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GLOBAL TELESYSTEMS GROUP, INC.
(a Delaware corporation)
8,880,000 Shares of Common Stock
U.S. PURCHASE AGREEMENT
Dated: February [ ], 1998
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TABLE OF CONTENTS
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U.S. PURCHASE AGREEMENT................................................... 1
SECTION 1. Representations and Warranties.............................. 4
(a) Representations and Warranties by the Company.......... 4
(i) Compliance with Registration Requirements...... 4
(ii) Independent Accountants........................ 5
(iii) Financial Statements........................... 5
(iv) No Material Adverse Change in Business......... 6
(v) Good Standing of the Company................... 6
(vi) Good Standing of Subsidiaries.................. 7
(vii) Capitalization................................. 7
(viii) Authorization of Agreement..................... 8
(ix) Authorization and Description of Securities.... 8
(x) Absence of Defaults and Conflicts.............. 8
(xi) Absence of Labor Dispute....................... 9
(xii) Absence of Proceedings......................... 9
(xiii) Accuracy of Exhibits........................... 10
(xiv) Possession of Intellectual Property............ 10
(xv) Absence of Further Requirements................ 10
(xvi) Possession of Licenses and Permits............. 11
(xvii) Title to Property.............................. 11
(xviii) Compliance with Cuba Act....................... 12
(xix) Investment Company Act......................... 12
(xx) Environmental Laws............................. 12
(xxi) Registration Rights............................ 13
(b) Officer's Certificates................................. 13
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing............. 13
(a) Initial Securities..................................... 13
(b) Option Securities...................................... 13
(c) Payment................................................ 14
(d) Denominations; Registration............................ 15
SECTION 3. Covenants of the Company.................................... 15
(a) Compliance with Securities
Regulations and Commission Requests.................... 15
(b) Filing of Amendments................................... 16
(c) Delivery of Registration Statements.................... 16
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(d) Delivery of Prospectuses.............................. 16
(e) Continued Compliance with Securities Laws............. 16
(f) Rule 158.............................................. 17
(g) Use of Proceeds....................................... 17
(h) Listing............................................... 17
(i) Restriction on Sale of Securities..................... 18
(j) Reporting Requirements................................ 18
(k) Compliance with Rule 463.............................. 18
SECTION 4. Payment of Expenses........................................ 18
(a) Expenses.............................................. 18
(b) Termination of Agreement.............................. 19
SECTION 5. Conditions of U.S. Underwriters' Obligations............... 19
(a) Effectiveness of Registration Statement............... 19
(b) Opinion of Counsel for Company........................ 20
(c) Opinion of Counsel for U.S. Underwriters.............. 20
(d) Officers' Certificate................................. 20
(e) Accountant's Comfort Letter........................... 21
(f) Bring-down Comfort Letter............................. 21
(g) Approval of Listing................................... 21
(h) No Objection.......................................... 21
(i) Lock-up Agreements.................................... 21
(j) Purchase of Initial International Securities.......... 22
(k) Notes Offering........................................ 22
(l) Conditions to Purchase of U.S.
Option Securities.................................... 22
(m) Additional Documents.................................. 23
(n) Termination of Agreement.............................. 23
SECTION 6. Indemnification............................................ 23
(a) Indemnification of U.S. Underwriters.................. 24
(b) Indemnification of Company,
Directors and Officers............................... 25
(c) Actions against Parties; Notification................. 25
(d) Settlement without Consent if
Failure to Reimburse................................. 26
SECTION 7. Contribution................................................ 27
SECTION 8. Representations, Warranties and Agreements to
Survive Delivery........................................... 28
SECTION 9. Termination of Agreement.................................... 29
(a) Termination; General................................... 29
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(b) Liabilities.......................................... 29
SECTION 10. Default by One or More of the U.S. Underwriters........... 29
SECTION 11. Notices................................................... 30
SECTION 12. Parties................................................... 31
SECTION 13. GOVERNING LAW AND TIME.................................... 31
SECTION 14. Effect of Headings........................................ 31
SCHEDULES
Schedule A - List of Underwriters................................... Sch A-1
Schedule B - Pricing Information.................................... Sch B-1
EXHIBITS
Exhibit A-1 - Form of Opinion of Company's Special Counsel.......... A-1-1
Exhibit A-2 - Form of Opinion of Company's Counsel.................. A-2-1
Exhibit B - Form of Lock-up Letter................................ B-1
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GLOBAL TELESYSTEMS GROUP, INC.
(a Delaware corporation)
8,880,000 Shares of Common Stock
(Par Value $.10 Per Share)
U.S. PURCHASE AGREEMENT
February , 0000
XXXXXXX XXXXX & XX.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
UBS Securities LLC
Xxxxxx Brothers Inc.
Xxxxxx Xxxx LLC
as U.S. Representatives of the several U.S. Underwriters
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
GLOBAL TELESYSTEMS GROUP, INC., a Delaware corporation (the "Company"),
confirms its agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx
& Xxxxx Incorporated ("Xxxxxxx Xxxxx") and each of the other U.S. Underwriters
named in Schedule A hereto (collectively, the "U.S. Underwriters", which term
shall also include any underwriter substituted as hereinafter provided in
Section 10 hereof), for whom Xxxxxxx Lynch, Donaldson, Lufkin & Xxxxxxxx
Securities Corporation, UBS Securities LLC, Xxxxxx Brothers Inc. and Xxxxxx
Xxxx LLC are acting as representatives (in such capacity, the "U.S.
Representatives"), with respect to the issue and sale by the Company and the
purchase by the U.S. Underwriters, acting severally and not jointly, of the
respective numbers of shares of Common Stock, par value $.10 per share, of the
Company ("Common Stock") set forth in said Schedule A, and with respect to the
grant by the Company to the U.S. Underwriters, acting severally and not
jointly, of the option described in Section 2(b) hereof to purchase all or any
part of 1,332,000 additional shares of Common Stock to cover over-allotments,
if any. The aforesaid 8,880,000 shares of Common Stock (the "Initial U.S.
