FOCAL COMMUNICATIONS CORPORATION
9,000,000 Shares
Common Stock
($0.01 par value)
Underwriting Agreement
New York, New York
July , 1999
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Xxxxxx Xxxxxxx Xxxx Xxxxxx
Credit Suisse First Boston Corporation
DLJdirect Inc.
As Representatives of the several Underwriters,
c/o Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Focal Communications Corporation, a corporation organized under the laws of
Delaware (the "Company"), proposes to sell to the several underwriters named in
Schedule I hereto (the "Underwriters"), for whom you (the "Representatives") are
acting as representatives, 9,000,000 shares of Common Stock, $0.01 par value
("Common Stock") of the Company (said shares to be issued and sold by the
Company being hereinafter called the "Underwritten Securities"). The Company
also proposes to grant to the Underwriters an option to purchase up to 1,350,000
additional shares of Common Stock to cover over-allotments (the "Option
Securities"; the Option Securities, together with the Underwritten Securities,
being hereinafter called the "Securities"). To the extent there are no
additional Underwriters listed on Schedule I other than you, the term
Representatives as used herein shall mean you, as Underwriters, and the terms
Representatives and Underwriters shall mean either the singular or plural as the
context requires. Certain terms used herein are defined in Section 17 hereof.
As part of the offering contemplated by this Agreement, Xxxxxxx Xxxxx
Xxxxxx Inc. ("Xxxxxxx Xxxxx Barney") has agreed to reserve out of the Securities
set forth opposite its name on Schedule II to this Agreement, up to shares
for sale to the Company's employees, officers, and directors and other parties
associated with the Company and its affiliates or employees
(collectively, "Participants"), as set forth in the Prospectus under the heading
"Underwriting" (the "Directed Share Program"). The Securities to be sold by
Xxxxxxx Xxxxx Xxxxxx pursuant to the Directed Share Program (the "Directed
Shares") will be sold by Xxxxxxx Xxxxx Barney pursuant to this Agreement at the
public offering price. Any Directed Shares not orally confirmed for purchase by
any Participants by the end of the business day on which this Agreement is
executed will be offered to the public by Xxxxxxx Xxxxx Xxxxxx as set forth in
the Prospectus.
1. Representations and Warranties. The Company represents and warrants
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to, and agrees with, each Underwriter as set forth below in this Section 1 .
(a) The Company has prepared and filed with the Commission a
registration statement (Reg. No. 333-77995) on Form S-1, including a
related Preliminary Prospectus, for registration under the Act of the
offering and sale of the Securities. The Company may have filed one or more
amendments thereto, including a related Preliminary Prospectus, each of
which has previously been furnished to you. The Company will next file with
the Commission either (1) prior to the Effective Date of such registration
statement, a further amendment to such registration statement (including
the form of final prospectus) or (2) after the Effective Date of such
registration statement, a final prospectus in accordance with Rules 430A
and 424(b). In the case of clause (2), the Company has included in such
registration statement, as amended at the Effective Date, all information
(other than Rule 430A Information) required by the Act and the rules
thereunder to be included in such registration statement and the
Prospectus. As filed, such amendment and form of final prospectus, or such
final prospectus, shall contain all Rule 430A Information, together with
all other such required information, and, except to the extent the
Representatives shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the Execution
Time or, to the extent not completed at the Execution Time, shall contain
only such specific additional information and other changes (beyond that
contained in the latest Preliminary Prospectus) as the Company has advised
you, prior to the Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did or will, and
when the Prospectus is first filed (if required) in accordance with Rule
424(b) and on the Closing Date (as defined herein) and on any date on which
Option Securities are purchased, if such date is not the Closing Date (a
"settlement date"), the Prospectus (and any supplements thereto) will,
comply in all material respects with the applicable requirements of the Act
and the rules thereunder; on the Effective Date and at the Execution Time,
the Registration Statement did not or will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), will not, and on the date of any filing pursuant
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to Rule 424(b) and on the Closing Date and any settlement date, the
Prospectus (together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
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however, that the Company makes no representations or warranties as to the
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information contained in or omitted from the Registration Statement or the
Prospectus (or any supplement thereto) in reliance upon and in conformity
with information furnished in writing to the Company by or on behalf of any
Underwriter through the Representatives specifically for inclusion in the
Registration Statement or the Prospectus (or any supplement thereto), it
being understood and agreed that the only such information is that
described as such in Section 8(b) hereof.
(c) Each of the Company and its subsidiaries (as hereinafter defined)
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is chartered or
organized with full corporate power and authority to own or lease, as the
case may be, and to operate its properties and conduct its business as
described in the Prospectus, and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification.
(d) All the outstanding shares of capital stock of each Subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Prospectus, all
outstanding shares of capital stock of the Subsidiaries are owned by the
Company either directly or through wholly owned subsidiaries free and clear
of any perfected security interest or any other security interests, claims,
liens or encumbrances.
(e) The Company's authorized equity capitalization is as set forth in
the Prospectus; the capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectus; the
outstanding shares of Common Stock have been duly and validly authorized
and issued and are fully paid and nonassessable; the Securities have been
duly and validly authorized, and, when issued and delivered to and paid for
by the Underwriters pursuant to this Agreement, will be fully paid and
nonassessable; the Securities are duly listed, and admitted and authorized
for trading, subject to official notice of issuance, on the Nasdaq National
Market; the certificates for the Securities are in valid and sufficient
form; the holders of outstanding shares of capital stock of the Company are
not entitled to preemptive or other rights to subscribe for the Securities;
and, except as set forth in the Prospectus, no options, warrants or other
rights to purchase, agreements or other obligations to issue, or rights to
convert any obligations into or exchange any securities for, shares of
capital stock of or ownership interests in the Company are outstanding.
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(f) There is no franchise, contract or other document of a character
required to be described in the Registration Statement or Prospectus, or to
be filed as an exhibit thereto, which is not described or filed as
required.
(g) The statements in the Prospectus under the headings "Risk
Factors--Reciprocal Compensation--Reciprocal compensation represents a
substantial portion of our revenues; a greater than expected decrease in
reciprocal compensation revenues could have a material adverse effect on
us", "Risk Factors--Regulation--We are subject to significant regulation
that could change in a manners adverse to us", "Risk Factors--Relationship
with ILECs--Our reliance on ILEC interconnection and changes to our
agreements with the ILECs could have a material adverse effect on us",
"United States Federal Tax Considerations for Non-U.S. Holders of Common
Stock", "Business--Regulation" and "Business--Legal and Administrative
Proceedings" fairly and accurately summarize the matters therein described.
(h) This Agreement has been duly authorized, executed and delivered by
the Company.
(i) The Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as defined
in the Investment Company Act of 1940, as amended.
(j) No consent, approval, authorization, filing with, registration,
qualification, license, permit or order of any court or governmental agency
or body is required in connection with the execution, delivery and
performance by the Company of this Agreement, the issuance and sale of the
Securities or the consummation of the other transactions contemplated
herein, except such as have been obtained under the Act, or pursuant to
other applicable requirements, and such as may be required under the blue
sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated herein and in the Prospectus.
