Exhibit 1.1
$97,000,000
TELEGROUP, INC.
10 1/2% Senior Discount Notes due 2004
PURCHASE AGREEMENT
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October 20, 1997
▇▇▇▇▇ ▇▇▇▇▇▇ INC.
BT ALEX. ▇▇▇▇▇ INCORPORATED
As Initial Purchasers
c/o ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Telegroup, Inc., an Iowa corporation (the "Company"), proposes, upon
the terms and conditions set forth herein, to issue and sell to ▇▇▇▇▇ ▇▇▇▇▇▇
Inc. and BT Alex. ▇▇▇▇▇ Incorporated, as the initial purchasers (the "Initial
Purchasers"), $97,000,000 aggregate principal amount at maturity of its 10 1/2%
Senior Discount Notes due 2004 (the "Notes"). The Notes will be issued pursuant
to the provisions of an Indenture, to be dated as of October 23, 1997 (the
"Indenture"), between the Company and State Street Bank and Trust Company, as
Trustee (the "Trustee"). The Company's common stock, no par value per share, is
hereinafter referred to as the "Common Stock."
The Company wishes to confirm as follows its agreement with the
Initial Purchasers in connection with the purchase and resale of the Notes.
1. Preliminary Offering Memorandum and Offering Memorandum. The
Notes will be offered and sold to the Initial Purchasers without registration
under the Securities Act of 1933, as amended (the "Act"), in reliance on an
exemption pursuant to Section 4(2) under the Act. The Company has prepared a
preliminary offering memorandum, dated October 9, 1997 (the "Preliminary
Offering Memorandum"), and an offering memorandum, dated October 20, 1997 (the
"Offering Memorandum"), setting forth information regarding the Company and the
Notes. Any references herein to the Preliminary Offering Memorandum and the
Offering Memorandum shall be deemed to include all amendments and supplements
thereto. The Company hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum and the Offering Memorandum in connection with
the offering and resale of the Notes by the Initial Purchasers.
The Company understands that the Initial Purchasers propose to make
offers and sales (the "Exempt Resales") of the Notes purchased by the Initial
Purchasers hereunder only on the terms and in the
manner set forth in the Offering Memorandum and Section 2 hereof, as soon as the
Initial Purchasers deem advisable after this Agreement has been executed and
delivered, (i) to persons in the United States whom the Initial Purchasers
reasonably believe to be qualified institutional buyers ("Qualified
Institutional Buyers") as defined in Rule 144A under the Act, as such rule may
be amended from time to time ("Rule 144A"), in transactions under Rule 144A and
(ii) to a limited number of other institutional "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) and (7) under Regulation D of the Act)
("Accredited Investors") in private sales exempt from registration under the Act
(such persons specified in clauses (i) and (ii) being referred to herein as the
"Eligible Purchasers").
It is understood and acknowledged that upon original issuance thereof,
and until such time as the same is no longer required under the applicable
requirements of the Act, the Notes shall bear the legends set forth in paragraph
five under the section of the Offering Memorandum entitled "Transfer
Restrictions."
It is also understood and acknowledged that holders (including
subsequent transferees) of the Notes will have the registration rights set forth
in the registration rights agreement (the "Registration Rights Agreement"), to
be dated the date hereof, in substantially the form of Exhibit A hereto, for so
long as such Notes constitute "Transfer Restricted Securities" (as defined in
the Registration Rights Agreement). This Agreement, the Indenture and the
Registration Rights Agreement are hereinafter referred to collectively as the
"Operative Documents."
Capitalized terms used herein without definition have the respective
meanings specified therefor in the Indenture or the Offering Memorandum.
2. Agreements to Sell, Purchase and Resell. (a) The Company hereby
agrees, subject to all the terms and conditions set forth herein, to issue and
sell to the Initial Purchasers and, upon the basis of the representations,
warranties and agreements of the Company herein contained and subject to all the
terms and conditions set forth herein, each Initial Purchaser, severally and not
jointly, agrees to purchase from the Company, at a purchase price of $723.09 per
$1,000 principal amount at maturity, the principal amount of Notes set forth
opposite the name of such Initial Purchaser in Schedule I hereto.
(b) The Initial Purchasers have advised the Company that they propose
to offer the Notes for sale upon the terms and conditions set forth in this
Agreement and in the Offering Memorandum. The Initial Purchasers hereby
represent and warrant to, and agree with, the Company that the Initial
Purchasers (i) are purchasing the Notes pursuant to a private sale exempt from
registration under the Act, (ii) will not solicit offers for, or offer or sell,
the Notes by means of any form of general solicitation or general advertising or
in any manner involving a public offering within the meaning of Section 4(2) of
the Act, and (iii) will solicit offers for the Notes only from, and will offer,
sell or deliver the Notes as part of its initial offering, only to (A) persons
in the United States whom the Initial Purchasers reasonably believe to be
Qualified Institutional Buyers, or if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to the Initial Purchasers that each such
account is a Qualified Institutional Buyer, to whom notice has been given that
such sale or delivery is being made in reliance on Rule 144A, in each case, in
transactions under Rule 144A and (B) to a limited number of Accredited Investors
that make the representations to and agreements with the Company specified in
Annex A to the Offering Memorandum in private sales exempt from registration
under the Act. The Initial Purchasers have advised the Company that they will
offer the Notes to Eligible Purchasers at a price initially equal to the
Accreted Value of the Notes on the date of sale. Such price may be changed by
the Initial Purchasers at any time thereafter without notice.
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3. Delivery of the Notes and Payment Therefor. Delivery to the
Initial Purchasers of and payment for the Notes shall be made at the office of
▇▇▇▇▇ ▇▇▇▇▇▇ Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, at 10:00 A.M., New
York City time, on October 23, 1997 (the "Closing Date"). The place of closing
for the Notes and the Closing Date may be varied by agreement between the
Initial Purchasers and the Company.
