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EXHIBIT 1.2
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT is made and entered into as of
March 6, 1997 by and between American Communications Services, Inc., a Delaware
corporation (the "Company" or the "Indemnitor"), and Alex. Xxxxx & Sons
Incorporated ("Alex. Xxxxx"), on behalf of the Representatives (as defined
below).
W I T N E S S E T H:
WHEREAS, Alex. Xxxxx and Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation (together, the "Representatives") are involved in the
formation of a syndicate to be comprised of several underwriters (collectively,
the "Underwriters"), to purchase from the Indemnitor shares of the Indemnitor's
common stock, par value $.01 (the "Common Stock"), in connection with a
proposed public offering (the "Proposed Offering") which, if consummated, will
be reflected in an Underwriting Agreement that would be entered into by the
Indemnitor and the Representatives, on behalf of the Underwriters, on terms and
conditions satisfactory to the Representatives (the "Underwriting Agreement");
WHEREAS, in connection with the Proposed Offering, the
Indemnitor has prepared and filed with the Securities and Exchange Commission
("SEC") in accordance with the Securities Act of 1933, as amended, and the
rules and regulations of the SEC thereunder (collectively, the "Act"), a
registration statement on Form SB-2 (Registration No. 333-20867) (such
registration statement as amended at the time when it becomes effective under
the Act, including any post-effective amendments thereto, is hereinafter
referred to as the "Registration Statement");
WHEREAS, the Indemnitor has from time to time entered into
contracts and agreements with certain of its security holders pursuant to which
such security holders were or may have been granted the right to require
registration under the Act of shares of capital stock or other securities of
the Company because of the filing or effectiveness of the Registration
Statement and the consummation of the transactions contemplated by the
Underwriting Agreement (such rights are hereinafter referred to as
"Registration Rights"); and
WHEREAS, as a condition to its proceeding with the Proposed
Offering and its providing advisory services to the Company in connection with
the Proposed Offering, Alex. Xxxxx has requested the Indemnitor to agree, and
the Indemnitor has agreed, to enter into this Agreement;
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NOW, THEREFORE, in consideration of the promises and the
mutual covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Indemnification by the Indemnitor; Reimbursement of Expenses. The
Company will indemnify and hold harmless Alex. Xxxxx, its affiliates, and the
respective directors, officers, agents and employees of Alex. Xxxxx and its
affiliates, and each of the Underwriters and the respective directors,
officers, agents and affiliates of each of the Underwriters (collectively, the
"Indemnified Persons"), from and against any losses, claims, damages,
judgments, assessments, costs and other liabilities (collectively
"Liabilities"), and will reimburse each Indemnified Person for all fees and
expenses (including the reasonable fees and expenses of counsel) (collectively,
"Expenses") as they are incurred in investigating, preparing, pursuing or
defending any claim, action, proceeding or investigation, whether or not in
connection with pending or threatened litigation and whether or not any
Indemnified Person is a party (collectively, "Actions"), arising out of,
relating to or in connection with, directly or indirectly, (i) Alex. Xxxxx'x
performance of services to the Company in connection with the preparation for,
or consummation of, the Proposed Offering, including the performance of such
services as are customary for managing underwriters of underwritten public
offerings of securities; (ii) any of the Registration Rights; and (iii) any
litigation or other legal, administrative or arbitrative proceeding between
Xxxxxxx X. Xxxxx ("Xxxxx") and the Indemnitor, or commenced, or threatened to
be commenced, by Xxxxx against Alex. Xxxxx and/or the Underwriters regarding,
arising from or relating to, directly or indirectly, his rights or obligations
with respect to any Registration Rights or under that certain Third Amended and
Restated Employment Agreement dated as of June 26, 1995, between the Company
and Xxxxx, or under any other oral or written agreement or arrangement between
the Company and Xxxxx (the "Xxxxx Matter") (collectively, the "Indemnifiable
Matters"); provided, however, that the Company will not be responsible for any
Liabilities or Expenses of any Indemnified Person that are determined by a
judgment of a court of competent jurisdiction which is no longer subject to
appeal or further review to have resulted solely from such Indemnified Person's
gross negligence or willful misconduct. The Company also agrees to reimburse
each Indemnified Person for all Expenses as they are incurred in connection
with enforcing such Indemnified Person's rights under this Agreement.