(k) Neither the execution, delivery or performance of this Agreement,
the issue and sale of the Securities, the consummation of any other of the
transactions herein contemplated nor the fulfillment of the terms hereof
will conflict with, result in a breach or violation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, (i) the charter or by-laws of the
Company or any of its subsidiaries, (ii) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement or
other agreement, obligation, condition, covenant or instrument to which the
Company or any of its subsidiaries is a party or bound or to which its or
their property is subject, or (iii) any statute, law, rule,
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regulation, ordinance, judgment, requirement, order or decree applicable to
the Company or any of its subsidiaries, including, without limitation, the
Communications Act of 1934, as amended, including the Telecommunications
Act of 1996, as amended (collectively referred to as the
"Telecommunications Act"), and the rules and regulations of the Federal
Communications Commission (the "FCC"), of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or any of its subsidiaries or any of
its or their assets or properties.
(l) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
(m) The consolidated historical financial statements and schedules of
the Company and its consolidated subsidiaries included in the Prospectus
and the Registration Statement present fairly in all material respects the
financial condition, results of operations and cash flows of the Company as
of the dates and for the periods indicated, comply as to form with the
applicable accounting requirements of the Act and have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as otherwise noted
therein). The selected financial data set forth under the caption "Selected
Consolidated Financial and Operating Data" in the Prospectus and
Registration Statement fairly present, on the basis stated in the
Prospectus and the Registration Statement, the information included
therein.
(n) There is (i) no action, suit, investigation or proceeding by or
before any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries or its or their
property pending or, to the best knowledge of the Company, threatened or
(ii) no local, state, or federal law, statute, ordinance, regulation,
requirement, judgment or court decree (including without limitation, the
Telecommunications Act and the rules and regulations of the FCC) or order
that has been adopted, enacted or issued by any governmental agency or to
the best of the Company's knowledge, that has been proposed by any
governmental body, that (a) could reasonably be expected to have a material
adverse effect on the performance of this Agreement or the consummation of
any of the transactions contemplated hereby or (b) could reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto).
(o) Each of the Company and its subsidiaries (i) owns or leases all
such properties as are necessary to the conduct of its operations as
presently conducted, (ii) has good and marketable title to all of the
properties and assets
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described in the Prospectus as owned by it, free and clear of all liens,
charges, encumbrances and restrictions, except such as are described in the
Prospectus or as would not have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, and (iii) has
peaceful and undisturbed possession under all leases to which it is a party
as lessee.
(p) Neither the Company nor any of its subsidiaries is in violation of
or default under (i) any provision of its charter or bylaws, (ii) the terms
of any indenture, contract, lease, mortgage, deed of trust, note agreement,
loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or bound or to which its property is
subject, or (iii) any statute, law, rule, regulation, judgment, order or
decree of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the Company or
such subsidiary or any of its properties, as applicable.
(q) Xxxxxx Xxxxxxxx LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and delivered
their report with respect to the audited consolidated financial statements
and schedules included in the Prospectus, are independent public
accountants with respect to the Company within the meaning of the Act and
the applicable published rules and regulations thereunder.
(r) There are no transfer taxes or other similar fees or charges under
federal law or the laws of any state, or any political subdivision thereof,
required to be paid in connection with the execution and delivery of this
Agreement or the issuance by the Company or sale by the Company of the
Securities.
(s) The Company has filed in a timely manner all foreign, federal,
state and local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file
would not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto)) and
has paid all taxes required to be paid by it and any other assessment, fine
or penalty levied against it, to the extent that any of the foregoing is
due and payable, except for any such assessment, fine or penalty that is
currently being contested in good faith or as would not have a material
adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its subsidiaries, taken
as a whole, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
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(t) No labor problem or dispute with the employees of the Company or
any of its subsidiaries exists or is threatened or imminent (including,
without limitation, any unfair labor practice complaint against the Company
or any of its subsidiaries before the National Labor Relations Board, any
state or local labor relations board or any foreign labor relations board),
and the Company is not aware of any existing or imminent labor disturbance
by the employees of any of its or its subsidiaries' principal suppliers,
contractors or customers, that could have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(u) The Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; all policies of insurance insuring the Company or any of its
subsidiaries or their respective businesses, assets, employees, officers
and directors are in full force and effect; the Company and its
subsidiaries are in compliance with the terms of such policies and
instruments in all material respects; and there are no claims by the
Company or any of its subsidiaries under any such policy or instrument as
to which any insurance company is denying liability or defending under a
reservation of rights clause; neither the Company nor any such subsidiary
has been refused any insurance coverage sought or applied for; and neither
the Company nor any such subsidiary has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in
the Prospectus (exclusive of any supplement thereto).
(v) No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the
Company any loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary's property or assets to the Company or
any other subsidiary of the Company, except as described in or contemplated
by the Prospectus.
(w) The Company and its subsidiaries possess all licenses,
certificates, permits, authorizations approvals, franchises and other
rights from, and has made all declarations and filings (including but not
limited to tariffs and annual filing with the appropriate federal, state,
local or foreign regulatory authorities
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("Authorizations") (including, without limitation, the FCC) necessary to
conduct their respective businesses as presently conducted by them, and
neither the Company nor any such subsidiary has any reason to believe that
any regulatory authority is considering limiting, modifying, suspending or
revoking any such certificate, authorization or permit which, except to the
extent that, if the subject of an unfavorable decision, ruling or finding,
such action or actions, single or in the aggregate, would not have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in
the Prospectus (exclusive of any supplement thereto). All such licenses,
certificates, permits, authorizations, if approvals, franchises and other
rights are valid and in full force and effect, and each of the Company and
its subsidiaries is in compliance with the terms and conditions thereof and
with the rules and regulations of regulatory bodies having jurisdiction
with respect thereto.
(x) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(y) The Company has not taken, directly or indirectly, any action
designed to or which has constituted or which might reasonably be expected
to cause or result, under the Exchange Act or otherwise, in stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities. The Company has not taken nor will it
take, directly or indirectly, any action prohibited by Regulation M under
the Exchange Act, in connection with the offering of the Securities.
(z) The Company and its subsidiaries are (i) in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received and are in compliance with all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) have
not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or
toxic substances or wastes, pollutants or contaminants, except where such
non-
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compliance with Environmental Laws, failure to receive required permits,
licenses or other approvals, or liability would not, individually or in the
aggregate, have a material adverse change in the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto).
Except as set forth in the Prospectus, neither the Company nor any of the
subsidiaries has been named as a "potentially responsible party" under the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended.
(aa) In the ordinary course of its business, the Company periodically
reviews the effect of Environmental Laws on the business, operations and
properties of the Company and its subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including,
without limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws, or
any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties). On the basis of
such review, the Company has reasonably concluded that such associated
costs and liabilities would not, singly or in the aggregate, have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in
the Prospectus (exclusive of any supplement thereto).
(bb) Each of the Company and its subsidiaries has fulfilled its
obligations, if any, under the minimum funding standards of Xxxxxxx 000 xx
xxx Xxxxxx Xxxxxx Employee Retirement Income Security Act of 1974 ("ERISA")
and the regulations and published interpretations thereunder with respect
to each "plan" (as defined in Section 3(3) of ERISA and such regulations
and published interpretations) in which employees of the Company and its
subsidiaries are eligible to participate and each such plan is in
compliance in all material respects with the presently applicable
provisions of ERISA and such regulations and published interpretations. The
Company and its subsidiaries have not incurred any unpaid liability to the
Pension Benefit Guaranty Corporation (other than for the payment of
premiums in the ordinary course) or to any such plan under Title IV of
ERISA.