The Notes will be delivered to the Initial Purchasers against payment
of the purchase price therefor in immediately available funds. The Notes will
be evidenced by one or more global securities in definitive form (the "Global
Notes") and/or by additional securities in definitive form and will be
registered in the name of Cede & Co. as nominee of The Depositary Trust Company
("DTC") and in the other cases, in such names and in such denominations as the
Initial Purchasers shall request prior to 1:00 p.m., New York City time, on the
second business day preceding the Closing Date, or such other times as otherwise
agreed by the parties hereto. The Notes to be delivered to the Initial
Purchasers shall be made available to the Initial Purchasers in New York City
for inspection and packaging not later than 9:30 a.m., New York City time, on
the business day next preceding the Closing Date.
4. Agreements of the Company. The Company agrees with the Initial
Purchasers as follows:
(a) The Company will advise the Initial Purchasers promptly and, if
requested by them, will confirm such advice in writing, within the period of
time referred to in paragraph (e) below, of any change in the Company's
financial condition, business, prospects, properties, net worth or results of
operations, or of the happening of any event which makes any statement made in
the Offering Memorandum untrue or which requires the making of any additions to
or changes in the Offering Memorandum (as then amended or supplemented) in order
to make the statements therein not misleading, or of the necessity to amend or
supplement the Offering Memorandum to comply with any law.
(b) The Company will furnish to the Initial Purchasers, without
charge, as of the date of the Offering Memorandum, such number of copies of the
Offering Memorandum, and any amendments or supplements thereto, as the Initial
Purchasers may reasonably request.
(c) The Company will not make any amendment or supplement to the
Preliminary Offering Memorandum or to the Offering Memorandum of which the
Initial Purchasers shall not previously have been advised or to which they shall
reasonably object in writing after being so advised.
(d) Prior to the execution and delivery of this Agreement, the
Company has delivered or will deliver to the Initial Purchasers, without charge,
in such quantities as the Initial Purchasers shall have reasonably requested or
may hereafter reasonably request, copies of the Preliminary Offering Memorandum.
The Company consents to the use, in accordance with the securities or Blue Sky
laws of the jurisdictions in which the Notes are offered by the Initial
Purchasers and by dealers, prior to the date of the Offering Memorandum, of each
Preliminary Offering Memorandum so furnished by the Company. The Company
consents to the use of the Offering Memorandum (and of any amendment or
supplement thereto) in accordance with the securities or Blue Sky laws of the
jurisdictions in which the Notes are offered by the Initial Purchasers and by
all dealers to whom Notes may be sold, in connection with the offering and sale
of the Notes.
(e) If, at any time prior to completion of the resale of the Notes by
the Initial Purchasers to
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Eligible Purchasers, any event shall occur that in the judgment of the Company
or in the opinion of counsel for the Initial Purchasers should be set forth in
the Offering Memorandum (as then amended or supplemented) in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary to supplement or amend the Offering
Memorandum to comply with any law, the Company will forthwith prepare an
appropriate supplement or amendment thereto, and will expeditiously furnish to
the Initial Purchasers and dealers a reasonable number of copies thereof. In the
event that the Company and the Initial Purchasers agree that the Offering
Memorandum should be amended or supplemented, the Company, if requested by the
Initial Purchasers, will promptly issue a press release announcing or disclosing
the matters to be covered by the proposed amendment or supplement.
(f) The Company will cooperate with the Initial Purchasers and with
their counsel in connection with the qualification of the Notes for offering and
sale by the Initial Purchasers and by dealers under the securities or Blue Sky
laws of such jurisdictions as the Initial Purchasers may reasonably designate
and will file such consents to service of process or other documents necessary
or appropriate in order to effect such qualification; provided that in no event
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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 which would subject it to
service of process in suits, other than those arising out of the offering or
sale of the Notes, in any jurisdiction where it is not now so subject.
(g) So long as any of the Notes are outstanding, the Company will
furnish to the Initial Purchasers (i) as soon as available, a copy of each
report of the Company mailed to stockholders or filed with the Commission or the
Nasdaq National Market, and (ii) from time to time such other information
concerning the Company as the Initial Purchasers may reasonably request.
(h) If this Agreement shall terminate or shall be terminated after
execution and delivery pursuant to any provisions hereof (otherwise than by
notice given by the Initial Purchasers terminating this Agreement pursuant to
Section 9 or Section 10 hereof) or if this Agreement shall be terminated by the
Initial Purchasers because of any failure or refusal on the part of the Company
to comply, in any material respect, with the terms or fulfill, in any material
respect, any of the conditions of this Agreement, the Company agrees to
reimburse the Initial Purchasers for all reasonable out-of-pocket expenses
(including reasonable fees and expenses of its counsel) incurred by it in
connection herewith.
(i) The Company will apply the net proceeds from the sale of the
Notes to be sold by it hereunder substantially in accordance with the
description set forth in the Offering Memorandum under the caption "Use of
Proceeds."
(j) For a period of 90 days from the date of the Offering Memorandum,
the Company will not offer for sale, sell, contract to sell or otherwise dispose
of, directly or indirectly, or announce any offer, sale, contract for sale of or
other disposition of any debt securities substantially similar to the Notes, or
securities exchangeable for, or convertible into, debt securities substantially
similar to the Notes, issued or guaranteed by the Company or any of the
Subsidiaries (as hereinafter defined) without the prior written consent of the
Initial Purchasers.
(k) Except as stated in this Agreement and in the Preliminary
Offering Memorandum and Offering Memorandum, the Company has not taken, nor will
it take, directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the price of
the Notes to facilitate the sale or resale of the Notes. Except as permitted by
the Act, the Company will not
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distribute any offering material in connection with the Exempt Resales.
(l) The Company will use its best efforts to cause the Notes to be
eligible for trading on The PORTAL Market prior to the Closing Date.