Securities") to be purchased by the U.S. Underwriters and all or any part of
the 1,332,000 shares of Common Stock subject to the
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option described in Section 2(b) hereof (the "U.S. Option Securities") are
hereinafter called, collectively, the "U.S. Securities."
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "International Purchase Agreement")
providing for the offering by the Company of an aggregate of 2,220,000 shares
of Common Stock (the "Initial International Securities") through arrangements
with certain underwriters outside the United States and Canada (the
"International Managers") for which Xxxxxxx Xxxxx International, UBS Limited,
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, Xxxxxx Brothers Inc. and
ING Bank N.V. are acting as the international representatives (collectively,
the "International Representatives") and the grant by the Company to the
International Managers, acting severally and not jointly, of an option to
purchase all or any part of the International Managers' pro rata portion of up
to 333,000 additional shares of Common Stock solely to cover over-allotments,
if any (the "International Option Securities" and, together with the U.S.
Option Securities, the "Option Securities"). The Initial International
Securities and the International Option Securities are hereinafter called the
"International Securities." It is understood that the Company is not obligated
to sell, and the U.S. Underwriters are not obligated to purchase, any Initial
U.S. Securities unless all of the Initial International Securities are
contemporaneously purchased by the International Managers.
The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters," the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities," and the U.S. Securities, and the International Securities
are hereinafter collectively called the "Securities."
The Underwriters will concurrently enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the direction
of Xxxxxxx Xxxxx & Co. (in such capacity, the "Global Coordinator").
The Company understands that the U.S. Underwriters propose to make a
public offering of the U.S. Securities as soon as the U.S. Representatives deem
advisable after this Agreement has been executed and delivered.
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The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-36555) covering the
registration of the Securities under the Securities Act of 1933, as amended
(the "1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will
either (i) prepare and file a prospectus in accordance with the provisions of
Rule 430A ("Rule 430A") of the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule
424(b)") of the 1933 Act Regulations or (ii) if the Company has elected to rely
upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term
sheet (a "Term Sheet") in accordance with the provisions of Rule 434 and Rule
424(b). Two forms of prospectus are to be used in connection with the offering
and sale of the Securities: one relating to the U.S. Securities (the "Form of
U.S. Prospectus") and one relating to the International Securities (the "Form
of International Prospectus"). The Form of International Prospectus is
identical to the Form of U.S. Prospectus, except for the front cover and back
cover pages and the information under the caption "Underwriting." The
information included in any such prospectus or in any such Term Sheet, as the
case may be, that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement
at the time it became effective (a) pursuant to paragraph (b) of Rule 430A is
referred to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule
434 is referred to as "Rule 434 Information." Each Form of U.S. Prospectus and
Form of International Prospectus used before such registration statement became
effective, and any prospectus that omitted, as applicable, the Rule 430A
Information or the Rule 434 Information, that was used after such effectiveness
and prior to the execution and delivery of this Agreement, is herein called a
"preliminary prospectus." Such registration statement, including the exhibits
thereto and schedules thereto, at the time it became effective and including
the Rule 430A Information and the Rule 434 Information, as applicable, is
herein called the "Registration Statement." Any registration statement filed
pursuant to Rule 462(b) of the 1933 Act Regulations is herein referred to as
the "Rule 462(b) Registration Statement," and after such filing the term
"Registration Statement" shall include the Rule 462(b) Registration Statement.
The final Form of U.S. Prospectus and the final Form of International
Prospectus in the forms first furnished to the Underwriters for use in
connection with the offering of the Securities are herein called the "U.S.
Prospectus" and the "International Prospectus," respectively, and collectively,
the "Prospectuses." If
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Rule 434 is relied on, the terms "U.S. Prospectus" and "International
Prospectus" shall refer to the preliminary U.S. Prospectus dated December 30,
1997 and preliminary International Prospectus dated December 30, 1997,
respectively, each together with the applicable Term Sheet and all references in
this Agreement to the date of such Prospectuses shall mean the date of the
applicable Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the U.S. Prospectus, the
International Prospectus or any Term Sheet or any amendment or supplement to any
of the foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("XXXXX").
Contemporaneously with the offering of the Securities, the Company will be
offering $[100] million of Senior Notes due 2005 (the "Notes Offering").
Consummation of both the Notes Offering and the offering of the Common Stock
are conditioned upon the consummation of the other.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each U.S. Underwriter as of the date hereof, as of
the Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b), hereof and agrees with each U.S.
Underwriter, as follows:
(i) Compliance with Registration Requirements. The Registration
Statement has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement has been issued
under the 1933 Act and no proceedings for that purpose have been instituted
or are pending or, to the knowledge of the Company, are contemplated by the
Commission, and any request on the part of the Commission for additional
information has been complied with.
At the respective times the Registration Statement and any
post-effective amendments thereto became effective and at the Closing
Time (and, if any U.S. Option Securities are purchased, at the Date of
Delivery), the Registration Statement and any amendments and supplements
thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and did not and
will not contain an untrue statement of a material fact or omit to state
a material
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fact required to be stated therein or necessary to make the statements
therein not misleading. Neither of the Prospectuses nor any amendments or
supplements thereto, at the time the Prospectuses or any amendments or
supplements thereto were issued and at the Closing Time (and, if any U.S.
Option Securities are purchased, at the Date of Delivery), included or
will include an untrue statement of a material fact or omitted or will
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. If Rule 434 is used, the Company will comply with the
requirements of Rule 434 and the Prospectuses shall not be "materially
different," as such term is used in Rule 434, from the prospectuses
included in the Registration Statement at the time it became effective.
The representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or the U.S.
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by or on behalf of any U.S.
Underwriter through the U.S. Representatives expressly for use in the
Registration Statement or the U.S. Prospectus.