(cc) The subsidiaries listed on Annex A attached hereto (the
"Subsidiaries") are the only significant subsidiaries of the Company as
defined by Rule 1-02 of Regulation S-X.
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(dd) The Company and its subsidiaries own, possess, license or have
other rights to use, on reasonable terms, all patents, patent applications,
trade and service marks, trade and service xxxx registrations, trade names,
copyrights, licenses, inventions, trade secrets, technology, know-how and
other intellectual property (collectively, the "Intellectual Property")
necessary for the conduct of the Company's business as now conducted or as
proposed in the Prospectus to be conducted. Except as set forth in the
Prospectus, (a) to the Company's best knowledge, there are no rights of
third parties to any such Intellectual Property; (b) to the Company's best
knowledge, there is no material infringement by third parties of any such
Intellectual Property; (c) there is no pending or, to the Company's best
knowledge, threatened action, suit, proceeding or claim by others
challenging the Company's rights in or to any such Intellectual Property,
and the Company is unaware of any facts which would form a reasonable basis
for any such claim; (d) to the Company's best knowledge, there is no
pending or threatened action, suit, proceeding or claim by others
challenging the validity or scope of any such Intellectual Property, and
the Company is unaware of any facts which would form a reasonable basis for
any such claim; (e) there is no pending or, to the Company's best
knowledge, threatened action, suit, proceeding or claim by others that the
Company infringes or otherwise violates any patent, trademark, copyright,
trade secret or other proprietary rights of others, and the Company is
unaware of any other fact which would form a reasonable basis for any such
claim; (f) to the Company's best knowledge, there is no U.S. patent or
published U.S. patent application which contains claims that dominate or
may dominate any Intellectual Property described in the Prospectus as being
owned by or licensed to the Company or that interferes with the issued or
pending claims of any such Intellectual Property; and (g) there is no prior
art of which the Company is aware that may render any U.S. patent held by
the Company invalid or any U.S. patent application held by the Company
unpatentable which has not been disclosed to the U.S. Patent and Trademark
Office.
(ee) Except as disclosed in the Registration Statement and the
Prospectus, the Company (i) does not have any material lending or other
relationship with any bank or lending affiliate of any of the Initial
Purchasers and (ii) does not intend to use any of the proceeds from the
sale of the Securities hereunder to repay any outstanding debt owed to any
affiliate of any of the Underwriters.
(ff) The Company and its subsidiaries have operated in compliance
with, and are not in violation of, any and all statutes (including, but not
limited to, telecommunications laws), ordinances, rules, regulations,
judgments, orders, decisions or decrees of any court, regulatory body,
administrative body, administrative agency, governmental body, arbitrator
or other authority having jurisdiction over the Company or its subsidiaries
or any of their assets or properties, as applicable, including, but not
limited to, the FCC and any state
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authority having jurisdiction over the Company or its subsidiaries or over
their respective assets or properties except for such noncompliance or
violations which would not have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business.
(gg) The Company and its subsidiaries have filed with all
administrative bodies, administrative agencies, governmental bodies,
arbitrators or other authorities having jurisdiction over the Company or
its subsidiaries or its or their assets or properties all applications,
statements, reports, tariffs, information, forms, or any documents or
materials required under any statute, law, ordinances, rule, regulation,
judgment, order, decision or decree, except where the failure to file would
not have a material adverse effect on the Company's or any of its
subsidiaries' ability to provide its services as described in the
Prospectus. To the Company's best knowledge, such filings or submissions
were in compliance with applicable laws and regulations when filed or
submitted and no deficiencies have been asserted by any administrative
bodies, administrative agencies, governmental bodies, arbitrators or other
authorities with respect to such filings or submissions, except where the
deficiency is of such a nature that failure to cure any such deficiency
would not have a material adverse effect on the Company's ability to
provide its services as described in the Prospectus. To the Company's best
knowledge, the information contained in such filings or submissions was and
continues to be in all material respects, accurate, complete and up-to-date
at the time the filings or submissions were made.
(hh) The Company and its subsidiaries are implementing a
comprehensive, detailed program to analyze and address the risk that the
computer hardware and software used by them may be unable to recognize and
properly execute date-sensitive functions involving certain dates prior to
and any dates after December 31, 1999 (the "Year 2000 Problem"), and
reasonably believes that such risk will be remedied on a timely basis
without material expense and will not have a material adverse effect upon
the financial condition and results of operations of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business; and the Company believes, after due
inquiry, that each supplier, vendor, customer or financial service
organization used or serviced by the Company and its subsidiaries has
remedied or will remedy on a timely basis the Year 2000 Problem, except to
the extent that a failure to remedy by any such supplier, vendor, customer
or financial service organization would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole. The Company is in
compliance with the Commission's staff legal bulletin No. 5 dated January
12, 1998 related to Year 2000 compliance, as amended to date.
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(ii) The Company has filed in a timely manner each document or report
required to be filed by it pursuant to the Exchange Act and the rules and
regulations thereunder, each such document or report at the time it was
filed conformed to the requirements of the Exchange Act and the rules and
regulations thereunder; and none or such documents or reports contained an
untrue statement of any material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading.
(jj) Since the date of the most recent financial statements included
in the Prospectus, there has been no material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectus.
(kk) [The Company has not offered, or caused the Underwriters to
offer, Shares to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or supplier of the
Company to alter the customer's or supplier's level or type of business
with the Company, or (ii) a trade journalist or publication to write or
publish favorable information about the Company or its products.]
(ll) The Registration Statement, the Prospectus and any Preliminary
Prospectus comply, and any further amendments or supplements thereto will
comply, with any applicable laws or regulations of foreign jurisdictions in
which the Prospectus or any Preliminary Prospectus, as amended or
supplemented, if applicable, are distributed in connection with the
Directed Share Program, and no authorization, approval, consent, license,
order, registration or qualification of or with any government,
governmental instrumentality or court, other than such as have been
obtained, is necessary under the securities laws and regulations of foreign
jurisdictions in which the Directed Shares are offered outside the United
States.
Any certificate signed by any officer of the Company and delivered to the
Representatives or counsel for the Underwriters in connection with the offering
of the Securities shall be deemed a representation and warranty by the Company,
as to matters covered thereby, to each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
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reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at a purchase price of $ per
share, the amount of the Underwritten Securities set forth opposite such
Underwriter's name in Schedule I hereto.
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(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several Underwriters to purchase, severally and not jointly, up to
Option Securities at the same purchase price per share as the Underwriters shall
pay for the Underwritten Securities. Said option may be exercised only to cover
over-allotments in the sale of the Underwritten Securities by the Underwriters.
Said option may be exercised in whole or in part at any time on or before the
30th day after the date of the Prospectus upon written or telegraphic notice by
the Representatives to the Company setting forth the number of shares of the
Option Securities as to which the several Underwriters are exercising the option
and the settlement date. The number of Option Securities to be purchased by each
Underwriter shall be the same percentage of the total number of shares of the
Option Securities to be purchased by the several Underwriters as such
Underwriter is purchasing of the Underwritten Securities, subject to such
adjustments as you in your absolute discretion shall make to eliminate any
fractional shares.