(m) From and after the Closing Date, so long as any of the Notes are
outstanding and are "Restricted Securities" within the meaning of Rule 144(a)(3)
under the Act or, if earlier, until two years after the Closing Date, and during
any period in which the Company is not subject to Section 13 or 15(d) of the
Exchange Act, the Company will furnish to holders of the Notes and prospective
purchasers of Notes designated by such holders, upon request of such holders or
such prospective purchasers, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Act to permit compliance with Rule 144A in
connection with resale of the Notes.
(n) The Company has complied and will comply with all provisions of
Florida Statutes Section 517.075 relating to issuers doing business with Cuba.
(o) The Company agrees not to sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Notes in a manner that would
require the registration under the Act of the sale to the Initial Purchasers or
the Eligible Purchasers of the Notes.
(p) The Company agrees to comply with all of the terms and conditions
of the Registration Rights Agreement and all agreements set forth in the
representations and letters of the Company to DTC relating to the approval of
the Notes by DTC for "book entry" transfer.
(q) The Company agrees that prior to any registration of the Notes
pursuant to the Registration Rights Agreement, or at such earlier time as may be
required, the Indenture shall be qualified under the Trust Indenture Act of 1939
(the "1939 Act") and any necessary supplemental indentures will be entered into
in connection therewith.
5. Representations and Warranties of the Company. The Company
represents and warrants to the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and Offering Memorandum with
respect to the Notes have been prepared by the Company for use by the Initial
Purchasers in connection with the Exempt Resales. No order or decree preventing
the use of the Preliminary Offering Memorandum or the Offering Memorandum or any
amendment or supplement thereto, or any order asserting that the transactions
contemplated by this Agreement are subject to the registration requirements of
the Act has been issued and no proceeding for that purpose has commenced or is
pending or, to the knowledge of the Company, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum
as of their respective dates and the Offering Memorandum as of the Closing Date,
did not or will not at any time contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, except that this representation and
warranty does not apply to statements in or omissions from the Preliminary
Offering Memorandum and Offering Memorandum made in reliance upon and in
conformity with information relating to the Initial Purchasers furnished to the
Company
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in writing by or on behalf of the Initial Purchasers expressly for use therein.
(c) The Indenture has been duly and validly authorized by the Company
and, upon its execution, delivery and performance by the Company and assuming
due authorization, execution, delivery and performance by the Trustee, will be a
valid and binding agreement of the Company, enforceable in accordance with its
terms, except (i) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to rights of creditors and other
obligees generally, (ii) the remedy of specific performance and other forms of
equitable relief may be subject to certain equitable defenses and principles and
to the discretion of the court before which the proceedings may be brought and
(iii) rights to indemnity and contribution thereunder may be limited by federal
or state securities laws or the public policy underlying such laws; the
Indenture conforms in all material respects to the description thereof in the
Offering Memorandum and no qualification of the Indenture under the 1939 Act is
required in connection with the offer and sale of the Notes contemplated hereby
or in connection with the Exempt Resales.
(d) The Notes have been duly authorized by the Company and, when
executed by the Company and authenticated by the Trustee in accordance with the
Indenture and delivered to the Initial Purchasers against payment therefor in
accordance with the terms hereof, will have been validly issued and delivered,
and will constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable in accordance with their terms, except
as (i) the enforcability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to rights of creditors and other obligees
generally, (ii) the remedy of specific performance and other forms of equitable
relief may be subject to certain equitable defenses and principles and to the
discretion of the court before which the proceedings may be brought and (iii)
rights to indemnity and contribution thereunder may be limited by federal or
state securities laws or the public policy underlying such laws; the Notes will
conform in all material respects to the description thereof in the Offering
Memorandum.
(e) All the outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable and
are free of any preemptive or similar rights and were issued and sold in
compliance with all applicable Federal and state securities laws.
(f) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Iowa with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum, and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify does not have a material adverse effect on the financial
condition, business, properties, net worth or results of operations of the
Company and the Subsidiaries (as hereinafter defined), taken as a whole (a
"Material Adverse Effect").
(g) All the Company's subsidiaries (collectively, the "Subsidiaries")
are listed on Schedule II hereto. Each Subsidiary is a corporation duly
organized, validly existing and in good standing in the jurisdiction of its
incorporation, with full corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Offering
Memorandum, and is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does not have
a Material Adverse Effect. All the outstanding shares of capital stock of
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each of the Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable, and are wholly owned by the Company directly or
indirectly through one of the other Subsidiaries, free and clear of any lien,
adverse claim, security interest, equity or other encumbrance, except as
described in the Offering Memorandum.
(h) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened, against the Company or any of the
Subsidiaries or to which the Company or any of the Subsidiaries, or to which any
of their respective properties, is subject, which are material to the Company or
its Subsidiaries, taken as a whole, that are not disclosed in the Offering
Memorandum and which, if adversely decided, are reasonably likely to cause a
Material Adverse Effect or materially affect the issuance of the Notes or the
consummation of the transactions contemplated by the Operative Documents. There
are no material agreements, contracts, indentures, leases, licenses or other
instruments or documents relating to the Company or the Subsidiaries that are
not described in the Offering Memorandum. The descriptions of the terms of any
such agreements, indentures, leases, licenses, instruments, contracts or
documents contained in the Offering Memorandum are correct in all material
respects. Neither the Company nor any Subsidiary is involved in any strike, job
action or labor dispute with any group of employees, and, to the Company's
knowledge, no such action or dispute is threatened.
(i) Neither the Company nor any of the Subsidiaries is (i) in
violation of its certificate or articles of incorporation or by-laws or other
organizational documents, (ii) in violation of any law, ordinance,
administrative or governmental rule or regulation applicable to the Company or
any of the Subsidiaries or of any decree of any court or governmental agency or
body having jurisdiction over the Company or any of the Subsidiaries, except
where any such violation or violations in the aggregate would not have a
Material Adverse Effect or (iii) in default in the performance of any
obligation, agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any agreement, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties may be bound, and no
condition or state of facts exists which with the passage of time or the giving
of notice or both, would constitute such a default (except where any such
default or defaults in the aggregate would not have a Material Adverse Effect)
except as may be disclosed in the Offering Memorandum.