Each preliminary prospectus and the prospectuses filed as part of
the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and each preliminary prospectus
and the Prospectuses delivered to the Underwriters for use in connection
with this offering was identical to the electronically transmitted copies
thereof filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
(ii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act and the
1933 Act Regulations.
(iii) Financial Statements. The financial statements included in the
Registration Statement and the Prospectuses, together with the related schedules
and notes, present fairly the financial position of the entities to which they
relate as of the dates indicated and their respective results of operations,
stockholders' equity and cash flows for the periods specified; said financial
statements
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have been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved. The
supporting schedules included in the Registration Statement present fairly in
accordance with GAAP the information required to be stated therein. The
selected financial data and the summary financial information included in the
Prospectuses present fairly the information shown therein and, in the case of
the consolidated financial data therein, have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement, and in the case of the combined financial data therein,
have been compiled from financial statements prepared on a basis consistent with
that of the audited financial statements included in the Registration Statement.
(iv) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement (at the
time it became effective), except as otherwise stated therein (at the time it
became effective), (A) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its Subsidiaries (as defined below)
considered as one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the Company and
its subsidiaries considered as one enterprise, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
(v) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under the
laws of the state of Delaware and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under this Agreement;
and the Company is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not, singly or in the aggregate, result in a Material Adverse
Effect.
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(vi) Good Standing of Subsidiaries. Each "significant subsidiary"
of the Company (as such term is defined in Rule 1-02 of Regulation S-X) and all
entities in which the Company has a direct or indirect majority equity interest
or voting power (each a "Subsidiary" and, collectively, the "Subsidiaries") has
been duly organized (to the extent applicable) and is validly existing as a
corporation, general partnership, limited partnership, limited liability
company, closed joint stock company, or similar entity in good standing (to the
extent applicable) under the laws of the jurisdiction of its organization, has
organizational power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectuses and is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not, singly or in the
aggregate, result in a Material Adverse Effect; except as otherwise disclosed in
the Registration Statement, all of the issued and outstanding capital stock or
other ownership interests of each such Subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable (to the extent applicable) and
is owned by the Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity; none of
the outstanding shares of capital stock or other ownership interests of any
Subsidiary was issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary. The only subsidiaries of the Company are (a)
the subsidiaries listed on Exhibit 21 to the Registration Statement and (b)
certain other subsidiaries which, considered in the aggregate as a single
Subsidiary, do not constitute a "significant subsidiary" as defined in Rule 1-02
of Regulation S-X.
(vii) Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectuses in the column
entitled "Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectuses or pursuant
to the exercise of convertible securities or options referred to in the
Prospectuses). The shares of issued and outstanding capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding
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shares of capital stock of the Company was issued in violation of the preemptive
or other similar rights of any securityholder of the Company.
(viii) Authorization of Agreement. This Agreement and the
International Purchase Agreement have been duly authorized, executed and
delivered by the Company.
(ix) Authorization and Description of Securities. The Securities to
be purchased by the U.S. Underwriters and the International Managers from the
Company have been duly authorized for issuance and sale to the U.S. Underwriters
pursuant to this Agreement and the International Managers pursuant to the
International Purchase Agreement, respectively, and, when issued and delivered
by the Company pursuant to this Agreement and the International Purchase
Agreement, respectively, against payment of the consideration set forth herein
and the International Purchase Agreement, respectively, will be validly issued,
fully paid and non-assessable; the Common Stock conforms in all material
respects to all statements relating thereto contained in the Prospectuses and
such description conforms to the rights set forth in the instruments defining
the same; no holder of the Securities will be subject to personal liability by
reason of being such a holder; and the issuance of the Securities is not subject
to the preemptive or other similar rights of any securityholder of the Company.
(x) Absence of Defaults and Conflicts. Neither the Company nor any
of its Ventures (as defined below) is in violation of its charter or by-laws (or
equivalent constitutive documents) or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of its
Ventures is a party or by which it or any of them may be bound, or to which any
of the property or assets of the Company or any Venture is subject
(collectively, "Agreements and Instruments") except for such defaults that would
not, singly or in the aggregate, result in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement and the International
Purchase Agreement and the consummation of the transactions contemplated in this
Agreement, the International Purchase Agreement and in the Registration
Statement (including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Prospectuses under
the
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caption "Use of Proceeds") and compliance by the Company with its obligations
under this Agreement and the International Purchase Agreement have been duly
authorized by all necessary corporate action and do not and will not, whether
with or without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any Venture pursuant
to, the Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a Material
Adverse Effect), nor will such action result in any violation of the provisions
of the charter or by-laws (or equivalent constitutive documents) of the Company
or any Venture or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any Venture or any
of their assets, properties or operations. As used herein, (a) "Ventures" means
all entities in which the Company has a direct or indirect greater than 25%
equity interest or voting power and (b) a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Company or any Venture.
(xi) Absence of Labor Dispute. No labor dispute with the employees
of the Company or any Venture exists or, to the knowledge of the Company, is
threatened, and the Company is not aware of any existing or threatened labor
disturbance by the employees of any of its or any Venture's principal suppliers,
manufacturers, customers or contractors, which, in either case, may reasonably
be expected to, singly or in the aggregate, result in a Material Adverse Effect.
(xii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental agency
or body, domestic or foreign, now pending, or, to the knowledge of the Company,
threatened, against or affecting the Company or any Venture, which is required
to be disclosed in the Registration Statement (other than as disclosed therein),
or which, singly or in the aggregate, might reasonably be expected to result in
a Material Adverse Effect, or which might reasonably be expected to materially
and adversely affect the properties or
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assets of the Company or any Venture or the consummation of the transactions
contemplated in this Agreement and the International Purchase Agreement or the
performance by the Company of its obligations hereunder or thereunder; the
aggregate of all pending legal or governmental proceedings to which the Company
or any Venture is a party or of which any of their respective property or assets
is the subject which are not described in the Registration Statement, including
ordinary routine litigation incidental to the business, singly or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
(xiii) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectuses or to be filed as exhibits thereto which have not been so described
and filed as required.