3. Delivery and Payment. Delivery of and payment for the Underwritten
---------------------
Securities and the Option Securities (if the option provided for in Section 2(b)
hereof shall have been exercised on or before the third Business Day prior to
the Closing Date) shall be made at 10:00 a.m., New York City time, on July,
1999, or at such time on such later date not more than three Business Days after
the foregoing date as the Representatives shall designate, which date and time
may be postponed by agreement between the Representatives and the Company or as
provided in Section 9 hereof (such date and time of delivery and payment for the
Securities being herein called the "Closing Date"). Delivery of the Securities
shall be made to the Representatives for the respective accounts of the several
Underwriters against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to an account specified by
the Company. Delivery of the Underwritten Securities and the Option Securities
shall be made through the facilities of The Depository Trust Company unless the
Representatives shall otherwise instruct.
If the option provided for in Section 2(b) hereof is exercised after the
third Business Day prior to the Closing Date, the Company will deliver the
Option Securities (at the expense of the Company) to the Representatives, at 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx the date specified by the
Representatives (which shall be within three Business Days after exercise of
said option) for the respective accounts of the several Underwriters, against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Company by wire transfer payable in
same-day funds to an account specified by the Company. If settlement for the
Option Securities occurs after the Closing Date, the Company will deliver to the
Representatives on the settlement date for the Option Securities, and the
obligation of the Underwriters to purchase the Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date
13
the opinions, certificates and letters delivered on the Closing Date pursuant to
Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
-------------------------
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements. The Company agrees with the several Underwriters that:
-----------
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereof, to become effective. Prior to the termination of the offering of
the Securities, the Company will not file any amendment of the Registration
Statement or supplement to the Prospectus or any Rule 462(b) Registration
Statement unless the Company has furnished you a copy for your review prior
to filing and will not file any such proposed amendment or supplement to
which you reasonably object. Subject to the foregoing sentence, if the
Registration Statement has become or becomes effective pursuant to Rule
430A, or filing of the Prospectus is otherwise required under Rule 424(b),
the Company will cause the Prospectus, properly completed, and any
supplement thereto to be filed with the Commission pursuant to the
applicable paragraph of Rule 424(b) within the time period prescribed and
will provide evidence satisfactory to the Representatives of such timely
filing. The Company will promptly advise the Representatives (1) when the
Registration Statement, if not effective at the Execution Time, shall have
become effective, (2) when the Prospectus, and any supplement thereto,
shall have been filed (if required) with the Commission pursuant to Rule
424(b) or when any Rule 462(b) Registration Statement shall have been filed
with the Commission, (3) when, prior to termination of the offering of the
Securities, any amendment to the Registration Statement shall have been
filed or become effective, (4) of any request by the Commission or its
staff for any amendment of the Registration Statement, or any Rule 462(b)
Registration Statement, or for any supplement to the Prospectus or for any
additional information, (5) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (6) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the institution or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of
any such stop order or the suspension of any such qualification and, if
issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or if it
14
shall be necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act or the rules thereunder, the Company
promptly will (1) notify the Representatives of any such event, (2) prepare
and file with the Commission, subject to the second sentence of paragraph
(a) of this Section 5, an amendment or supplement which will correct such
statement or omission or effect such compliance; and (3) supply any
supplemented Prospectus to you in such quantities as you may reasonably
request.
(c) As soon as practicable, the Company will make generally available
to its security holders and to the Representatives an earnings statement or
statements of the Company and its subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) The Company will furnish to the Representatives and counsel for
the Underwriters signed copies of the Registration Statement (including
exhibits thereto) and to each other Underwriter a copy of the Registration
Statement (without exhibits thereto) and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the Act, as many
copies of each Preliminary Prospectus and the Prospectus and any supplement
thereto as the Representatives may reasonably request.
(e) The Company will arrange, if necessary, for the qualification of
the Securities for sale under the laws of such jurisdictions as the
Representatives may designate and will maintain such qualifications in
effect so long as required for the distribution of the Securities; 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 Securities, in any jurisdiction
where it is not now so subject.
(f) The Company will not, without the prior written consent of
Xxxxxxx Xxxxx Xxxxxx Inc., offer, sell, contract to sell, pledge, assign or
otherwise dispose of, (or enter into any transaction which is designed to,
or might reasonably be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement
or otherwise) by the Company or any affiliate of the Company or any person
in privity with the Company or any affiliate of the Company) directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange Act,
any other shares of Common Stock or any securities convertible into, or
exercisable, or exchangeable for, shares of Common Stock; or publicly
announce an intention to effect any such transaction, for a period of 180
days after the date of the Underwriting Agreement, provided, however, that
-------- -------
the
15
Company may issue and sell Common Stock pursuant to any employee stock
option plan, stock ownership plan or dividend reinvestment plan of the
Company in effect at the Execution Time and the Company may issue Common
Stock issuable upon the conversion of securities or the exercise of
warrants outstanding at the Execution Time.
(g) The Company will not take, directly or indirectly, any action
designed to or which has constituted or which might reasonably be expected
to cause or result, under the Exchange Act or otherwise, in stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
(h) The Company will use its best efforts to effect and maintain the
quotation of the Securities on the Nasdaq National Market and will file
with the Nasdaq National Market all documents and notices required by the
Nasdaq National Market of companies that have securities that are traded in
the over-the-counter market and quotations for which are reported by the
Nasdaq National Market.
(i) The Company will use the net proceeds received by it from the
sale of the Securities in the manner specified in the Prospectus under "Use
of Proceeds."
(j) In connection with the Directed Share Program, the Company will
ensure that the Directed Shares will be restricted to the extent required
by the National Association of Securities Dealers, Inc. (the "NASD") or the
NASD rules from sale, transfer, assignment, pledge or hypothecation for a
period of three months following the date of the effectiveness of the
Registration Statement. Xxxxxxx Xxxxx Barney will notify the Company as to
which Participants will need to be so restricted. The Company will direct
the transfer restrictions upon such period of time.
(k) The Company agrees to pay all fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Share Program
and stamp duties, similar taxes or duties or other taxes, if any, incurred
by the Underwriters in connection with the Directed Share Program.
(l) The Company covenants with Xxxxxxx Xxxxx Xxxxxx that the Company
will comply with all applicable securities and other applicable laws, rules
and regulations in each foreign jurisdiction in which the Directed Shares
are offered in connection with the Directed Share Program.
(m) The Company agrees to pay the costs and expenses relating to the
following matters: (i) the preparation, printing or reproduction and filing
with the Commission of the Registration Statement (including financial
statements and
16
exhibits thereto), each Preliminary Prospectus, the Prospectus, and each
amendment or supplement to any of them; (ii) the printing (or reproduction)
and delivery (including postage, air freight charges and charges for
counting and packaging) of such copies of the Registration Statement, each
Preliminary Prospectus, the Prospectus, and all amendments or supplements
to any of them, as may, in each case, be reasonably requested for use in
connection with the offering and sale of the Securities; (iii) the
preparation, printing, authentication, issuance and delivery of
certificates for the Securities, including any stamp or transfer taxes in
connection with the original issuance and sale of the Securities; (iv) the
printing (or reproduction) and delivery of this Agreement, any blue sky
memorandum and all other agreements or documents printed (or reproduced)
and delivered in connection with the offering of the Securities; (v) the
registration of the Securities under the Exchange Act and the listing of
the Securities on the Nasdaq National Market; (vi) any registration or
qualification of the Securities for offer and sale under the securities or
blue sky laws of the several states (including filing fees and the
reasonable fees and expenses of counsel for the Underwriters relating to
such registration and qualification); (vii) any filings required to be made
with the NASD (including filing fees and the reasonable fees and expenses
of counsel for the Underwriters relating to such filings); (viii) the
transportation and other expenses incurred by or on behalf of Company
representatives in connection with presentations to prospective purchasers
of the Securities; (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 (x) all other costs and expenses incident to the
performance by the Company of its obligations hereunder.
