxxxxx Xxxxxx
Greenwich Street Capital Partners, L.P.
Greenwich Street Capital Offshore Fund, Ltd.
TRV Employees Fund, L.P.
The Travelers Insurance Company
The Travelers Life and Annuity Company
--------------
Total
--------------
49