(xiv) Possession of Intellectual Property. The Company and the
Ventures own or possess, or can acquire on reasonable terms, adequate patents,
patent rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade names or
other intellectual property (collectively, "Intellectual Property") necessary to
carry on the business now operated by them, except to the extent the failure to
so own, possess or be able to acquire would not result in a Material Adverse
Effect, and neither the Company nor any Venture has received any notice or is
otherwise aware of any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or inadequate
to protect the interest of the Company or any Venture therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, singly or in the aggregate, would result
in a Material Adverse Effect.
(xv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations hereunder, in
connection with the offering, issuance or sale of the Securities under this
Agreement and the International Purchase Agreement or the consummation of the
transactions contemplated
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by this Agreement and the International Purchase Agreement, except such as have
been already obtained or as may be required under the 1933 Act or the 1933 Act
Regulations and foreign or state securities or blue sky laws.
(xvi) Possession of Licenses and Permits. Except as otherwise
disclosed in the Registration Statement, the Company and the Ventures possess
such material permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them; the Company and the Ventures are in compliance
with the terms and conditions of all such Governmental Licenses, except where
the failure so to comply would not, singly or in the aggregate, result in a
Material Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental Licenses or
the failure of such Governmental Licenses to be in full force and effect would
not have a Material Adverse Effect; and neither the Company nor any Venture has
received any notice of proceedings relating to the revocation or modification of
any such Governmental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(xvii) Title to Property. The Company and the Ventures have good and
marketable title to all real property owned by the Company and the Ventures and
good title to all other properties owned by them, in each case, free and clear
of all mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the Prospectuses or
(b) do not, singly or in the aggregate, materially affect the value of such
property and do not interfere with the use made and proposed to be made of such
property by the Company or any Venture; and all of the leases and subleases
material to the business of the Company and the Ventures, considered as one
enterprise, and under which the Company or any Venture holds properties
described in the Prospectuses, are in full force and effect, and neither the
Company nor any Venture has any notice of any material claim of any sort that
has been asserted by anyone adverse to the rights of the Company or any Venture
under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or such Venture to the continued
possession of the leased or subleased premises under any such lease or sublease.
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(xviii) Compliance with Cuba Act. The Company has complied with, and is
and will be in compliance with, the provisions of that certain Florida act
relating to disclosure of doing business with Cuba, codified as Section 517.075
of the Florida statutes, and the rules and regulations thereunder (collectively,
the "Cuba Act") or is exempt therefrom.
(xix) Investment Company Act. Neither the Company nor any of its
Subsidiaries is, nor upon the issuance and sale of the Securities as herein
contemplated and the application of the net proceeds therefrom as described in
the Prospectuses will be, an "investment company" or an entity "controlled" by
an "investment company" as such terms are defined in the Investment Company Act
of 1940, as amended (the "1940 Act").
(xx) Environmental Laws. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) neither the Company nor any Venture is in violation
of any federal, state, local or foreign statute, law, rule, regulation,
ordinance, code, policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent,
decree or judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened release
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company and the Ventures have all permits,
authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements, (C) there are no pending or
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any Ventures and (D) there are no events or circumstances that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company
17
-13-
or any Ventures relating to Hazardous Materials or any Environmental Laws.
(xxi) Registration Rights. Except as disclosed in the Prospectuses,
there are no persons with registration rights or other similar rights to have
any securities registered pursuant to the Registration Statement or otherwise
registered by the Company under the 1933 Act.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any Ventures delivered to the Global Coordinator, the U.S.
Representatives or to counsel for the U.S. Underwriters shall be deemed a
representation and warranty by the Company herein to each U.S. Underwriter as
to the matters covered thereby.
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing.
(a) Initial Securities. The Company agrees to sell to each U.S.
Underwriter, severally and not jointly, and on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, each U.S. Underwriter, severally and not jointly, agrees to purchase
from the Company, at the price per share set forth in Schedule B, the number of
Initial U.S. Securities set forth in Schedule A opposite the name of such U.S.
Underwriter, plus any additional number of Initial U.S. Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) Option Securities. In addition, the Company hereby grants an option
to the U.S. Underwriters, severally and not jointly, to purchase up to an
additional 1,332,000 shares of Common Stock at the price per share set forth in
Schedule B, less an amount per share equal to any dividends or distributions
declared by the Company and payable on the Initial U.S. Securities but not
payable on the U.S. Option Securities. The option hereby granted will expire
30 days after the date hereof and may be exercised not more than two times in
whole or in part only for the purpose of covering over-allotments which may be
made in connection with the offering and distribution of the Initial U.S.
Securities upon notice by the Global Coordinator to the Company setting forth
the number of U.S. Option Securities as to which the several U.S. Underwriters
are then exercising the option and the time and date of payment and delivery
for such U.S. Option Securities. Any such time and date of delivery for the
U.S. Option Securities (a "Date of Delivery")
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-14-
shall be determined by the Global Coordinator, but shall not be later than seven
full business days after the exercise of said option, nor in any event prior to
the Closing Time, as hereinafter defined. If the option is exercised as to all
or any portion of the U.S. Option Securities, each of the U.S. Underwriters,
acting severally and not jointly, on the basis of the representations and
warranties of the Company contained herein and subject to the terms and
conditions herein set forth, will purchase that proportion of the total number
of U.S. Option Securities then being purchased which the number of Initial U.S.