(j) Neither the issuance, offer, sale or delivery of the Notes, the
execution, delivery or performance of this Agreement, the Indenture or the
Registration Rights Agreement by the Company nor the consummation by the Company
of the transactions contemplated hereby or thereby (i) requires any consent,
approval, authorization or other order of, or registration or filing with, any
court, regulatory body, administrative agency or other governmental body, agency
or official (except such as may be required in connection with the registration
under the Act of the Notes in accordance with the Registration Rights Agreement,
qualification of the Indenture under the 1939 Act and compliance with the
securities or Blue Sky laws of various jurisdictions) or conflicts or will
conflict with or constitutes or will constitute a breach of, or a default under,
the certificate or articles of incorporation or bylaws, or other organizational
documents, of the Company or any of the Subsidiaries or (ii) conflicts or will
conflict with or constitutes or will constitute a breach of, or a default under,
in any material respect, any material agreement, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties may be bound, or
violates or will violate in any material respect any statute, law, regulation or
filing or judgment, injunction, order or decree applicable to the Company or any
of the Subsidiaries or any of their respective properties, or will result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of the Subsidiaries pursuant to the terms
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of any agreement or instrument to which any of them is a party or by which any
of them may be bound or to which any of the property or assets of any of them is
subject.
(k) The accountants, KPMG Peat Marwick LLP, KPMG Chartered
Accountants and Registered Auditors, and ▇▇▇▇▇▇▇▇, Blakiston & ▇▇▇▇▇▇, P.A.,
have certified or shall certify the financial statements included as part of the
Offering Memorandum (or any amendment or supplement thereto), and, with respect
to KPMG Peat Markwick LLP and ▇▇▇▇▇▇▇▇, Blakiston & ▇▇▇▇▇▇, P.A. are each
independent public accountants under Rule 101 of the AICPA'a Code of
Professional Conduct, and its interpretation and rulings.
(l) The financial statements (historical and pro forma), together
with related schedules and notes forming part of the Offering Memorandum (and
any amendment or supplement thereto), present fairly the consolidated financial
position, results of operations and changes in stockholders' equity and cash
flows of the Company and the Subsidiaries on the basis stated in the Offering
Memorandum at the respective dates or for the respective periods to which they
apply. Such statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein. The pro forma
financial data included in the Offering Memorandum have been prepared in
accordance with the Commission's applicable rules and guidelines with respect to
pro forma financial statements. The pro forma adjustments contained therein have
been properly applied to the historical amounts in the compilation of those
statements, and the Company believes that the assumptions used in the
preparation thereof are reasonable. The other financial and statistical
information and data set forth in the Offering Memorandum are accurately
presented in all material respects and prepared on a basis consistent in all
material respects with the books and records of the Company and its
Subsidiaries.
(m) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement and the Registration
Rights Agreement; the execution and delivery of, and the performance by the
Company of its obligations under, this Agreement and the Registration Rights
Agreement have been duly and validly authorized by the Company, and this
Agreement and the Registration Rights Agreement have been duly executed and
delivered by the Company and constitute the valid and legally binding agreements
of the Company, enforceable against the Company in accordance with their terms,
except (i) the enforceability hereof or thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to rights of creditors and other
obligees generally, (ii) the remedy of specific performance and other forms of
equitable relief may be subject to certain equitable defenses and principles and
to the discretion of the court before which the proceedings may be brought and
(iii) rights to indemnity and contribution hereunder or thereunder may be
limited by federal or state securities laws or the public policy underlying such
laws.
(n) Except as disclosed in the Offering Memorandum (or any amendment
or supplement thereto), subsequent to the date as of which such information is
given in the Offering Memorandum (or any amendment or supplement thereto),
neither the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any change in the capital
stock of the Company, or material increase in the short-term or long-term debt,
of the Company or any of the Subsidiaries, or any material adverse change, or
any development involving or which could reasonably be expected to have a
Material Adverse Effect.
(o) Each of the Company and the Subsidiaries has good and marketable
title to all property
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(real and personal) described in the Offering Memorandum as being owned by it,
free and clear of all liens, claims, security interests or other encumbrances
except such as are described in the Offering Memorandum, except where the
failure to have such title would not, individually or in the aggregate, have a
Material Adverse Effect and all the property described in the Offering
Memorandum as being held under lease by each of the Company and the Subsidiaries
is held by it under valid, subsisting and enforceable leases, except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or hereafter in
effect relating to rights of creditors and other obligees generally or by
general equitable principles with only such exceptions as in the aggregate are
not materially burdensome and do not interfere in any material respect with the
conduct of the business of the Company and the Subsidiaries, taken as a whole.
(p) Except as permitted by the Act, the Company has not distributed
and, prior to the later to occur of the Closing Date and completion of the
distribution of the Notes, will not distribute any offering material in
connection with the offering and sale of the Notes other than the Preliminary
Offering Memorandum and Offering Memorandum.