6. Conditions to the Obligations of the Underwriters. The obligations of
--------------------------------------------------
the Underwriters to purchase the Underwritten Securities and the Option
Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as of
the Execution Time, the Closing Date and any settlement date pursuant to Section
3 hereof, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Representatives agree in writing to a later
time, the Registration Statement will become effective not later than (i)
6:00 p.m. New York City time on the date of determination of the public
offering price, if such determination occurred at or prior to 3:00 p.m. New
York City time on such date or (ii) 9:30 a.m. on the Business Day following
the day on which the public offering price was determined, if such
determination occurred after 3:00 p.m. New York City time on such date; if
filing of the Prospectus, or any supplement thereto, is required pursuant
to Rule 424(b), the Prospectus, and any such supplement, will be filed in
the manner and within the time period required by
17
Rule 424(b); and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.
(b) All consents, approvals, authorizations, certificates or permits
required for the consummation of the transactions contemplated in this
Agreement and the Prospectus shall have been received.
(c) The Company shall have requested and caused Xxxxx, Day, Xxxxxx &
Xxxxx, counsel for the Company, to have furnished to the Representatives
their opinion, dated the Closing Date and addressed to the Representatives,
to the effect that:
(i) each of the Company and the Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own or lease, as
the case may be, and to operate its properties and conduct its
business as described in the Prospectus, and is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction which requires such qualification;
(ii) all the outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in
the Prospectus, all outstanding shares of capital stock of the
Subsidiaries are owned by the Company either directly or through
wholly owned subsidiaries free and clear of any perfected security
interest and, to the knowledge of such counsel, after due inquiry, any
other security interest, claim, lien or encumbrance;
(iii) the Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms in
all material respects to the description thereof contained in the
Prospectus; the outstanding shares of Common Stock have been duly and
validly authorized and issued and are fully paid and nonassessable; the
Securities have been duly and validly authorized, and, when issued and
delivered to and paid for by the Underwriters pursuant to this
Agreement, will be fully paid and nonassessable; the Securities are
duly listed, and admitted and authorized for trading, subject to
official notice of issuance, on the Nasdaq National Market; the
certificates for the Securities are in valid and sufficient form; the
holders of outstanding shares of capital stock of the Company are not
entitled to preemptive or other rights to subscribe for the Securities;
and, except as set forth in the Prospectus, no options, warrants
18
or other rights to purchase, agreements or other obligations to issue, or
rights to convert any obligations into or exchange any securities for,
shares of capital stock of or ownership interests in the Company are
outstanding;
(iv) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property of a character
required to be disclosed in the Registration Statement which is not
adequately disclosed in the Prospectus, and there is no franchise, contract
or other document of a character required to be described in the
Registration Statement or Prospectus, or to be filed as an exhibit thereto,
which is not described or filed as required;
(v) the statements included in the Prospectus under the headings
"United States Federal Tax Considerations for Non-U.S. Holders of Common
Stock" and "Business--Legal and Administrative Proceedings" fairly and
accurately summarize the matters therein described;
(vi) the Registration Statement has become effective under the Act;
any required filing of the Prospectus, and any supplements thereto,
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has been
issued, no proceedings for that purpose have been instituted or threatened
and the Registration Statement and the Prospectus (other than the financial
statements and other financial information contained therein, as to which
such counsel need express no opinion) comply as to form in all material
respects with the applicable requirements of the Act and the rules
thereunder; and such counsel has no reason to believe that on the Effective
Date or at the Execution Time the Registration Statement contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus as of its date and on the Closing
Date included or includes any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (in each case, other than the financial statements and other
financial information contained therein, as to which such counsel need
express no opinion);
(vii) this Agreement has been duly authorized, executed and delivered
by the Company;
19
(viii) the Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as
described in the Prospectus, will not be, an "investment company" as
defined in the Investment Company Act of 1940, as amended;
(ix) no consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection with the
transactions contemplated herein, except such as have been obtained under
the Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the
Securities by the Underwriters in the manner contemplated in this Agreement
and in the Prospectus and such other approvals (specified in such opinion)
as have been obtained;
(x) neither the issue and sale of the Securities, nor the consummation
of any other of the transactions herein contemplated nor the fulfillment of
the terms hereof will conflict with, result in a breach or violation of;
default under or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or its subsidiaries pursuant to, (i) the
charter or by-laws of the Company or its subsidiaries, (ii) the terms of
any indenture, contract, lease, mortgage, deed of trust, note agreement,
loan agreement or other agreement, obligation, condition, covenant or
instrument to which the Company or its subsidiaries is a party or bound or
to which its or their property is subject, or (iii) any statute, law, rule,
regulation, judgment, order or decree applicable to the Company or its
subsidiaries of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over
the Company or its subsidiaries or any of its or their properties; and
(xi) no holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
Illinois or the federal laws of the United States, to the extent they deem
proper and specified in such opinion, upon the opinion of other counsel of good
standing whom they believe to be reliable and who are satisfactory to counsel
for the Underwriters and (B) as to matters of fact, to the extent they deem
proper, on certificates of responsible officers of the Company and public
officials. References to the Prospectus in this paragraph (b) include any
supplements thereto at the Closing Date.