Securities set forth in Schedule A opposite the name of such U.S. Underwriter
bears to the total number of Initial U.S. Securities, subject in each case to
such adjustments as the Global Coordinator in its discretion shall make to
eliminate any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for the Initial Securities
shall be made at the offices of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 or at such other place as shall be agreed upon by the
Global Coordinator and the Company, at 9:00 A.M. (Eastern time) on the third
(fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on the date
hereof) business day after the date hereof (unless postponed in accordance with
the provisions of Section 10), or such other time not later than ten business
days after such date as shall be agreed upon by the Global Coordinator and the
Company (such time and date of payment and delivery being herein called
"Closing Time").
In addition, in the event that any or all of the U.S. Option Securities
are purchased by the U.S. Underwriters, payment of the purchase price for such
U.S. Option Securities shall be made at the above-mentioned offices, or at such
other place as shall be agreed upon by the Global Coordinator and the Company,
on each Date of Delivery as specified in the notice from the Global Coordinator
to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company. It is understood
that each U.S. Underwriter has authorized the U.S. Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial U.S. Securities and the U.S. Option Securities, if any,
which it has agreed to purchase. Xxxxxxx Xxxxx, individually and not as
representative of the U.S. Underwriters, may (but shall not be obligated to)
make payment of the purchase price for the Initial U.S. Securities or the U.S.
Option Securities, if any, to be purchased by any U.S. Underwriter
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-15-
whose funds have not been received by the Closing Time or the relevant Date of
Delivery, as the case may be, but such payment shall not relieve such U.S.
Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing Time or
the relevant Date of Delivery, as the case may be. The certificates for the
Initial U.S. Securities and the U.S. Option Securities, if any, will be made
available for examination and packaging by the U.S. Representatives in The City
of New York not later than 10:00 A.M. (Eastern time) on the business day prior
to the Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
U.S. Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule
430A or Rule 434, as applicable, and will notify the Global Coordinator
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectuses or any amended Prospectuses shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectuses or for additional information,
and (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to Rule 424(b) and
will take such steps as it deems necessary to ascertain promptly whether the
form of prospectus transmitted for filing under Rule 424(b) was received for
filing by the Commission and, in the event that it was not, it will promptly
file such prospectus. The Company will make every reasonable effort to prevent
the issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
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(b) Filing of Amendments. The Company will give the Global Coordinator
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), any Term Sheet or any
amendment, supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the Prospectuses,
will furnish the Global Coordinator with copies of any such documents a
reasonable amount of time prior to such proposed filing or use, as the case may
be, and will not file or use any such document to which the Global Coordinator
or counsel for the U.S. Underwriters shall reasonably object within three
Business Days after being furnished such documents.
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the U.S. Representatives and counsel for the U.S. Underwriters,
without charge, signed copies of the Registration Statement as originally filed
and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and signed copies of all consents and
certificates of experts, and will also deliver to the U.S. Representatives,
without charge, a conformed copy of the Registration Statement as originally
filed and of each amendment thereto (without exhibits) for each of the U.S.
Underwriters. The copies of the Registration Statement and each amendment
thereto furnished to the U.S. Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
XXXXX, except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each U.S.
Underwriter, without charge, as many copies of each preliminary prospectus as
such U.S. Underwriter reasonably requested, and the Company hereby consents to
the use of such copies for purposes permitted by the 1933 Act. The Company
will furnish to each U.S. Underwriter, without charge, during the period when
the U.S. Prospectus is required to be delivered under the 1933 Act or the
Securities Exchange of 1934 (the "1934 Act"), such number of copies of the U.S.
Prospectus (as amended or supplemented) as such U.S. Underwriter may reasonably
request. The U.S. Prospectus and any amendments or supplements thereto
furnished to the U.S. Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX, except
to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations
21
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so as to permit the completion of the distribution of the Securities as
contemplated in this Agreement, the International Purchase Agreement and the
Prospectuses. If at any time when a prospectus is required by the 1933 Act to
be delivered in connection with sales of the Securities, any event shall occur
or condition shall exist as a result of which it is necessary, in the reasonable
opinion of counsel for the U.S. Underwriters or for the Company, to amend the
Registration Statement or amend or supplement any Prospectus in order that the
Prospectuses will not include any untrue statements of a material fact or omit
to state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the reasonable opinion
of any such counsel, at any such time to amend the Registration Statement or
amend or supplement any Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, subject to Section 3(b), such amendment or supplement
as may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectuses comply with such requirements, and
the Company will furnish to the U.S. Underwriters such number of copies of such
amendment or supplement as the U.S. Underwriters may reasonably request.
(f) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders an earnings statement for the purposes of, and to provide the
benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act.
(g) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Prospectuses
under "Use of Proceeds."
(h) Listing. The Company will use its best efforts to effect the
admission of the Securities on the European Association of Securities Dealers
Automated Quotation ("EASDAQ") system and comply with the requirements of such
exchange to maintain such listing. 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.
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(i) Restriction on Sale of Securities. During a period of 180 days from
the date of the Prospectuses, the Company will not, without the prior written
consent of the Global Coordinator, (i) directly or indirectly, offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any share of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or file any
registration statement under the 1933 Act with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the sale of the Securities hereunder and under
the International Purchase Agreement, (B) the issuance of any shares of Common
Stock by the Company upon the exercise of options or warrants or the conversion
of securities outstanding on the date hereof and referred to in the
Prospectuses or (C) the purchase or acquisition of shares of Common Stock
pursuant to contracts entered into prior to the date hereof and referred to in
the Prospectus.
(j) Reporting Requirements. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant to
the 1934 Act and rules and regulations of the Commission thereunder within the
time periods referred to therein.
(k) Compliance with Rule 463. The Company will comply with Rule 463 of
the 1933 Act Regulations.
SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay
all expenses incident to the performance of its obligations under this
Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Agreement, any Agreement among
Underwriters and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the Securities to the
Underwriters, including any stock or other transfer taxes and any stamp or
other duties payable upon the
23
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sale, issuance or delivery of the Securities to the Underwriters and the
transfer of the Securities between the U.S. Underwriters and the International
Managers, (iv) the fees and disbursements of the Company's counsel, accountants
and other advisors, (v) the printing and delivery to the Underwriters of copies
of each preliminary prospectus, any Term Sheets and of the Prospectuses and any
amendments or supplements thereto, (vi) the preparation, printing and delivery
to the Underwriters of copies of the Blue Sky Survey and any supplement thereto,
(vii) the fees and expenses of any transfer agent or registrar for the
Securities, (viii) the filing fees incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review by
the National Association of Securities Dealers, Inc. (the "NASD") of the terms
of the sale of the Securities and (ix) the fees and expenses incurred in
connection with the listing of the Securities on EASDAQ and inclusion of the
Securities in the Nasdaq National Market.
(b) Termination of Agreement. If this Agreement is terminated by the
U.S. Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the U.S. Underwriters for all of
their out-of-pocket expenses reasonably incurred by the U.S. Underwriters in
connection with this Agreement or the offering of the Securities contemplated
hereunder, including the reasonable fees and disbursements of counsel and
special counsel for the U.S. Underwriters.
SECTION 5. Conditions of U.S. Underwriters' Obligations. The
obligations of the several U.S. Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof and in certificates of any officer of the Company or any
subsidiary of the Company delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations hereunder, and
to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement has become effective and at Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the U.S. Underwriters. A
prospectus containing the Rule 430A Information shall have been filed
with the Commission
24
-20-
in accordance with Rule 424(b) (or a post-effective amendment providing
such information shall have been filed and declared effective in
accordance with the requirements of Rule 430A) or, if the Company has
elected to rely upon Rule 434, a Term Sheet shall have been filed with the
Commission in accordance with Rule 424(b).
(b) Opinion of Counsel for Company. At Closing Time, the U.S.
Representatives shall have received the favorable opinion, dated as of
Closing Time, of each of Shearman & Sterling, counsel for the Company,
Xxxxx Xxxxxx, Senior Vice President and General Counsel of the Company,
Coudert Brothers, special counsel for the Company and special regulatory
counsel for Hermes Europe Railtel B.V., Visil Kisil & Partners, special
Ukranian counsel to Bancomsvyaz, and Somodeco, counsel and regulatory
counsel to GTS Monaco Access X.X.X., each in form and substance
satisfactory to counsel for the U.S. Underwriters, together with signed
or reproduced copies of such letter for each of the other U.S.
Underwriters to the effect set forth in Exhibits A-1 through A-__ hereto.
(c) Opinion of Counsel for U.S. Underwriters. At Closing Time, the
U.S. Representatives shall have received the favorable opinion, dated as
of Closing Time, of each of Xxxxxx Xxxxxx & Xxxxxxx, counsel for the U.S.
Underwriters, and Xxxxxxxx Chance, special Russian counsel to the U.S.
Underwriters, together with signed or reproduced copies of such letter
for each of the other U.S. Underwriters as to such matters as are
reasonably requested by the Representatives.
(d) Officers' Certificate. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectuses, any material adverse change in
the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, and the U.S. Representatives shall have received a
certificate of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company, dated as
of Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Section 1(a)
hereof are true and correct with the same force and effect as though
expressly made at and as of Closing Time,
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(iii) the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to Closing
Time, and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or are pending or, to the knowledge of such officer,
are contemplated by the Commission.
(e) Accountant's Comfort Letter. At the time of the execution of
this Agreement, the U.S. Representatives shall have received from Ernst &
Young a letter dated such date, in form and substance satisfactory to the
U.S. Representatives, together with signed or reproduced copies of such
letter for each of the other U.S. Underwriters containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and
the Prospectuses.
(f) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from Ernst & Young a letter, dated as of Closing Time,
to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the
specified date referred to shall be a date not more than three business
days prior to Closing Time.
(g) Approval of Listing. At Closing Time, the Securities shall
have been approved for listing on EASDAQ, subject only to official notice
of issuance. At Closing Time, the Securities shall have been approved
for inclusion in the Nasdaq National Market, subject only to official
notice of issuance.
(h) No Objection. The NASD has confirmed that it has not raised
any objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(i) Lock-up Agreements. At the date of this Agreement, the U.S.
Representatives shall have received an agreement substantially in the
form of Exhibit B hereto signed by holders of shares of Common Stock,
warrants, options or other rights to purchase or acquire shares of Common
Stock or other securities convertible or exchangeable into Common Stock
(other than the Company's Convertible Bonds due 2000 (the "Convertible
Bonds")) representing
26
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not less than 93% of the outstanding Common Stock (excluding the effect of
the Convertible Bonds).
(j) Purchase of Initial International Securities.
Contemporaneously with the purchase by the U.S. Underwriters of the
Initial U.S. Securities under this Agreement, the International Managers
shall have purchased the Initial International Securities under the
International Purchase Agreement.
(k) Notes Offering. Contemporaneously with the purchase by the
Underwriters of the Securities under this Agreement, the Company shall
have consummated the Notes Offering.
(l) Conditions to Purchase of U.S. Option Securities. In the event
that the U.S. Underwriters exercise their option provided in Section 2(b)
hereof to purchase all or any portion of the U.S. Option Securities, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company or any subsidiary
of the Company hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the U.S. Representatives
shall have received:
(i) Officers' Certificate. A certificate, dated such Date
of Delivery, of the President or a Vice President of the
Company and of the chief financial or chief accounting officer
of the Company confirming that the certificate delivered at the
Closing Time pursuant to Section 5(d) hereof remains true and
correct as of such Date of Delivery.
(ii) Opinion of Counsel for Company. The favorable
opinion, dated as of such Date of Delivery, of each of counsels
listed in Section 5(b), each in form and substance satisfactory
to counsel for the U.S. Underwriters, relating to the U.S.
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section
5(b) hereof.