(q) The Company and each of the Subsidiaries have such consents,
approvals, permits, licenses, franchises and authorizations of and from all
United States and foreign, federal, state or provincial, local and other
governmental or regulatory authorities (collectively, the "Licenses") as are
necessary to own its respective properties and to conduct its business in the
manner described in the Offering Memorandum, except where the failure to have
any such Licenses would not have a Material Adverse Effect and subject to such
qualifications as may be set forth in the Offering Memorandum; the Company and
each of the Subsidiaries has fulfilled and performed all its material
obligations with respect to such Licenses and no event has occurred that allows,
or after notice or lapse of time or both would allow, revocation or termination
thereof or results in any other material impairment of the rights of the holder
of any such Licenses, except where any of the foregoing would not have,
individually or in the aggregate, a Material Adverse Effect and subject in each
case to such qualification as may be set forth in the Offering Memorandum; and,
except as described in the Offering Memorandum, none of such Licenses contains
any restriction or conditions that is materially burdensome to the Company or
any of the Subsidiaries. Without limiting the generality of this paragraph 5(q):
(i) The Company and each of the Subsidiaries hold all
telecommunications regulatory licenses, permits, authorizations, consents
and approvals (the "Telecommunications Licenses") required from the Federal
Communications Commission (the "FCC") for the Company and the Subsidiaries
to conduct their business in the manner described in or contemplated by the
Offering Memorandum, except as would not have, individually or in the
aggregate, a Material Adverse Effect; the Telecommunications Licenses have
been duly and validly issued and are in full force and effect, except where
the failure to be in full force and effect would not have, individually or
in the aggregate, a Material Adverse Effect; no proceedings to revoke or
restrict the Telecommunications Licenses are pending or, to the best of our
knowledge, threatened; neither the Company nor the Subsidiaries are in
violation of any of the terms and conditions of any of the
Telecommunications Licenses, are in violation of the Communications Act of
1934, as amended (the "Communications Act"), or are in violation of any FCC
rules and regulations, except as would not have, individually or in the
aggregate, a Material Adverse Effect; and the Company and the Subsidiaries
have in effect with the FCC all international and domestic service tariffs
necessary to conduct their business in the manner described in or
contemplated by the Offering Memorandum except as would not have,
individually or in the aggregate, a Material Adverse Effect;
(ii) The Company and the Subsidiaries have obtained all state
Telecommunications Licenses
9
and filed all tariffs required for the provision of telecommunications
services in any state to conduct their business in the manner described in
or contemplated by the Offering Memorandum, except where the failure to do
so would not have, individually or in the aggregate, a Material Adverse
Effect;
(iii) There is no outstanding adverse judgment, injunction, decree
or order that has been issued by the FCC or any state public utility
commission or similar state agency ("PUC") against the Company or the
Subsidiaries or any action, proceeding or investigation pending before the
FCC or any state PUC, or, to the Company's knowledge, threatened by the FCC
or any state PUC against the Company or the Subsidiaries which, if the
subject of any unfavorable decision, ruling or finding, would have a
Material Adverse Effect on the Company or the Subsidiaries;
(iv) No license, permit, consent, approval, order or authorization
of, or filing with, the FCC or with any state PUC on the part of the
Company or the Subsidiaries is required in connection with the issuance or
sale of the Notes;
(v) Neither the issuance and sale of the Notes nor the performance
by the Company or the Subsidiaries of their obligations under this
Agreement, the Registration Rights Agreement or the Indenture will result
in a violation in any material respect of the Communications Act or any
applicable FCC rules or regulations, or any order, writ, judgment,
injunction, decree or award of the FCC binding on the Company or the
Subsidiaries; and
(vi) Neither the Company nor the Subsidiaries are in non-compliance
in the provision of international call-back service with the laws of any
foreign jurisdiction that would constitute a violation of the
Telecommunications Licenses, except where such non-compliance would not
have a Material Adverse Effect and subject to such qualifications as may be
set forth in the Offering Memorandum.
(r) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(s) Neither the Company nor any of the Subsidiaries nor, to the
Company's knowledge, any employee or agent of the Company or any Subsidiary has
made any payment of funds of the Company or any Subsidiary or received or
retained any funds in violation of any law, rule or regulation, which violation
would have a Material Adverse Effect.
(t) Except as disclosed in the Offering Memorandum, the Company
and each of the Subsidiaries have filed all tax returns required to be filed,
which returns are true and correct in all material respects, and neither the
Company nor any Subsidiary is in default in the payment of any taxes which were
payable pursuant to said returns or any assessments with respect thereto.
(u) No holder of any security of the Company has any right to
request or demand registration of shares of Common Stock or any other security
of the Company because of the consummation of the transactions contemplated by
this Agreement or the Registration Rights Agreement, except as described in
10
the Offering Memorandum.
(v) The Company and the Subsidiaries own or possess all patents,
trademarks, trademark registration, service marks, service ▇▇▇▇ registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Offering Memorandum as being owned by any of them or necessary
for the conduct of their respective businesses, except where the lack of such
ownership would not have a Material Adverse Effect, and the Company is not aware
of any claim to the contrary or any challenge by any other person to the rights
of the Company and the Subsidiaries with respect to the foregoing.
(w) The Company is not and, upon sale of the Notes to be issued and
sold in accordance herewith and the application of the net proceeds to the
Company of such sale as described in the Offering Memorandum under the caption
"Use of Proceeds," will not be an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(x) When the Notes are issued and delivered pursuant to this
Agreement, such Notes will not be of the same class (within the meaning of Rule
144A(d)(3) under the Act) as any security of the Company that is listed on a
national securities exchange registered under Section 6 of the Exchange Act or
that is quoted in a United States automated interdealer quotation system.
(y) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D ("Regulation D") under the Act) of the Company has directly, or
through any agent (provided that no representation is made as to the Initial
Purchasers or any person acting on their behalf), (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any security (as
defined in the Act) which is or will be integrated with the offering and sale of
the Notes in a manner that would require the registration of the Notes under the
Act or (ii) engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offering of the
Notes.
(z) The Company is not required to deliver the information specified
in Rule 144A(d)(4) in connection with the offering and resale of the Notes by
the Initial Purchasers.
(aa) Assuming (i) the Initial Purchasers comply with the covenants
set forth in Section 2 hereof and (ii) that each person to whom the Initial
Purchasers offer, sell or deliver the Notes is a Qualified Institutional Buyer
or an Accredited Investor, the purchase and sale of the Notes pursuant hereto
(including the Initial Purchasers' proposed offering of the Notes on the terms
and in the manner set forth in the Offering Memorandum and Section 2 hereof) is
exempt from the registration requirements of the Act.