20
(d) The Company shall have requested and caused Xxxxxxx Berlin Shereff
Xxxxxxxx, LLP, regulatory counsel for the Company, to have furnished to the
Representatives their opinion, dated the Closing Date and addressed to the
Representatives on behalf of the Underwriters, to the effect that:
(i) The licenses, certificates, permits, registrations and
authorizations (the "Authorizations") set forth in the schedule to such
opinion constitute all of the licenses, certificates, permits and
authorizations required by the FCC and the State Regulatory Agencies (as
defined below) for the provision of telecommunications services by the
Company and the Subsidiaries as such counsel understands those services
currently to be provided based on the declaration of an executive officer
of the Company attached to such opinion, where the failure to obtain or
hold such Authorizations would materially adversely affect the ability of
the Company or the Subsidiaries to provide such services, and none of the
Company or any Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such Authorizations which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the Company or such
Subsidiary, in connection with the provision of such services;
(ii) The Company and/or its Subsidiaries holds the Authorizations set
forth in the schedule to such opinion, and those Authorizations are valid
and in full force and effect;
(iii) To the best knowledge of such counsel, after due inquiry,
neither the Company nor any of the Subsidiaries is subject to any pending
or threatened proceeding, complaint or investigation before the FCC or any
State Regulatory Agency based on any alleged violation by the Company or
its Subsidiaries in connection with the provision of or failure to provide
telecommunications services, of a character that would be required to be
disclosed or incorporated by reference in the Registration Statement and
the Prospectus, which is not adequately disclosed in the Registration
Statement and the Prospectus;
(iv) The statements included in the Prospectus under the headings
"Risk Factors--Reciprocal Compensation; "Risk Factors--Regulation," "Risk
Factors--Relationship with ILECs" and "Business--Regulation" fairly and
accurately summarize the matters therein described;
(v) No consent, approval, authorization, license, certificate, permit
or order of the FCC or any State Regulatory Agency is required for the
consummation of the transactions contemplated by this Agreement or
21
to the extent such consent, approval, authorization, license, certificate
or permit is required it shall have been secured;
(vi) Neither the execution and delivery of this Agreement nor the
issuance and sale of the Securities contemplated hereby will conflict with
or result in a breach or violation of the Communications Act of 1934, as
amended, the Telecommunications Act of 1996, as amended, any order, rule or
regulation of the FCC or any state regulatory agency applicable to the
Company or any of its Subsidiaries or cause the suspension, revocation,
impairment, forfeiture, nonrenewal or termination of any FCC license or
other authorization of the FCC;
(vii) Although such counsel has not independently checked or verified
and is neither passing upon nor assuming any responsibility for the factual
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus or any amendment thereof or
supplement thereto, nothing has come to its attention which would cause it
to believe that the statements included in the Prospectus under the
headings "Risk Factors--Reciprocal Compensation," "Risk Factors--
Relationship with ILECs," "Business--Regulation", on the date thereof or on
the Closing Date contain an untrue statement of material fact or omit to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(viii) The Company and its Subsidiaries have operated in compliance
with all, and are not in violation of any, statutes (including, but not
limited to, the Communications Act of 1934, as amended, or the
Telecommunications Act of 1996) laws, rules, regulations, judgments,
orders, decisions or decrees of any court, regulatory body, administrative
body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company or its Subsidiaries or any
of their assets or properties, as applicable, including, but not limited
to, the FCC and any state authority having jurisdiction over the Company or
its Subsidiaries or over their respective assets or properties except for
such noncompliance or violations as would not have a Material Adverse
Effect.
(ix) The Company and its subsidiaries have filed with all
administrative bodies, administrative agencies, governmental bodies,
arbitrators or other authorities having jurisdiction over the Company or
its subsidiaries or any of its or their assets or properties, as
applicable, all applications, statements, reports, tariffs, information,
forms, or any other documents or materials required under all statutes,
laws, rules, regulations, judgments, orders, decisions or decrees, except
where the
22
failure to file would not have a Material Adverse Effect on the Company's
or any of its subsidiaries' ability to provide its services as described in
the Registration Statement. To such counsel's knowledge after due inquiry,
such filings or submissions were in compliance with applicable laws or
regulations when filed or submitted and no deficiencies have been asserted
by any administrative bodies, administrative agencies, governmental bodies,
arbitrators or other authorities with respect to such filings or
submissions, except where the deficiency is of such a nature that failure
to cure any such deficiency would not have a Material Adverse Effect on the
Company's ability to provide its services as described in the Registration
Statement. To such counsel's knowledge, after due inquiry, the information
contained in such filings or submissions was and continues to be in all
material respects, accurate, complete and up-to-date at the time the
filings or submissions were made.
(x) To such counsel's knowledge, after due inquiry, there is no
outstanding adverse judgment, injunction, decision, decree or order that
has been issued by any court, regulatory body, administrative agency,
governmental body, arbitrator or other foreign, federal, state or local
authority having jurisdiction over any of the Company or its subsidiaries
or any of its or their properties or assets, as applicable, which, either
singly or in the aggregate, would have a Material Adverse Effect.
Such counsel's opinions may be based solely on the Communications Act of
1934, as amended, the Telecommunications Act, decisions of the FCC and FCC
rules, regulations and orders comparable state statutes governing
telecommunications, and the rules, regulations and orders of comparable state
regulatory agencies with direct regulatory jurisdiction over telecommunications
matters in the states in which the Company and its subsidiaries provide
intrastate services ("State Regulatory Agencies"). Such counsel's opinion may be
limited solely to matters arising under these authorities regarding federal
common carrier telecommunications regulatory requirements and comparable state
regulatory requirements in states in which the Company and its subsidiaries
provide intrastate services.
(e) The Representatives shall have received from Paul, Hastings, Xxxxxxxx &
Xxxxxx LLP, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date and addressed to the Representatives, with respect to the issuance
and sale of the Securities, the Registration Statement, the Prospectus (together
with any supplement thereto) and other related matters as the Representatives
may reasonably require, and the Company shall have furnished to such counsel
such documents as they request for the purpose of enabling them to pass upon
such matters.
23
(f) The Company shall have furnished to the Representatives a certificate
of the Company, signed by the Chairman of the Board or the President and the
principal financial or accounting officer of the Company, dated the Closing
Date, to the effect that the signers of such certificate have carefully examined
the Registration Statement, the Prospectus, any supplements to the Prospectus
and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of the
Closing Date with the same effect as if made on the Closing Date and the
Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the
Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the Company's best knowledge, threatened; and
(iii) since the date of the most recent financial statements included
in the Prospectus (exclusive of any supplement thereto), there has been no
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in
the Prospectus (exclusive of any supplement thereto).
(g) The Company shall have requested and caused Xxxxxx Xxxxxxxx LLP to have
furnished to the Representatives, at the Execution Time and at the Closing Date,
letters, dated respectively as of the Execution Time and as of the Closing Date,
in form and substance satisfactory to the Representatives, confirming that they
are independent accountants within the meaning of the Act and Exchange Act and
the respective applicable rules and regulations adopted by the Commission
thereunder and Rule 101 of the Code of Professional Conduct of American
Certified Public Accountants and stating in effect that:
(i) in their opinion the audited financial statements and financial
statement schedules included in the Registration Statement and the
Prospectus and reported on by them comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related rules and regulations adopted by the Commission;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries; their
24
limited review, in accordance with standards established under Statement on
Auditing Standards No. 71, of the unaudited interim financial information
for the three-month period ended March 31, 1999, and as at March 31, 1999;
carrying out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the comments set
forth in such letter; a reading of the minutes of the meetings of the
stockholders, directors and the compensation, audit and nominating
committees of the Company and its subsidiaries; and inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters of the Company and its subsidiaries as to transactions
and events subsequent to December 31, 1998, nothing came to their attention
which caused them to believe that:
1. with respect to the period subsequent to December 31, 1999,
there were any changes, at a specified date not more than five days
prior to the date of the letter, in the long-term debt, net of current
maturities of the Company and its subsidiaries or capital stock of the
Company or decreases in the stockholders' equity of the Company or
current assets of the Company and its subsidiaries as compared with
the amounts shown on the December 31, 1998 consolidated balance sheet
included in the Registration Statement and the Prospectus, or for the
period from January 1, 1999 to such specified date there were any
decreases, as compared with the corresponding period in the preceding
year in revenues, operating income or interest income or any
increases, as compared with the corresponding period in the preceding
year in loss before income taxes or in total or per share amounts of
net loss of the Company and its subsidiaries, except in all instances
for such changes, decreases or increases, as applicable, set forth in
such letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof unless said
explanation is not deemed necessary by the Representatives; and
2. the information included in the Registration Statement and
Prospectus in response to Regulation S-K, Item 301 (Selected Financial
Data), Item 302 (Supplementary Financial Information), Item 402
(Executive Compensation) and Item 503(d) (Ratio of Earnings to Fixed
Charges) is not in conformity with the applicable disclosure
requirements of Regulation S-K;
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
25
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company and its subsidiaries) set forth in the Registration Statement
and the Prospectus, including the information set forth under the captions
"Selected Consolidated Financial and Operating Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
in the Prospectus, agrees with the accounting records of the Company and
its subsidiaries, excluding any questions of legal interpretation;
(iv) The Company shall have received from Xxxxxx Xxxxxxxx LLP (and
furnished to the Representatives) a report with respect to a review of
unaudited interim financial information of the Company for the six quarters
ending December 31, 1998 in accordance with Statement on Auditing Standards
No. 71;
(v) The Company shall have received from Xxxxxx Xxxxxxxx LLP (and
furnished to the Representatives) an examination report with respect to
Management's Discussion and Analysis of Financial Condition and Results of
Operations of the Company for the two fiscal years ending December 31,
1998, and the corresponding period for the prior fiscal year, each in
accordance with Statement on Standards for Attestation Engagements No. 8
issued by the Auditing Standards Board of the American Institute of
Certified Public Accountants, and such examination report shall be included
in the Registration Statement.