(iii) Opinion of Counsel for U.S. Underwriters. The favorable
opinion of Xxxxxx Xxxxxx & Xxxxxxx, counsel for the U.S.
Underwriters and Xxxxxxxx Chance, special counsel to the U.S.
27
Underwriters, dated such Date of Delivery, relating to the U.S.
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(c)
hereof.
(iv) Bring-down Comfort Letter. A letter from Ernst & Young, in
form and substance satisfactory to the U.S. Representatives and
dated such Date of Delivery, substantially in the same form and
substance as the letter furnished to the U.S. Representatives
pursuant to Section 5(f) hereof, except that the "specified date" in
the letter furnished pursuant to this paragraph shall be a date not
more than five days prior to such Date of Delivery.
(m) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the U.S. Underwriters shall have been furnished
with such documents and opinions as they may reasonably request for the
purpose of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated, or in order to evidence the accuracy
of any of the representations or warranties, or the fulfillment of any of
the conditions, herein contained; and all proceedings taken by the
Company in connection with the issuance and sale of the Securities as
herein contemplated shall be reasonably satisfactory in form and
substance to the U.S. Representatives and counsel for the U.S.
Underwriters.
(n) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of U.S. Option Securities on a Date of Delivery which is after
the Closing Time, the obligations of the several U.S. Underwriters to
purchase the relevant Option Securities, may be terminated by the U.S.
Representatives by notice to the Company at any time at or prior to
Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party
except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
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(a) Indemnification of U.S. Underwriters. The Company agrees to
indemnify and hold harmless each U.S. Underwriter and each person, if any, who
controls any U.S. Underwriter within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or the
Prospectuses (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Xxxxxxx Xxxxx), reasonably
incurred in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of any U.S. Underwriter through the U.S. Representatives
29
-25-
expressly for use in the Registration Statement (or any amendment or supplement
thereto), including the Rule 430A Information and the Rule 434 Information, if
applicable, or any preliminary prospectus or the U.S. Prospectus (or any
amendment or supplement thereto); provided, further the Company will not be
liable to any Underwriter with respect to any preliminary prospectus to the
extent that any such loss, liability, claim, damage or expense of such
Underwriter results from the fact that such Underwriter sold Securities to a
person as to whom it shall be established in the related proceedings that there
was not sent or given, at or prior to the written confirmation of such sale, a
copy of the Prospectus (or of the Prospectus as then amended or supplemented if
the Company shall have furnished such Underwriter with such amendment or
supplement thereto prior to the written confirmation of such sale), if such
delivery was required by the Act, and such loss, liability, claim, damage or
expense results from an untrue statement or omission of a material fact
contained in such preliminary prospectus that was completely corrected in the
Prospectus (or of the Prospectus as then amended or supplemented if the Company
shall have furnished such Underwriter with such amendment or supplement thereto
prior to the written confirmation of such sale).
(b) Indemnification of Company, Directors and Officers. Each U.S.
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection
(a) of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment or supplement thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
U.S. prospectus or the U.S. Prospectus (or any amendment or supplement thereto)
in reliance upon and in conformity with written information furnished to the
Company by such U.S. Underwriter through the U.S. Representatives expressly for
use in the Registration Statement (or any amendment or supplement thereto) or
such preliminary prospectus or the U.S. Prospectus (or any amendment or
supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced
30
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against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. In the case of
parties indemnified pursuant to Section 6(a) above, counsel to the indemnified
parties shall be selected by Xxxxxxx Xxxxx, and, in the case of parties
indemnified pursuant to Section 6(b) above, counsel to the indemnified parties
shall be selected by the Company. An indemnifying party may participate at its
own expense in the defense of any such action; provided, however, that counsel
to the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have
31
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reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the U.S. Underwriters on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and of the
U.S. Underwriters on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
U.S. Underwriters on the other hand in connection with the offering of the U.S.
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the U.S.
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the U.S.
Underwriters, in each case as set forth on the cover of the U.S. Prospectus, or,
if Rule 434 is used, the corresponding location on the Term Sheet, bear to the
aggregate initial public offering price of the U.S. Securities as set forth on
such cover.
The relative fault of the Company on the one hand and the U.S.
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the U.S. Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the U.S. Underwriters agree that it would not be just
and equitable if contribution pursuant to
32
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this Section 7 were determined by pro rata allocation (even if the U.S.
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above in this Section 7. The aggregate amount of losses,
liabilities, claims, damages and expenses incurred by an indemnified party and
referred to above in this Section 7 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission.
Notwithstanding the provisions of this Section 7, no U.S. Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the U.S. Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such U.S. Underwriter has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls a
U.S. Underwriter within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company. The U.S.
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial U.S. Securities set forth
opposite their respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any Venture submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on
33
-29-
behalf of any U.S. Underwriter or controlling person, or by or on behalf of the
Company, and shall survive delivery of the Securities to the U.S. Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The U.S. Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the U.S. Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the U.S.
Representatives, impracticable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in any securities of the
Company has been suspended or materially limited by the Commission, or EASDAQ,
Luxembourg Stock Exchange or the Nasdaq National Market, or if trading generally
on the American Stock Exchange or the New York Stock Exchange or in the Nasdaq
National Market has been suspended or materially limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by such system or by order of the
Commission, the NASD or any other governmental authority, or (iv) if a banking
moratorium has been declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the U.S. Underwriters. If one
or more of the U.S. Underwriters shall fail at Closing Time or a Date of
Delivery to purchase the Securities which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"), the U.S.
34
-30-
Representatives shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting U.S. Underwriters, or any
other underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the U.S. Representatives shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the number of U.S. Securities to be purchased on such date, each of the
non-defaulting U.S. Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting U.S. Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number
of U.S. Securities to be purchased on such date, this Agreement or, with
respect to any Date of Delivery which occurs after the Closing Time, the
obligation of the U.S. Underwriters to purchase and of the Company to
sell the Option Securities to be purchased and sold on such Date of
Delivery shall terminate without liability on the part of any
non-defaulting U.S. Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
U.S. Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery which is
after the Closing Time, which does not result in a termination of the obligation
of the U.S. Underwriters to purchase and the Company to sell the relevant U.S.