2. Indemnification Procedures. Upon receipt by an Indemnified
Person of actual notice of an Action against such Indemnified Person with
respect to which indemnity may be sought under this Agreement, such Indemnified
Person shall promptly notify the Indemnitor in writing; provided that failure
so to notify the
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Indemnitor shall not relieve the Indemnitor from any liability which the
Indemnitor may have on account of this indemnity or otherwise, except to the
extent the Indemnitor shall have been materially prejudiced by such failure.
The Indemnitor shall, if requested by Alex. Xxxxx or any such other Indemnified
Person, assume the defense of any such Action including the employment of
counsel reasonably satisfactory to Alex. Xxxxx or any such other Indemnified
Person. Any Indemnified Person shall have the right to employ separate counsel
in any such Action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person
unless: (i) the Company has failed promptly to assume the defense and employ
counsel or (ii) the named parties to any such Action (including any impleaded
parties) include such Indemnified Person and the Indemnitor, and such
Indemnified Person shall have been advised by counsel that there may be one or
more legal defenses available to it which are different from or in addition to
those available to the Indemnitor; provided that the Indemnitor shall not in
such event be responsible hereunder for the fees and expenses of more than one
firm of separate counsel in connection with any Action in the same
jurisdiction, in addition to any local counsel. The Indemnitor shall not be
liable for any settlement of any Action effected without its written consent
(which shall not be unreasonably withheld). In addition, the Indemnitor will
not, without prior written consent of Alex. Xxxxx or any such other Indemnified
Person, settle, compromise or consent to the entry of any judgment in or
otherwise seek to terminate any pending or threatened Action in respect of
which indemnification or contribution may be sought hereunder (whether or not
any Indemnified Person is a party thereto) unless such settlement, compromise,
consent or termination includes an unconditional release of each such
Indemnified Person from any and all Liabilities arising out of such Action.
3. Contribution. In the event the foregoing indemnity is
unavailable to an Indemnified Person other than in accordance with this
Agreement, the Indemnitor shall contribute to the Liabilities and Expenses paid
or payable by such Indemnified Person in such proportion as is appropriate to
reflect (i) the relative benefits to the Indemnitor, on the one hand, and to
Alex. Xxxxx and the other Underwriters, on the other hand, of the matters
contemplated by the Proposed Offering or (ii) if the allocation provided by the
immediately preceding clause is not permitted by the applicable law, not only
such relative benefits but also the relative fault of the Indemnitor, on the
one hand, and Alex. Xxxxx and the other Underwriters, on the other hand, in
connection with the matters as to which such Liabilities or Expenses relate, as
well as any other relevant equitable considerations; provided that in no event
shall the Indemnitor contribute less than the amount necessary to ensure that
all Indemnified Persons, in the aggregate, are not liable for any Liabilities
and Expenses in excess of the amount of the underwriting discounts and
commissions actually received by Alex. Xxxxx and the other Underwriters in
connection with the Proposed Offering. For purposes of this paragraph, the
relative benefits to the Indemnitor, on
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the one hand, and to Alex. Xxxxx and the other Underwriters, on the other hand,
of the matters contemplated to be paid or received or to be in the same
proportion as (a) the total value to be received or contemplated to be received
by the Indemnitor in the Proposed Offering, whether or not the Proposed
Offering is consummated, bears to (b) the underwriting discounts and
commissions paid or to be paid to Alex. Xxxxx and the other Underwriters in
connection with the Proposed Offering and in accordance with the Underwriting
Agreement.
4. Expense Reimbursement. In addition to any rights of an
Indemnified Person under Section 1 hereof, the Company will reimburse Alex.
Xxxxx for all Expenses, as incurred by Alex. Xxxxx, in connection with Alex.
Xxxxx'x providing any services to the Company at the Company's or its counsel's
request in connection with, related to or arising from, directly or indirectly,
the Xxxxx Matter, including, without limitation, Alex. Xxxxx'x issuing an
"underwriters' cut-back" or similar letter, executing any affidavit or similar
document or providing testimony (whether in trial, deposition or otherwise),
provided, that Alex. Xxxxx'x per diem rate for the provision of any such
testimony shall be as follows: Managing Directors, $4,500; Principals, $3,500;
Vice Presidents, $2,500; and Associates, $2,000. To the extent Alex. Xxxxx is
entitled to be reimbursed for any Expenses under this Section 4, Alex. Xxxxx
will provide the Company written notice of such Expenses, which notice shall
contain a reasonably itemized list of the Expenses incurred by Alex. Xxxxx, and
promptly after receiving such notice, the Company shall reimburse Alex. Xxxxx
for such Expenses.
5. Non-exclusivity. The rights of the Indemnified Persons
hereunder shall be in addition to any other rights, claims or remedies the
Indemnified Persons may have against the Indemnitor under the Underwriting
Agreement and any other agreement with the Indemnitor or at common law or by
statute or rule.
6. Partial Indemnity. If any Indemnified Person is entitled
under any provision of this Agreement to indemnification by the Indemnitor for
some or a portion of Liabilities and Expenses but not, however, for all of the
total amount thereof, the Indemnitor shall nevertheless indemnify such
Indemnified Person for the portion thereof to which such Indemnified Person is
entitled.
7. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
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8. GOVERNING LAW SUBMISSION TO JURISDICTION; SELECTION OF FORUM.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK. EACH PARTY AGREES THAT IT SHALL BRING ANY ACTION OR
PROCEEDING IN RESPECT OF ANY CLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT,
WHETHER IN TORT OR CONTRACT OR AT LAW OR IN EQUITY, EXCLUSIVELY IN THE UNITED
STATED DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK (THE "CHOSEN
COURT") AND (I) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE CHOSEN
COURT, (II) WAIVES ANY OBJECTION TO LAYING VENUE IN ANY SUCH ACTION OR
PROCEEDING IN THE CHOSEN COURT, (III) WAIVES ANY OBJECTION THAT THE CHOSEN
COURT IS AN INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION OVER ANY PARTY
HERETO AND (IV) AGREES THAT SERVICE OR PROCESS UPON SUCH PARTY IN ANY SUCH
ACTION OR PROCEEDING SHALL BE EFFECTIVE IF NOTICE IS GIVEN IN ACCORDANCE WITH
SECTION 9 OF THIS AGREEMENT.
9. Notices. Any notice or other communication required to be
made pursuant to the provisions of this Agreement shall be sufficiently given
or made if in writing and either delivered in person with receipt acknowledged,
sent by recognized overnight courier or sent by registered or certified mail,
return receipt requested, postage prepaid, or by telecopy and confirmed by
telecopy answerback, addressed as follows:
If to the Indemnitor, at:
American Communications Services, Inc.
000 Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxx Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
Telecopier No.: (000) 000-0000
If to Alex. Xxxxx or any Underwriter, at:
Alex. Xxxxx & Sons Incorporated
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Syndicate Department
Telecopier No.: (000) 000-0000
with a copy to:
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Xxxxxx XxXxxxxx, Esq.
Alex. Xxxxx & Sons Incorporated
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Telecopier No.: (000) 000-0000
or at such other address or telecopier number as may be substituted by notice
given as herein provided. The giving of any notice required hereunder may be
waived in writing by the party entitled to receive such notice. Every notice
or other communication hereunder shall be deemed to have been duly given or
served on the date on which personally delivered, with receipt acknowledged,
the next business day after delivery to a recognized overnight courier or five
(5) days after the same shall have been deposited in the mail.
10. Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
11. No Commitment to Proceed with Proposed Offering. The Company
understands that Alex. Xxxxx is relying on the agreements and undertakings of
the Company contained herein in proceeding with the Proposed Offering.
However, the execution and delivery of this Agreement shall in no event commit
or obligate Alex. Xxxxx or any other Underwriter to proceed with the Proposed
Offering unless and until the Underwriting Agreement is executed. The terms of
this paragraph shall survive any filing of a registration statement, or any
amendment thereto, with the SEC.
12. Successors and Assigns; Beneficiaries. This Agreement shall
be binding upon the parties hereto and their respective successors and assigns
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Each of the Representatives and Underwriters and their
respective successors and assigns shall have third party beneficiary rights, as
Indemnified Parties, under this Agreement, and shall be entitled to enforce all
of their rights as Indemnified Parties hereunder as if each of these were party
to this Agreement.
13. Amendment; Waiver; Termination. No amendment, modification,
termination or cancellation of this Agreement shall be effective unless made in
a writing signed by each of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver. The reimbursement, indemnity and contribution
obligations of the Indemnitor set forth in this Agreement shall apply to any
amendment or modification of this Agreement and shall remain in full force and
effect after the execution and delivery of the
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Underwriting Agreement and regardless of whether or not the Proposed Offering
is consummated.
14. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be considered an original, but all of which
taken together shall constitute one and the same Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date and year first above written.
American Communications Services, Inc.
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: President/CEO
Alex. Xxxxx & Sons Incorporated
as a Representative of the
several Underwriters
By: Alex. Xxxxx & Sons Incorporated
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
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