(bb) The execution and delivery of this Agreement, the other
Operative Documents and the sale of the Notes to the Initial Purchasers or by
the Initial Purchasers to Eligible Purchasers will not involve any prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of the
Code. The representation made by the Company in the preceding sentence is made
in reliance upon and subject to the accuracy of, and compliance with, the
representations and covenants made or deemed made by the Eligible Purchasers as
set forth in the Offering Memorandum under the section entitled "Transfer
Restrictions."
(cc) The Company is not required to obtain stockholder consent or
approval pursuant to the rules of the Nasdaq National Market in connection with
the offering and sale of the Notes.
(dd) Each of the Company and the Subsidiaries maintains insurance of
the types and in the amounts
11
reasonably adequate for its business, including, but not limited to, business
interruption insurance and insurance covering real and personal property owned
or leased by the Company or such Subsidiary against theft, damage, destruction,
acts of vandalism and other risks customarily insured against by corporations of
established reputation engaged in the same or similar businesses and similarly
situated, all of which insurance is in full force and effect.
6. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each of the Initial Purchasers and each person, if
any, who controls an Initial Purchaser within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Offering
Memorandum or Offering Memorandum or in any amendment or supplement thereto, or
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with the information
relating to the Initial Purchasers furnished in writing to the Company by or on
behalf of the Initial Purchasers expressly for use in connection therewith;
provided, however, that the indemnification contained in this paragraph (a) with
-------- -------
respect to the Preliminary Offering Memorandum shall not inure to the benefit of
the Initial Purchasers (or to the benefit of any person controlling an Initial
Purchaser) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Notes by an Initial Purchaser to any person if the
untrue statement or alleged untrue statement or omission or alleged omission of
a material fact contained in the Preliminary Offering Memorandum was corrected
in the Offering Memorandum and such Initial Purchaser sold Notes to that person
without sending or giving at or prior to the written confirmation of such sale,
a copy of the Offering Memorandum (as then amended or supplemented) if the
Company has previously furnished sufficient copies thereof to the Initial
Purchasers on a timely basis. The foregoing indemnity agreement shall be in
addition to any liability which the Company may otherwise have.
(b) If any action, suit or proceeding shall be brought against any of
the Initial Purchasers or any person controlling an Initial Purchaser in respect
of which indemnity may be sought against the Company, the Initial Purchasers or
such controlling person shall promptly notify the parties against whom
indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. The Initial Purchasers or any
such controlling person shall have the right to employ separate counsel in any
such action, suit or proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the Initial
Purchasers or such controlling person unless (i) the indemnifying parties have
agreed in writing to pay such fees and expenses, (ii) the indemnifying parties
have failed to assume the defense and employ counsel, or (iii) the named parties
to any such action, suit or proceeding (including any impleaded parties) include
both an Initial Purchaser or such controlling person and the indemnifying
parties and the Initial Purchasers or such controlling person shall have been
advised by its counsel in writing that representation of such indemnified party
and any indemnifying party by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such representation
by the same counsel has been proposed) due to actual or potential differing
interests between them (in which case the indemnifying party shall not have the
right to assume the defense of such action, suit or proceeding on behalf of the
Initial Purchaser or such controlling person). It is understood, however, that
the indemnifying parties shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general allegations
or
12
circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
the Initial Purchasers and controlling persons not having actual or potential
differing interests with the Initial Purchasers or among themselves, which firm
shall be designated in writing by ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., and that all such
reasonable fees and expenses shall be reimbursed as they are incurred upon
submission to the indemnifying party of invoices or other evidence of payment.
The indemnifying parties shall not be liable for any settlement of any such
action, suit or proceeding effected without their express prior written consent,
but if settled with such written consent, or if there be a final judgment for
the plaintiff in any such action, suit or proceeding, the indemnifying parties
agree to indemnify and hold harmless the Initial Purchasers, to the extent
provided in paragraph (a), and any such controlling person from and against any
loss, claim, damage, liability or expense by reason of such settlement or
judgment.
(c) Each Initial Purchaser agrees, severally and not jointly, to
indemnify and hold harmless the Company, and its directors and officers, and any
person who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act to the same extent as the indemnity from the
Company to the Initial Purchaser set forth in paragraph (a) hereof, but only
with respect to information relating to the Initial Purchasers furnished in
writing by or on behalf of the Initial Purchasers expressly for use in the
Preliminary Offering Memorandum or Offering Memorandum or any amendment or
supplement thereto. If any action, suit or proceeding shall be brought against
the Company, any of its directors or officers, or any such controlling person
based on the Preliminary Offering Memorandum or Offering Memorandum, or any
amendment or supplement thereto, and in respect of which indemnity may be sought
against the Initial Purchasers pursuant to this paragraph (c), the Initial
Purchasers shall have the rights and duties given to the Company by paragraph
(b) above (except that if the Company shall have assumed the defense thereof the
Initial Purchasers shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the Initial Purchasers' expense), and the
Company, its directors and officers, and any such controlling person shall have
the rights and duties given to the Initial Purchasers by paragraph (b) above.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Initial Purchasers on the other hand from the
offering of the Notes, or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Initial Purchasers on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Initial Purchasers on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Initial Purchasers. The relative fault of the
Company on the one hand and the Initial Purchasers on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or by the Initial Purchasers on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
13
(e) The Company and the Initial Purchasers agree that it would not be
just and equitable if contribution pursuant to this Section 6 were determined by
a pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 6, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total concessions price of the Notes purchased by it and resold
exceeds the amount of any damages which such Initial Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 6 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of the Initial Purchasers or any person
controlling an Initial Purchaser, the Company, its directors or officers or any
person controlling the Company, (ii) acceptance of any Notes and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor to
an Initial Purchaser or any person controlling an Initial Purchaser, or to the
Company, its directors or officers or any person controlling the Company, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 6.