Option Securities, as the case may be, either the U.S. Representatives or the
Company shall have the right to postpone Closing Time or the relevant Date of
Delivery, as the case may be, for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the term "U.S.
Underwriter" includes any person substituted for a U.S. Underwriter under this
Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be
35
-31-
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the U.S. Underwriters shall be directed to the
U.S. Representatives c/o Merrill Xxxxx & Co., Xxxxxxx Xxxxx Xxxxxx, Xxxxxx &
Xxxxx Incorporated at North Tower, World Financial Center, New York, New York
10281-1201, attention of Xxxxxx Xxxxxx; and notices to the Company shall be
directed to it at 0000 Xxxxxxxx Xxxxx, Xxxxx Xxxxx - 00xx Xxxxx, XxXxxx, XX
00000, attention of Xxxxxxx X. Xxxxxxx.
SECTION 12. Parties. This Agreement shall each inure to the benefit
of and be binding upon the U.S. Underwriters and the Company and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the U.S. Underwriters and the Company and their respective successors and
the controlling persons and officers and directors referred to in Sections 6 and
7 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the U.S. Underwriters and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any U.S. Underwriter shall be deemed to be a successor by reason merely of
such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
36
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the U.S. Underwriters and the Company in accordance with its terms.
Very truly yours,
GLOBAL TELESYSTEMS GROUP, INC.
By
-------------------------------------
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
UBS SECURITIES LLC
XXXXXX BROTHERS INC.
XXXXXX XXXX LLC
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By
-----------------------------------------
Authorized Signatory
For themselves and as U.S. Representatives of the other U.S. Underwriters named
in Schedule A hereto.
37
SCHEDULE A
Number of
Initial U.S.
Name of U.S. Underwriter Securities
------------------------ ----------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated..........
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation.........
UBS Securities LLC..........................................
Xxxxxx Brothers Inc.........................................
Xxxxxx Xxxx LLC.............................................
--------------
Total....................................................... 8,880,000
==============
Schedule A-1
38
SCHEDULE B
GLOBAL TELESYSTEMS GROUP, INC.
Shares of Common Stock
(Par Value $.10 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $__________.
2. The purchase price per share for the U.S. Securities to be paid
by the several U.S. Underwriters shall be $__________, being an amount
equal to the initial public offering price set forth above less
$__________per share; provided that the purchase price per share for any
U.S. Option Securities purchased upon the exercise of the over-allotment
option described in Section 2(b) shall be reduced by an amount per share
equal to any dividends or distributions declared by the Company and
payable on the Initial U.S. Securities but not payable on the U.S. Option
Securities.
Schedule B-1
39
Exhibit A-1
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
A-1-1
40
Exhibit A-2
FORM OF OPINION OF COMPANY'S SPECIAL COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
A-2-1
41
Exhibit B
, 1997
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES
CORPORATION
UBS SECURITIES LLC
XXXXXX BROTHERS INC.
XXXXXX XXXX LLC
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx, Xxxxx, Xxxxxx, Xxxxxx & Xxxxx
Incorporated
North Tower
World Financial Center
Xxx Xxxx, Xxx Xxxx 00000-0000
Xxxxxx Xxxxxx of America
as U.S. Representatives of the several Underwriters to be named in
the within-mentioned Purchase Agreements
Re: Agreement not to sell or otherwise dispose of securities of
Global TeleSystems Group, Inc.
Ladies and Gentlemen:
The undersigned, a stockholder of Global TeleSystems Group, Inc. (the
"Company"), understands that the Company has filed a registration statement on
Form S-1 with the Securities and Exchange Commission in connection with the
initial public offering (the "Offering") of shares of Common Stock ("Shares") of
the Company. The undersigned further understands that the Company proposes to
enter into a U.S. purchase agreement (the "U.S. Purchase Agreement") with
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), Xxxxxxxxx,
Xxxxxx & Xxxxxxxx Securities Corporation, UBS Securities LLC, Xxxxxx Brothers
Inc. and Xxxxxx Xxxx LLC (the "U.S. Representatives"), on behalf of the U.S.
underwriters (collectively, the "U.S. Underwriters"), and a separate
international purchase agreement (the "International Purchase Agreement";
together with the U.S.
X-0
00
Xxxxxxxx Xxxxxxxxx, the "Purchase Agreements") with Xxxxxxx Xxxxx International,
UBS Limited, Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, Xxxxxx
Brothers Inc. and ING Bank N.V. (the "International Representatives") on behalf
of the international managers (collectively, the "International Managers", and,
together with the U.S. Underwriters, the "Underwriters"), in connection with the
Offering.
In recognition of the benefit that such Offering will confer upon the
undersigned as a stockholder of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and in order to induce the Company and the Underwriters to enter into the
respective Purchase Agreements and to proceed with the Offering, the
undersigned hereby agrees, that, should the Offering be consummated, for a
period of 180 days after the date of the Purchase Agreements relating to the
Offering, the undersigned will not, without the prior written consent of
Xxxxxxx Xxxxx, directly or indirectly, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant for the sale of, or otherwise
dispose of or transfer any Shares or any securities convertible into or
exchangeable or exercisable for any Shares, whether now owned or hereafter
acquired by the undersigned or with respect to which the undersigned has or
hereafter acquires the power of disposition or request the filing of any
registration statement under the Securities Act of 1933, as amended, with
respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of Shares, whether any such
swap transaction is to be settled by delivery of the Shares or other
securities, in cash or otherwise.
Sincerely,
Name of Stockholder:
-----------------------------------
(Print)
Signature:
-----------------------------------
By:
(if not natural person)
B-2