(h) Subsequent to the Execution Time or, if earlier, the dates as of which
information is given in the Registration Statement (exclusive of any amendment
thereof) and the Prospectus (exclusive of any supplement thereto), there shall
not have been (i) any change or decrease specified in the letter or letters
referred to in paragraph (e) of this Section 6 or (ii) any change, or any
development involving a prospective change, in or affecting the condition
(financial or otherwise), earnings, business or properties of the Company and
its subsidiaries taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto) the effect of which, in any
case referred to in clause (i) or (ii) above, is, in the sole judgment of the
Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Registration Statement (exclusive of any amendment thereof)
and the Prospectus (exclusive of any supplement thereto).
26
(i) Prior to the Closing Date, the Company shall have furnished to
the Representatives such further information, certificates and documents as
the Representatives may reasonably request.
(j) Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act) or any notice given of any intended
or potential decrease in any such rating or of a possible change in any
such rating that does not indicate the direction of the possible change.
(k) The Securities shall have been listed and admitted and authorized
for trading, subject to official notice of issuance, on the Nasdaq National
Market, and satisfactory evidence of such actions shall have been provided
to the Representatives.
(l) At the Execution Time, the Company shall have furnished to the
Representatives a letter substantially in the form of Exhibit A hereto from
each executive officer and director of the Company and certain stockholders
specified in a separate letter from the Representatives addressed to the
Representatives.
(m) The Company shall have consummated the recapitalization and the
_____ for one stock split (as described in the Prospectus).
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of
such cancellation shall be given to the Company in writing or by telephone or
facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be delivered
at the office of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, counsel for the
Underwriters, at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the Securities
----------------------------------------
provided for herein is not consummated because any condition to the obligations
of the Underwriters set forth in Section 6 hereof is not satisfied, because of
any termination pursuant to Section 10 hereof or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or comply with any provision hereof other than by reason of a default by any of
the Underwriters, the Company will reimburse the Underwriters severally through
Xxxxxxx Xxxxx Barney on demand for all out-of-pocket
27
expenses (including reasonable fees and disbursements of counsel) that shall
have been incurred by them in connection with the proposed purchase and sale of
the Securities.
8. Indemnification and Contribution. (a) The Company agrees to indemnify
---------------------------------
and hold harmless each Underwriter, the directors, officers, employees and
agents of each Underwriter and each person who controls any Underwriter within
the meaning of either the Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject under the Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the registration statement for the registration of the
Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
-------- -------
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion in the Registration Statement or the Prospectus (or
any amendment or supplement thereto), it being understood and agreed that the
only such information is that described as such in Section 8(b) hereof. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Underwriter severally and not jointly agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only with
reference to written information relating to such Underwriter furnished to the
Company by or on behalf of such Underwriter through the Representatives
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Underwriter may otherwise have. The Company acknowledges that (i) the list
of Underwriters and their respective participation in the sale of the
Securities, (ii) the sentences related to concessions and reallowances and (iii)
the paragraph related to stabilization, syndicate covering transactions and
penalty bids under the heading "Underwriting" in any Preliminary Prospectus and
the Prospectus constitute the only information furnished in writing by or on
behalf of the several Underwriters for inclusion in any Preliminary Prospectus
or the Prospectus.
28
(c) The Company agrees to indemnify and hold harmless Xxxxxxx Xxxxx Xxxxxx
and each person, if any, who controls Xxxxxxx Xxxxx Barney within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act
("Xxxxxxx Xxxxx Xxxxxx Entities"), from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) (i) caused by any untrue statement or alleged untrue
statement of a material fact contained in the prospectus wrapper material
prepared by or with the consent of the Company for distribution in foreign
jurisdictions in connection with the Directed Share Program attached to the
Prospectus or any Preliminary Prospectus, caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, when considered in conjunction with
the Prospectus or any applicable Preliminary Prospectus, not misleading; (ii)
caused by the failure of any Participant to pay for and accept delivery of the
shares which immediately following the effective of the Registration Statement,
were subject to a properly confirmed agreement to purchase; or (iii) related to,
arising out of, or in connection with the Directed Share Program, provided,
however, that the Company shall not be responsible under this clause (iii) for
any losses, claim, damages or liabilities (or expenses relating thereto) that
are finally judicially determined to have resulted from the bad faith or gross
negligence of Xxxxxxx Xxxxx Xxxxxx Entities.
(d) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a), (b) or (c) above unless and to the extent it did
not otherwise learn of such action and such failure results in the forfeiture by
the indemnifying party of substantial rights and defenses and (ii) will not, in
any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraph (a), (b) or (c) above. The indemnifying party shall be entitled to
appoint counsel of the indemnifying party's choice at the indemnifying party's
expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
-------- -------
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
29
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(e) In the event that the indemnity provided in paragraph (a), (b) or (c)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Underwriters severally
agree to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the Company
and one or more of the Underwriters may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and by the Underwriters on the other from the offering of the Securities;
provided, however, that in no case shall any Underwriter (except as may be
-------- -------
provided in any agreement among underwriters relating to the offering of the
Securities) be responsible for any amount in excess of the underwriting discount
or commission applicable to the Securities purchased by such Underwriter
hereunder. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company and the Underwriters severally shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
of the Underwriters on the other in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the total net proceeds from the offering (before deducting expenses) received by
it, and benefits received by the Underwriters shall be deemed to be equal to the
total underwriting discounts and commissions, in each case as set forth on the
cover page of the Prospectus. Relative fault shall be determined by reference
to, among other things, whether any untrue or any alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information provided by the Company on the one hand or the
Underwriters on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriters agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (e), no person guilty of
30
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. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of an Underwriter shall have the
same rights to contribution as such Underwriter, and each person who controls
the Company within the meaning of either the Act or the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (e).
(f) Notwithstanding anything contained herein to the contrary, if
indemnity may be sought pursuant to Section 8(b) hereof in respect of such
action or proceeding, then in addition to such separate firm for the indemnified
parties, the indemnifying party shall be liable for the reasonable fees and
expenses of not more than one separate firm (in addition to any local counsel)
for Xxxxxxx Xxxxx Barney for the defense of any losses, claims, damages and
liabilities arising out of the Directed Share Program, and all persons, if any,
who control Xxxxxxx Xxxxx Barney within the meaning of either Section 15 of the
Act or Section 20 of the Exchange Act.