(g) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
7. Conditions of the Initial Purchasers' Obligations. The
obligations of the Initial Purchasers to purchase the Notes hereunder are
subject to the following conditions:
(a) At the time of execution of this Agreement and on the Closing
Date, no order or decree preventing the use of the Offering Memorandum or any
amendment or supplement thereto, or any order asserting that the transactions
contemplated by this Agreement are subject to the registration requirements of
the Act shall have been issued and no proceedings for that purpose shall have
been commenced or shall be pending or, to the knowledge of the Company, be
contemplated. No stop order suspending the sale of the Notes in any
jurisdiction designated by the Initial Purchasers shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending or,
to the knowledge of the Company, shall be contemplated.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change, or any development involving a prospective
change, that would have a Material Adverse Effect in or affecting the financial
condition, business, prospects, properties, net worth, or results of operations
of the
14
Company or the Subsidiaries not contemplated by the Offering Memorandum
(excluding any amendments or supplements thereto after the date hereof), which
in the opinion of the Initial Purchasers, would materially adversely affect the
market for the Notes, or (ii) any event or development relating to or involving
the Company or any officer or director of the Company which makes any statement
made in the Offering Memorandum (excluding any amendments or supplements thereto
after the date hereof) untrue in any material respect or which, in the opinion
of the Company and its counsel or the Initial Purchasers and their counsel,
requires the making of any addition to or change in the Offering Memorandum in
order to state a material fact required by any law to be stated therein or
necessary in order to make the statements therein not misleading, if amending or
supplementing the Offering Memorandum to reflect such event or development
would, in the opinion of the Initial Purchasers, materially adversely affect the
market for the Notes.
(c) The Initial Purchasers shall have received on the Closing Date a
corporate opinion of ▇▇▇▇▇▇▇ & Berlin, Chartered, counsel for the Company, dated
the Closing Date and addressed to the Initial Purchasers, in the form attached
hereto as Exhibit A.
(d) The Initial Purchasers shall have received on the Closing Date a
regulatory opinion from ▇▇▇▇▇▇▇ & Berlin, Chartered, special regulatory counsel
to the Company, dated the Closing Date and addressed to the Initial Purchasers,
in the form attached hereto as Exhibit B.
(e) The Initial Purchasers shall have received on the Closing Date an
opinion from Marcus & ▇▇▇▇▇▇▇▇, P.C., local counsel to the Company, dated the
Closing Date and addressed to the Initial Purchasers, in the form attached
hereto as Exhibit C.
(f) The Initial Purchasers shall have received on the Closing Date an
opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., Corporate Counsel of the Company, dated
the Closing Date and addressed to the Initial Purchasers in the form attached
hereto as Exhibit D.
(g) The Initial Purchasers shall have received on the Closing Date
opinions of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ (Australia) in the form attached hereto as Exhibit
E, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ (Hong Kong) in the form attached hereto as Exhibit F, ▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ (Germany) in the form attached hereto as Exhibit G, Coudert Freres
(France) in the form attached hereto as Exhibit H, TMI Associates (Japan) in the
form attached hereto as Exhibit I, Stibbe Simont ▇▇▇▇▇▇▇ Duhot (The Netherlands)
in the form attached hereto as Exhibit J, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (United
Kingdom) in the form attached hereto as Exhibit K, Advokatfirman ▇▇▇▇▇▇▇
(Sweden) in the form attached hereto as Exhibit L and ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
(Switzerland) in the form attached hereto as Exhibit M, special regulatory
counsel for the Company in each of the jurisdictions described above, each dated
the Closing Date and addressed to you, as Initial Purchasers.
(h) The Initial Purchasers shall have received on the Closing Date an
opinion of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for the Initial Purchasers, dated the
Closing Date, and addressed to the Initial Purchasers, with respect to certain
matter referred to above and such other related matters as the Initial
Purchasers may request.
(i) The Initial Purchasers shall have received letters addressed to
the Initial Purchasers, and dated the date hereof and the Closing Date from (i)
KPMG Peat Marwick LLP, independant certified public accountants, (ii) KPMG,
Chartered Accountants and Registered Auditors, independant certified public
accountants and (iii) ▇▇▇▇▇▇▇▇, Blakiston & ▇▇▇▇▇▇, P.A., independent certified
public accountants, substantially in the forms heretofore approved by the
Initial Purchasers.
15
(j) (i) There shall not have been any change in the capital stock of
the Company nor any material increase in the short-term or long-term debt of the
Company (other than in the ordinary course of business) from that set forth or
contemplated in the Offering Memorandum (excluding any amendment or supplement
thereto after the date hereof); (ii) there shall not have been, since the
respective dates as of which information is given in the Offering Memorandum
(excluding any amendment or supplement thereto after the date hereof), except as
may otherwise be stated in the Offering Memorandum (excluding any amendment or
supplement thereto after the date hereof), any material adverse change in the
financial condition, business, prospects, properties, net worth or results of
operations of the Company and the Subsidiaries taken as a whole; (iii) the
Company and the Subsidiaries shall not have any liabilities or obligations,
direct or contingent (whether or not in the ordinary course of business), that
are material to the Company and the Subsidiaries, taken as a whole, other than
those reflected in the Offering Memorandum (excluding any amendment or
supplement thereto after the date hereof); and (iv) all the representations and
warranties of the Company contained in this Agreement shall be true and correct
in all material respects on and as of the date hereof and on and as of the
Closing Date as if made on and as of the Closing Date, and the Initial
Purchasers shall have received a certificate, dated the Closing Date and signed
by the chief executive officer and the chief accounting officer of the Company
(or such other officers as are acceptable to the Initial Purchasers), to the
effect set forth in this Section 7(j) and in Section 7(k) hereof.
(k) The Company shall not have failed at or prior to the Closing Date
to have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it hereunder at or prior to the
Closing Date.
(l)The Notes shall have been approved for trading on PORTAL.
(m) There shall not have been any announcement by any "nationally
recognized statistical rating organization," as defined for purposes of Rule
436(g) under the Act, that (i) it is downgrading its rating assigned to any
class of securities of the Company, or (ii) it is reviewing its ratings assigned
to any class of securities of the Company with a view to possible downgrading,
or with negative implications, or direction not determined.
(n) The Company shall have furnished or caused to be furnished to the
Initial Purchasers such further certificates and documents as the Initial
Purchasers shall reasonably have requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Initial Purchasers and counsel for the
Initial Purchasers.
Any certificate or document signed by any officer of the Company and
delivered to the Initial Purchasers, or to counsel for the Initial Purchasers,
shall be deemed a representation and warranty by the Company to the Initial
Purchasers as to the statements made therein.
8. Expenses. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction of the
Offering Memorandum (including financial statements thereto), and each amendment
or supplement to any of them, this Agreement and the Indenture; (ii) the
printing (or reproduction) and delivery (including postage, air freight charges
and charges for counting and packaging) of such copies of the Offering
Memorandum, the Preliminary Offering Memorandum and all amendments or
supplements to any of them as
16
may be reasonably requested for use in connection with the offering and sale of
the Notes; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Notes, including any stamp taxes in connection
with the original issuance and sale of the Notes; (iv) the printing (or
reproduction) and delivery of this Agreement, the preliminary and supplemental
Blue Sky Memoranda and all other agreements or documents printed (or reproduced)
and delivered in connection with the offering of the Notes; (v) the
qualification of the Notes on the PORTAL market; (vi) the qualification of the
Notes for offer and sale under the securities or Blue Sky laws of the several
states as provided in Section 4(f) hereof (including the reasonable fees,
expenses and disbursements of counsel for the Initial Purchasers relating to the
preparation, printing or reproduction, and delivery of the preliminary and
supplemental Blue Sky Memoranda and such qualification); and (vii) the
performance by the Company of its obligation under the Registration Rights
Agreement; and (viii) the fees and expenses of the Company's accountants and the
fees and expenses of counsel (including local and special counsel) for the
Company.
9. Effective Date of Agreement. This Agreement shall become
effective upon the execution and delivery hereof by all the parties hereto.
Until such time as this Agreement shall have become effective, it may be
terminated by the Company, by notifying the Initial Purchasers, or by the
Initial Purchasers, by notifying the Company.
Any notice under this Section 9 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
10. Termination of Agreement. This Agreement shall be subject to
termination in the absolute discretion of the Initial Purchasers, without
liability on the part of the Initial Purchasers to the Company, by notice to the
Company, if prior to the Closing Date (i) trading in securities generally on the
New York Stock Exchange, American Stock Exchange or the Nasdaq National Market
shall have been suspended or materially limited, (ii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or state authorities, or (iii) there shall have occurred any outbreak or
escalation of hostilities or other international or domestic calamity, crisis or
change in political, financial or economic conditions, the effect of which on
the financial markets of the United States is such as to make it, in the
judgment of the Initial Purchasers, impracticable or inadvisable to commence or
continue the offering of the Notes on the terms set forth on the cover page of
the Offering Memorandum or to enforce contracts for the resale of the Notes by
the Initial Purchasers. Notice of such termination may be given to the Company
by telegram, telecopy or telephone and shall be subsequently confirmed by
letter.
11. Information Furnished by the Initial Purchasers. The statements
set forth in the last paragraph on the cover page, the stabilization legend on
page 2 and the fourth paragraph, the eight paragraph and the second sentence of
the fifth paragraph under the caption "Private Placement" in the Preliminary
Offering Memorandum and Offering Memorandum, constitute the only information
furnished by or on behalf of the Initial Purchasers as such information is
referred to in Sections 5(b) and 6 hereof.
12. Miscellaneous. Except as otherwise provided in Sections 4, 9 and
10 hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Vice President - Finance and Chief Financial Officer, or (ii) if to the Initial
Purchasers, c/o ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: Manager, Investment Banking Division.
17
This Agreement has been and is made solely for the benefit of the
Initial Purchasers, the Company, its directors, its officers and the controlling
persons referred to in Section 6 hereof and their respective successors and
assigns, to the extent provided herein, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from the Initial Purchasers of any of the Notes in his
status as such purchaser.
13. Applicable Law; Counterparts. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
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Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Initial Purchasers.
Very truly yours,
TELEGROUP, INC.
By:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President -
Finance, Chief
Financial Officer
and Treasurer
Confirmed as of the date first
above mentioned.
▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By:
Name:
Title:
BT ALEX. ▇▇▇▇▇ INCORPORATED
By:
Name:
Title:
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SCHEDULE I
TELEGROUP, INC.
Principal
Initial Purchaser Amount of Notes
----------------- ---------------
▇▇▇▇▇ ▇▇▇▇▇▇ Inc. $58,200,000
BT Alex. ▇▇▇▇▇ Incorporated $38,800,000
Total $97,000,000
===========
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SCHEDULE II
SUBSIDIARIES OF TELEGROUP, INC.
Global Access Pty Ltd.
PCS Telecom, Inc.
Telecontinent, S.A.
Telegroup Deutschland GmbH (Dusseldorf)
Telegroup Denmark ApS (ApS 235149)
Telegroup Network Services Deuschland GmbH (Dusseldorf)
Telegroup Financial Services Pty Limited
A.C.N. 069159646
Telegroup Italia S.r.l. (109221667)
Telegroup Hong Kong Limited
Telegroup International Management Pty Limited
Australian Company Number ▇▇▇ ▇▇▇ ▇▇▇
Telegroup Japan Kabushiki Kaisha
Telegroup Nederland B.V.
Telegroup Network Services Pty Limited
Australian Company Number 075 304 871
Telegroup Network Services New Zealand Limited
Telegroup Network Services, S.A. (Geneva)
Telegroup UK Limited
Telegroup UK (No. 2) Limited
Telegroup South Europe, Inc.
Telegroup Technologies, Inc.
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Telegroup Technologies Limited
22
EXHIBIT A
[FORM OF REGISTRATION RIGHTS AGREEMENT]
23