9. Default by an Underwriter. If any one or more Underwriters shall fail
--------------------------
to purchase and pay for any of the Securities agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
-------- -------
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
five Business Days, as the Representatives shall determine in order that the
required changes in the Registration Statement and the Prospectus or in any
other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Company and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
10. Termination. This Agreement shall be subject to termination in the
------------
absolute discretion of the Representatives, by notice given to the Company prior
to
31
delivery of and payment for the Securities, if at any time prior to such time
(i) trading in the Company's Common Stock shall have been suspended by the
Commission or the Nasdaq National Market or trading in securities generally on
the New York Stock Exchange or the Nasdaq National Market shall have been
suspended or limited or minimum prices shall have been established on such
Exchange or the Nasdaq National Market, (ii) a banking moratorium shall have
been declared either by federal or New York State authorities or (iii) there
shall have occurred any outbreak or escalation of hostilities, declaration by
the United States of a national emergency or war, or other calamity or crisis
the effect of which on financial markets is such as to make it, in the sole
judgment of the Representatives, impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Prospectus
(exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective agreements,
-------------------------------------------
representations, warranties, indemnities and other statements of the Company or
its officers and of the Underwriters set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter or the Company or any of the officers,
directors, employees, agents or controlling persons referred to in Section 8
hereof, and will survive delivery of and payment for the Securities. The
provisions of Sections 7 and 8 hereof shall survive the termination or
cancelation of this Agreement.
12. Notices. All communications hereunder will be in writing and effective
--------
only on receipt, and, if sent to the Representatives, will be mailed, delivered
or telefaxed to the Xxxxxxx Xxxxx Xxxxxx Inc. General Counsel (fax no.: (212)
000-0000) and confirmed to the General Counsel, Xxxxxxx Xxxxx Barney Inc., at
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: General Counsel; or,
if sent to the Company, will be mailed, delivered or telefaxed to and
confirmed to it at , attention of the Legal Department.
13. Successors. This Agreement will inure to the benefit of and be
-----------
binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
14. Applicable Law. This Agreement will be governed by and construed in
---------------
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
15. Counterparts. This Agreement may be signed in one or more
-------------
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
32
16. Headings. The section headings used herein are for convenience only
---------
and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this Agreement,
------------
shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City [or Chicago,
Illinois].
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in Section 1(a) and any preliminary prospectus included in the
Registration Statement at the Effective Date that omits Rule 430A
Information.
"Prospectus" shall mean the prospectus relating to the Securities that
is first filed pursuant to Rule 424(b) after the Execution Time or, if no
filing pursuant to Rule 424(b) is required, shall mean the form of final
prospectus relating to the Securities included in the Registration
Statement at the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in Section 1(a), including exhibits and financial statements,
as amended at the Execution Time (or, if not effective at the Execution
Time, in the form in which it shall become effective) and, in the event any
post-effective amendment thereto or any Rule 462(b) Registration Statement
becomes effective prior to the Closing Date, shall also mean such
registration statement as so amended or such Rule 462(b) Registration
Statement, as the case may be. Such term shall include any Rule 430A
Information deemed to be included therein at the Effective Date as provided
by Rule 430A.
33
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the
Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating
to the offering covered by the registration statement referred to in
Section 1(a) hereof.
[Intentionally left blank]
34
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the Company
and the several Underwriters.
Very truly yours,
FOCAL COMMUNICATIONS CORPORATION
By:
-----------------------------------
Name
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
XXXXXXX XXXXX XXXXXX INC.
XXXXXXXXX, XXXXXX & XXXXXXXX SECURITIES CORPORATION
XXXXXX XXXXXXX XXXX XXXXXX
CREDIT SUISSE FIRST BOSTON CORPORATION
DLJdirect Inc.
By: XXXXXXX XXXXX BARNEY INC.
By:
-----------------------------------
Name:
Title:
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
35
[PHJ&W Draft 4/02/99]
SCHEDULE I
----------
Number of Underwritten
Securities to be
Underwriters Purchased
------------ ----------------------
Xxxxxxx Xxxxx Xxxxxx Inc. . . . . . . . . . . .
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation. . . . . . . . . . . . . . . . . .
Xxxxxx Xxxxxxx Xxxx Xxxxxx. . . . . . . . . . .
Credit Suisse First Boston Corporation. . . . .
DLJdirect Inc. . . . . . . . . . . . . . . . .
------------
Total . . . . . . . . . . . . . . . .
============
ANNEX A
SUBSIDIARIES
Focal Communications Corporation of New York
Focal Communications Corporation of the Mid-Atlantic
Focal Communications Corporation of New Jersey
Focal Communications Corporation of Virginia
Focal Communications Corporation of Massachusetts
Focal Communications Corporation of Florida
Focal Communications Corporation of Illinois
Focal Communications Corporation of Pennsylvania
Focal Communications Corporation of Michigan
Focal Communications Corporation of California
Focal Communications Corporation of Washington
Focal Telecommunications Corporation
Focal Communications Corporation of Texas
Focal Communications Corporation of Missouri
Focal Communications Corporation of Georgia
Focal Communications Corporation of Colorado
Focal Communications Corporation of Wisconsin
Focal Financial Services, Inc.
Focal International Corp.
EXHIBIT A
[Letterhead of officer, director or major shareholder of
Corporation]
Focal Communications Corporation
--------------------------------
Public Offering of Common Stock
-------------------------------
July , 1999
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Xxxxxx Xxxxxxx Xxxx Xxxxxx
Credit Suisse First Boston Corporation
DLJdirect Inc.
As Representatives of the several Underwriters,
c/o Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement"), between Focal
Communications Corporation, a Delaware corporation (the "Company"), and each of
you as representatives of a group of Underwriters named therein, relating to an
underwritten public offering of Common Stock, $0.01 par value (the "Common
Stock"), of the Company.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned will not, without the prior written
consent of Xxxxxxx Xxxxx Xxxxxx Inc., offer, sell, contract to sell, pledge,
assign or otherwise dispose of, (or enter into any transaction which is designed
to, or might reasonably be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company) directly or
indirectly, including the filing (or participation in the filing of) a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder with respect to, any
shares of capital stock of the Company or any securities convertible into, or
exercisable or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, for a period of 180 days after the
date of the Underwriting Agreement, other than shares of Common Stock disposed
of as bona fide gifts approved by Xxxxxxx Xxxxx Barney Inc.
In addition, the undersigned agrees that, without the prior written
consent of Xxxxxxx Xxxxx Xxxxxx Inc., it will not, for a period of 180 days
after the date of the Underwriting Agreement, make any demand for or exercise
any right with respect to, the registration of any shares of Common Stock or any
security convertible into or exercisable or exchangeable for Common Stock that
would result in a registration statement relating to such Common Stock or
security being filed prior to the date that is 180 days after the date of the
Underwriting Agreement.
If for any reason the Underwriting Agreement shall be terminated prior
to the Closing Date (as defined in the Underwriting Agreement), the agreement
set forth above shall likewise be terminated.
Yours very truly,
By:
------------------------------------
Name:
Title:
