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$210,000,000 Aggregate Principal Amount of 11 1/2% Senior Notes due 2009
CAPROCK COMMUNICATIONS CORP.
PURCHASE AGREEMENT
May 13, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
CHASE SECURITIES INC.
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ SECURITIES CORPORATION
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
c/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
CapRock Communications Corp., a Texas corporation (the "Company"),
confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), ▇▇▇▇▇ Securities Inc. ("Chase"), Bear,
▇▇▇▇▇▇▇ & Co. Inc. ("Bear ▇▇▇▇▇▇▇"), ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities
Corporation ("DLJ") and ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. ("Goldman") (collectively, the
"Initial Purchasers", which term shall also include any initial purchaser
substituted as hereinafter provided in Section 11 hereof), with respect to the
issue and sale by the Company and the purchase by the Initial Purchasers, acting
severally and not jointly, of the respective principal amounts set forth in
Schedule A attached hereto of $210,000,000 aggregate principal amount of the
Company's 11 1/2% Senior Notes due 2009 (the "Securities"). The Securities are
to be issued pursuant to an indenture dated as of May 18, 1999 (the "Indenture")
between the Company and Chase Manhattan Trust Company, National Association, as
trustee (the "Trustee"). Securities issued in book-entry form will be issued to
Cede & Co. as nominee of The Depository Trust Company ("DTC") pursuant to a
letter agreement, to be dated as of the Closing Time (as defined in Section
2(b)) (the "DTC Agreement"), among the Company, the Trustee and DTC.
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The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
agree that the Initial Purchasers may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers ("Subsequent
Purchasers") at any time after the date of this Agreement. The Securities are to
be offered and sold through the Initial Purchasers without being registered
under the Securities Act of 1933, as amended (the "1933 Act"), in reliance upon
exemptions therefrom. Pursuant to the terms of the Securities and the Indenture,
investors that acquire Securities may only resell or otherwise transfer such
Securities if such Securities are hereafter registered under the 1933 Act or if
an exemption from the registration requirements of the 1933 Act is available
(including the exemption afforded by Rule 144A ("Rule 144A") or Regulation S
("Regulation S") of the rules and regulations promulgated under the 1933 Act by
the Securities and Exchange Commission (the "Commission").
The Company has prepared and delivered to each Initial Purchaser copies
of a preliminary offering memorandum dated May 7, 1999 (the "Preliminary
Offering Memorandum") and has prepared and delivered to each Initial Purchaser,
on the date hereof or the next succeeding day, copies of a final offering
memorandum dated May 13, 1999 (the "Final Offering Memorandum") each for use by
such Initial Purchaser in connection with its solicitation of offers and
purchases of the Securities. "Offering Memorandum" means with respect to any
date or time referred to in this Agreement the most recent offering memorandum
(whether the Preliminary Offering Memorandum or the Final Offering Memorandum,
as the same may have been amended or supplemented through such date or time,
including exhibits thereto, which has been prepared and delivered by the Company
to the Initial Purchasers in connection with their solicitation of purchases of
or offering of the Securities.
The holders of the Securities will be entitled to the benefits of a
registration rights agreement (the "Registration Rights Agreement"). Pursuant to
the Registration Rights Agreement, the Company will agree to file with the
Commission under the circumstances set forth therein, either (i) a registration
statement under the 1933 Act registering the "Exchange Notes" (as such term is
defined in the Registration Rights Agreements) to be offered in exchange for the
Securities and use its best efforts to cause such registration statement to be
declared effective or (ii) under certain circumstances set forth therein, a
shelf registration statement pursuant to Rule 415 under the 1933 Act relating to
the resale of the Securities, and use its best efforts to cause such shelf
registration statement to be declared effective.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Initial Purchaser as of the date hereof and as
of the
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Closing Time referred to in Section 2(b) hereof, and agrees with each Initial
Purchaser as follows:
(i) Similar Offerings. The Company has not, directly or
indirectly, solicited any offer to buy or offered to sell, and will not,
directly or indirectly, solicit any offer to buy or offer to sell, in the United
States or to any United States citizen or resident, any security which is or
would be integrated with the sale of the Securities in a manner that would
require the Securities to be registered under the 1933 Act.
(ii) Offering Memorandum. (A) General. The Offering Memorandum
does not, and at the Closing Time will not, include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that this representation, warranty and agreement
shall not apply to statements in or omissions from the Offering Memorandum made
in reliance upon and in conformity with information furnished to the Company in
writing by any Initial Purchaser expressly for use in the Offering Memorandum.
(B) Documents. All contracts which are described in
the Offering Memorandum to which the Company or any of its subsidiaries is a
party have been duly authorized, executed and delivered by it or its
subsidiaries, constitute valid and binding agreements of the Company or such
subsidiary and are enforceable against the Company or such subsidiary in
accordance with the terms thereof except as enforcement thereof may be limited
by bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(C) Certain Transactions. No relationship, direct or
indirect, exists between or among the Company or any of its subsidiaries, on the
one hand, and the directors, officers, securityholders, customers or suppliers
of the Company or any of its subsidiaries, on the other hand, that is of a
character that would be required to be described in the Offering Memorandum if
it were a prospectus filed as part of a registration statement on Form S-1 under
the 1933 Act, that is not described as would be so required.
(D) Data. The statistical and market-related data
included in the Offering Memorandum are based on or derived from sources which
the Company believes to be reliable and accurate in all material respects or
represents the Company's good faith estimates that are made on the basis of data
derived from such sources.
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(iii) Independent Accountants. The accountants who
certified the financial statements and supporting schedules included in the
Offering Memorandum are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of Regulation S-X under the
1933 Act.
(iv) Financial Statements. The financial statements
included in the Offering Memorandum present fairly the financial position of the
Company and its consolidated subsidiaries at the dates indicated and the
statements of operations, shareholders' equity and cash flows of the Company and
its consolidated subsidiaries for the periods specified; and said financial
statements have been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved. The selected financial data and the summary financial information
included in the Offering Memorandum present fairly the information shown therein
and have been compiled on a basis consistent with that of the audited financial
statements included in the Offering Memorandum.
(v) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Offering Memorandum,
except as otherwise stated therein, (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 considered as
one enterprise (a "Material Adverse Effect"), whether or not arising in the
ordinary course of business, (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 or any of its subsidiaries on
any class of its capital stock or other equity interests.
(vi) 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 Texas and has the corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Offering Memorandum 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 result in a Material
Adverse Effect.
(vii) Good Standing of Subsidiaries. Each of CapRock
Telecommunications Corp., IWL Communications, Incorporated and CapRock Fiber
Network, Ltd. (each a "Subsidiary" and, collectively, the "Subsidiaries") has
been duly organized and is validly existing as a corporation or limited
partnership, as the case may be, in good standing under the laws of the
jurisdiction of its incorporation or organization,
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has corporate or partnership power and authority to own, lease and operate its
properties and to conduct its business as described in the Offering Memorandum
and is duly qualified as a foreign corporation or limited partnership, as the
case may be, 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 result in a Material Adverse Effect.
The Company does not have any "significant subsidiary" (as defined in Rule
1.02(w) of Regulation S-X of the Commission) other than the Subsidiaries. Except
as otherwise disclosed in the Offering Memorandum, all of the issued and
outstanding capital stock or other equity interests of each such Subsidiary has
been duly authorized and validly issued, is fully paid and non-assessable 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 partnership interests of any
Subsidiary was issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary.
(viii) Capitalization. The authorized, issued and
outstanding capital stock of the Company is as set forth in the Offering
Memorandum in the column entitled "Actual" under the caption "Capitalization,"
subject to subsequent issuances of common stock of the Company under employee
stock option plans and the issuance of common stock of the Company pursuant to
the May 1999 equity offering described in the Offering Memorandum.
(ix) Authorization of Agreement. This Agreement has
been duly authorized, executed and delivered by the Company.
(x) Authorization of the Indenture. The Indenture has
been duly authorized by the Company and, at the Closing Time, will have been
duly executed and delivered by the Company and will constitute a valid and
binding agreement of the Company, enforceable against it in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to or
affecting enforcement of creditors' rights generally, or by general principles
of equity (regardless of whether enforcement is considered in a proceeding in
equity or at law).
(xi) Authorization of the Securities and the Exchange
Notes. The Securities have been duly authorized and, at the Closing Time, will
have been duly executed by the Company and, when authenticated in the manner
provided for in the Indenture and delivered against payment of the purchase
price therefor, will constitute valid and binding obligations of the Company,
enforceable against it in accordance with their terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or other
similar laws relating to or affecting enforcement of creditors' rights
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generally, or by general principles of equity (regardless of whether enforcement
is considered in a proceeding in equity or at law), and will be in the form
contemplated by, and entitled to the benefits of, the Indenture.
The Exchange Notes have been duly authorized by the Company,
and, when executed and delivered by the Company and when authenticated in the
manner provided for in the Indenture, will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to or
affecting enforcement of creditors' rights generally, or by general principles
of equity (regardless of whether enforcement is considered in a proceeding in
equity or at law), and will be in the form contemplated by, and entitled to the
benefits of, the Indenture.
(xii) Authorization of the Registration Rights
Agreement. The Registration Rights Agreement has been duly authorized by the
Company, and, when executed and delivered by the Company and the other parties
thereto in accordance with the terms thereof, will constitute a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except as enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting creditors'
rights generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and the enforceability of any right to
indemnification provided therein violates the public policy of any law, rule or
regulation.
(xiii) Description of the Securities and the
Indenture. The Securities and the Indenture will conform in all material
respects to the respective statements relating thereto contained in the Offering
Memorandum and will be in substantially the respective forms previously
delivered to the Initial Purchasers.
(xiv) Absence of Defaults and Conflicts. Neither the
Company nor any of its subsidiaries is in violation of its charter or by-laws
(or other equivalent organizational document) 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
subsidiaries is a party or by which or any of them may be bound, or to which any
of their properties or assets is subject (collectively, "Agreements and
Instruments"), except for such defaults that would not result in a Material
Adverse Effect; and the execution, delivery and performance of this Agreement,
the Registration Rights Agreement, the Indenture and the Securities and any
other agreement or instrument entered into or issued or to be entered into or
issued by the Company in connection with
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the transactions contemplated hereby or thereby (collectively, the "Transaction
Documents") and the consummation of the transactions contemplated pursuant to
the Transaction Documents (including the issuance and sale of the Securities,
and the use of the proceeds from the sale of the Securities as described in the
Offering Memorandum under the caption "Use of Proceeds"), and compliance by the
Company with its obligations hereunder or any other Transaction Document have
been duly authorized by all necessary corporate action and do not and will not,
except as is set forth in the Offering Memorandum, whether with or without the
giving of notice or passage of time or both, constitute a breach of, or default
or a 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 of its subsidiaries pursuant to, the Agreements and Instruments
except for such breaches or defaults or Repayment Events or liens, charges or
encumbrances that, singly or in the aggregate, 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 other equivalent organizational document) of the
Company or any of its subsidiaries 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 of its subsidiaries or any of their assets or properties. As used
herein, 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 of its
subsidiaries.
(xv) Absence of Labor Disputes. No labor dispute with
the employees of the Company or any of its subsidiaries exists or, to the
knowledge of the Company, is imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employees of its or any of its
subsidiaries' principal suppliers, manufacturers, customers or contractors,
which, in either case, may reasonably be expected to result in a Material
Adverse Effect.
(xvi) Absence of Proceedings. Except as disclosed in
the Offering Memorandum, there is no action, suit, proceeding, inquiry,
complaint or investigation before or 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 of its subsidiaries or any
licenses, permits or authorizations held by the Company or any of its
subsidiaries which 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 assets of the Company or any of its subsidiaries or the
validity or enforceability of any material provisions of any Transaction
Document or the rights and remedies of the Initial Purchasers, the Securities or
the holders of the Securities. The aggregate of all pending legal or
governmental proceedings to which the Company or any of its subsidiaries is a
party or of which any of its properties or assets is the subject which are not
described in the Offering Memorandum, including ordinary routine litigation
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incidental to the business, could not reasonably be expected to result in a
Material Adverse Effect.
(xvii) Possession of Intellectual Property. Except as
is set forth in the Offering Memorandum, the Company and its subsidiaries 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, and neither the Company nor any of its
subsidiaries 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 of
its subsidiaries 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.
(xviii) 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
(including, without limitation, the Federal Communications Commission (the
"FCC") or any state agency or governmental authority having jurisdiction over
interstate or intrastate communication) 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 hereunder, or the consummation of
the transactions provided for by this Agreement or any other Transaction
Document (except (i) such as have been obtained or made, (ii) such as may be
required under securities or Blue Sky laws of various states and (iii) such as
may be required under securities laws in connection with the Exchange Offer or
the Shelf Registration Statement).
(xix) Possession of Licenses and Permits. The Company
and its subsidiaries possess such permits, licenses, certificates,
registrations, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state, local or
foreign regulatory agencies or bodies necessary or required to conduct the
business now operated by them including, but not limited to, any licences,
certificates, authorizations or registrations issued by the FCC or from state
agencies having jurisdiction over interstate or intrastate telecommunications,
except to the extent that any failure to so possess such Governmental Licenses,
either singly or in the aggregate, would not have a Material Adverse Effect.
Each of the Company and its subsidiaries is in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure so to
comply would not have a Material Adverse Effect. To the Company's knowledge,
such Governmental Licenses contain no materially burdensome conditions or
restrictions not customarily imposed by the FCC or state
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agency having jurisdiction over interstate or intrastate telecommunications on
telecommunications operators operating under the same type of licenses as the
Company and its subsidiaries. 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. Neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the revocation,
suspension 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. None of the Company or any of its
subsidiaries has failed to obtain and maintain in effect, any Governmental
License required or necessary for the ownership or lease of its property or the
conduct of its business except to the extent that such failure to obtain or
maintain such Governmental Licenses, either singly or in the aggregate, would
not have a Material Adverse Effect. All Governmental Licenses held by the
Company or any of its subsidiaries have been duly and validly issued to the
Company or its subsidiaries, are not subject to any conditions outside of the
ordinary course. No event has occurred which permits (nor has an event occurred
which with notice or lapse of time or both would permit) the revocation or
termination of such Governmental Licenses except to the extent such revocation
or termination, either singly or in the aggregate, would not have a Material
Adverse Effect, or the imposition of any material adverse restriction or
condition thereon or which might result in a Material Adverse Effect.
(xx) Compliance with Laws and Regulations. The
Company and its subsidiaries have operated in compliance with, and are not in
violation of (except for such noncompliance or such violations which do not or
will not result in a Material Adverse Effect), all statutes (including, but not
limited to, the Communications Act of 1934, as amended, including the
Telecommunications Act of 1996) laws, ordinances, rules, regulations, judgments,
orders, decisions or decrees of any court, regulatory body, administrative body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or its subsidiaries or any of their assets or
properties, as applicable, including, but not limited to, the FCC and any state
authority having jurisdiction over the Company or its subsidiaries or over their
respective assets or properties.
(xxi) Required Filings. The Company and its
subsidiaries have filed with all administrative bodies, administrative agencies,
governmental bodies, arbitrators or other authorities having jurisdiction over
the Company or such subsidiaries or any of their assets or its properties, as
applicable, all applications, statements, reports, tariffs, information, forms,
or any other documents required under all statutes, laws, rules, regulations,
judgments, orders, decisions or decrees, except where the failure to file would
not have a Material Adverse Effect on the Company's or any of its subsidiaries'
ability to provide its services as described in the Offering Memorandum. To the
Company's knowledge, such filings or submissions were in compliance with
applicable laws or
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regulations when filed or submitted and no deficiencies have been asserted by
any administrative bodies, administrative agencies, governmental bodies,
arbitrators or other authorities with respect to such filings or submissions,
except where the deficiency is of such a nature that failure to cure any such
deficiency would not have a Material Adverse Effect on the Company's or any of
its subsidiaries' ability to provide their services as described in the Offering
Memorandum. To the Company's knowledge, the information contained in such
filings or submissions was and continues to be in all material respects,
accurate, complete and up-to-date at the time the filings or submissions were
made.
(xxii) No Adverse Judgments or Other Orders. There is
no outstanding adverse judgment, injunction, decision, decree or order that has
been issued by any court, regulatory body, administrative agency, governmental
body, arbitrator or other foreign, federal, state or local authority having
jurisdiction over the Company or any of its subsidiaries or any of their
properties or assets, as applicable, which, either singly or in the aggregate,
would have a Material Adverse Effect.
(xxiii) Title to Property. The Company and its
subsidiaries have good and indefeasible title to all real property owned by the
Company and its subsidiaries 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 Offering Memorandum or (b) do not singly or in the
aggregate have a Material Adverse Effect. All leases and subleases material to
the businesses of the Company and its subsidiaries, considered as one
enterprise, and under which the Company or any of its subsidiaries holds
properties described in the Offering Memorandum, are in full force and effect,
and neither the Company nor any of its subsidiaries 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 of its subsidiaries under any of the title leases
or subleases mentioned above, or affecting or questioning the rights of the
Company or any of its subsidiaries to the continued possession of the leased or
subleased premises under any such lease or sublease.
(xxiv) Tax Returns. The Company and its subsidiaries
have filed all federal, state, local and foreign tax returns that are required
to be filed or have duly requested extensions thereof and have paid all taxes
required to be paid by any of them and any related assessments, fines or
penalties, except for any such tax, assessment, fine or penalty that is being
contested in good faith and by appropriate proceedings; and adequate charges,
accruals and reserves have been provided for in the financial statements
referred to in Section 1(a)(iv) above in respect of all federal, state, local
and foreign taxes for all periods as to which the tax liability of the Company
or any of its subsidiaries has not been finally determined or remains open to
examination by applicable taxing authorities.
(xxv) Environmental Laws. Except as described in the
Offering Memorandum and except such matters as would not, singly or in the
aggregate, result in a
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Material Adverse Effect, (a) neither the Company nor any of its subsidiaries 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) to the Company's best knowledge after due inquiry,
the Company and its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in compliance with
their requirements, (c) to the Company's best knowledge after due inquiry, 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 of its subsidiaries and (d) to the Company's best
knowledge after due inquiry, 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 or any of its
subsidiaries relating to Hazardous Materials or Environmental Laws.
(xxvi) Registration Rights. Except as described in
the Offering Memorandum, there are no persons with registration rights or other
similar rights to have any securities registered by the Company or any of its
subsidiaries under the 1933 Act.
(xxvii) PORTAL. The Company has been advised by the
National Association of Securities Dealers, Inc. (the "NASD") Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") Market that the
Securities have been designated PORTAL eligible securities in accordance with
the rules and regulations of the NASD.
(xxviii) Investment Company Act. The Company is not,
and upon the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Offering
Memorandum will not 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").
(xxix) Rule 144A Eligibility. The Securities are
eligible for resale pursuant to Rule 144A and will not be, at the Closing Time,
of the same class as securities listed on a national securities exchange
registered under Section 6 of the Securities
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Exchange Act of 1934, as amended (the "1934 Act"), or quoted in a U.S. automated
interdealer quotation system.
(xxx) Market Activities. The Company has not,
directly or indirectly, (A) taken any action designed to cause or to result in,
or that has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the Securities to facilitate the sale or resale
of the Securities or (B) (x) sold (except pursuant to this Agreement), bid for,
purchased, or paid anyone any compensation for soliciting purchases of, the
Securities or (y) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company other than
underwriting commissions paid to the underwriters named in the Company's
prospectus dated May 6, 1999 relating to its May 1999 equity offering described
in the Offering Memorandum.
(xxxi) ERISA. To the Company's best knowledge after
due inquiry, the Company and each of its subsidiaries are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA") except where such
noncompliance would not have a Material Adverse Effect. No "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company or any of its subsidiaries would have
any liability. The Company and each of its subsidiaries have not incurred and do
not expect to incur liability under (A) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (B) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"). Each "pension plan" for
which the Company and each of its subsidiaries would have liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification.
(xxxii) Insurance. The Company and its subsidiaries
carry, or are covered by, insurance in such amounts and covering such risks as
is adequate for the conduct of its businesses and the value of its properties
and is customary for companies engaged in similar businesses in similar
industries.
(xxxiii) No General Solicitation. None of the
Company, its affiliates, as such term is defined in Rule 501(b) under the 1933
Act ("Affiliates"), or any person acting on its or any of their behalf (other
than the Initial Purchasers, as to whom the Company make no representation) has
engaged or will engage, in connection with the offering of the Securities, in
any form of general solicitation or general advertising within the meaning of
Rule 502(c) under the 1933 Act.
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(xxxiv) No Registration Required. Subject to
compliance by the Initial Purchasers with the representations and warranties set
forth in Section 2 and the procedures set forth in Section 6 hereof, it is not
necessary in connection with the offer, sale and delivery of the Securities to
the Initial Purchasers and to each Subsequent Purchaser in the manner
contemplated by this Agreement and the Offering Memorandum to register the
Securities under the 1933 Act or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended (the "1939 Act").
(xxxv) Compliance with Rule 144A. Each of the
Preliminary Offering Memorandum and the Final Offering Memorandum, as of its
date, contains all the information specified in, and meeting the requirements
of, Rule 144A(d)(4) under the 1933 Act.
(b) Officer's Certificates. Any certificate signed by any officer of
the Company or any of its subsidiaries delivered to the Initial Purchasers or to
counsel for the Initial Purchasers shall be deemed a representation and warranty
by the Company or such subsidiary to each Initial Purchaser as to the matters
covered thereby.
SECTION 2. Sale and Delivery to Initial Purchasers; Closing.
(a) Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Initial Purchaser, severally and not jointly, and
each Initial Purchaser, severally and not jointly, agrees to purchase from the
Company, at the price set forth in Schedule B, the aggregate principal amount of
Securities set forth in Schedule A opposite the name of such Initial Purchaser,
plus any additional principal amount of Securities which such Initial Purchaser
may become obligated to purchase pursuant to the provisions of Section 11
hereof.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Paul,
Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, or at such
other place as shall be agreed upon by the Initial Purchasers and the Company,
at 10:00 A.M. (New York time) on the third business day after the date hereof
(unless postponed in accordance with the provisions of Section 11), or such
other time not later than ten business days after such date as shall be agreed
upon by the Initial Purchasers and the Company (such time and date of payment
and delivery being herein called the "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds, against delivery to the Initial Purchasers for the respective
accounts of the Initial Purchasers of certificates for the Securities to be
purchased by them. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as representative of the
Initial Purchasers, may (but shall not be obligated to) make payment of the
purchase price for the Securities to be purchased by
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any Initial Purchaser whose funds have not been received by the Closing Time,
but such payment shall not relieve such Initial Purchaser from its obligations
hereunder. The certificates representing the Securities shall be registered in
the name of Cede & Co. pursuant to the DTC Agreement and shall be made available
for examination and packaging by the Initial Purchasers in The City of New York
not later than 10:00 A.M. on the last business day prior to the Closing Time.
(c) Qualified Institutional Buyer. Each Initial Purchaser severally and
not jointly represents and warrants to, and agrees with, the Company that it is
a "qualified institutional buyer" within the meaning of Rule 144A under the 1933
Act (a "Qualified Institutional Buyer") and an "accredited investor" within the
meaning of Rule 501(a) under the 1933 Act (an "Accredited Investor").
(d) Denominations; Registration. Certificates for the Securities shall
be in such denominations ($1,000 or integral multiples thereof) and registered
in such names as the Initial Purchasers may request in writing at least one full
business day before the Closing Time.
SECTION 3. Covenants of the Company. The Company covenants with each
Initial Purchaser as follows:
(a) Offering Memorandum. The Company, as promptly as possible, will
furnish to each Initial Purchaser, without charge, such number of copies of the
Preliminary Offering Memorandum, the Final Offering Memorandum and any
amendments and supplements thereto and documents incorporated by reference
therein as such Initial Purchaser may reasonably request.
(b) Notice and Effect of Material Events. The Company will immediately
notify each Initial Purchaser, and confirm such notice in writing, of (x) any
filing made by the Company of information relating to the offering of the
Securities with any securities exchange or any other regulatory body in the
United States or any other jurisdiction and (y) prior to the earlier of (i)
completion of the placement of the Securities by the Initial Purchasers as
evidenced by a notice in writing from the Initial Purchasers to the Company
(which notice will be provided to the Company upon its request if such placement
is complete) or (ii) 90 days after the Closing Time, any material changes in or
affecting the earnings, business affairs or business prospects of the Company
and its subsidiaries which (i) make any statement in the Offering Memorandum
false or misleading or (ii) are not disclosed in the Offering Memorandum. In
such event or if during such time any event shall occur as a result of which it
is necessary, in the reasonable collective opinion of the Company, its counsel,
the Initial Purchasers or counsel for the Initial Purchasers, to amend or
supplement the Final Offering Memorandum in order that the Final Offering
Memorandum not include any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein not misleading
in the light
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of the circumstances then existing, the Company will forthwith amend or
supplement the Final Offering Memorandum by preparing and furnishing to each
Initial Purchaser an amendment or amendments of, or a supplement or supplements
to, the Final Offering Memorandum (in form and substance satisfactory in the
reasonable opinion of counsel for the Initial Purchasers) so that, as so amended
or supplemented, the Final Offering Memorandum will not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances existing at
the time it is delivered to a Subsequent Purchaser, not misleading.
(c) Amendment to Offering Memorandum and Supplements. The Company will
advise each Initial Purchaser promptly of any proposal to amend or supplement
the Offering Memorandum and will not effect such amendment or supplement to
which the Initial Purchasers shall reasonably object in writing. Neither the
consent of the Initial Purchasers, nor the Initial Purchaser's delivery of any
such amendment or supplement, shall constitute a waiver of any of the conditions
set forth in Section 5 hereof.
(d) Qualification of Securities for Offer and Sale. The Company will
use its best efforts, in cooperation with the Initial Purchasers, to qualify the
Securities for offering and sale under the applicable securities laws of such
jurisdictions as the Initial Purchasers may designate and will maintain such
qualifications in effect as long as required for the sale of the Securities to
the Initial Purchasers and Subsequent Purchasers; provided, however, that the
Company shall not be obligated to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which they are not so qualified or to subject themselves to
taxation in respect of doing business in any jurisdiction in which they are not
otherwise so subject.
(e) Rating of Securities. The Company shall take all reasonable actions
necessary to enable Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc. ("S&P"), and ▇▇▇▇▇'▇ Investors Service, Inc. ("▇▇▇▇▇'▇") to provide its
credit ratings of the Securities.
(f) DTC. The Company will cooperate with the Initial Purchasers and use
its best efforts to permit the Securities to be eligible for clearance and
settlement through the facilities of DTC.
(g) PORTAL. The Company will use its best efforts in cooperation with
the Initial Purchasers to obtain the necessary approvals for the Securities to
be designated for trading on PORTAL in accordance with the rules and regulations
adopted by the NASD relating to trading in the PORTAL market.
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(h) Use of Proceeds. The Company will use the net proceeds received by
them from the sale of the Securities in the manner specified in the Offering
Memorandum under "Use of Proceeds".
(i) Restriction on Sale of Securities. During a period of 90 days from
the date of the Offering Memorandum, the Company will not, without the prior
written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or indirectly issue, sell, offer or
agree to sell, grant any option for the sale of, or otherwise dispose of, any
other debt securities of the Company or securities of the Company that are
convertible into, or exchangeable for, the Securities or such other debt
securities (other than as required by the terms of the Registration Rights
Agreement).
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 any filing of the Offering Memorandum (including
financial statements and any schedules or exhibits) and of each amendment or
supplement thereto; (ii) the preparation, printing and delivery to the Initial
Purchasers of this Agreement, any agreement among Initial Purchasers, the
Indenture, the Registration Rights Agreement and such other documents as may be
required in connection with the offering, purchase, sale and delivery of the
Securities; (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Initial Purchasers, including any charges of DTC in
connection therewith; (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors; (v) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(d) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Initial Purchasers in connection therewith and in connection with the
preparation of the Blue Sky Survey, any supplement thereto and any Legal
Investment Survey; (vi) the fees and expenses of the Trustee, including the fees
and disbursements of counsel for the Trustee in connection with the Indenture
and the Securities; (vii) any fees payable in connection with the rating of the
Securities; (viii) any fees payable to the review by the NASD in connection with
the initial and continued designation of the Securities as being eligible for
trading on PORTAL under the PORTAL Market Rules pursuant to NASD Rule 5322; and
(ix) all other costs and expenses incident to the performance of the Company's
obligations hereunder that are not otherwise specifically provided for in this
Section.
(b) Termination of Agreement. If this Agreement is terminated by the
Initial Purchasers in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the Company shall be responsible to reimburse the Initial
Purchasers for all of their reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of one counsel for the Initial Purchasers.
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SECTION 5. Conditions of Initial Purchasers' Obligations. The
obligations of the several Initial Purchasers hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company or any of its
subsidiaries 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) Opinions of Counsel for Company. At the Closing Time, the Initial
Purchasers shall have received the favorable opinion, dated as of the Closing
Time, of the following counsel for the Company, in form and substance
satisfactory to counsel for the Initial Purchasers: (i) ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇, P.C., counsel for the Company, to the effect set forth in Exhibit A-1
hereto and to such further effect as counsel to the Initial Purchasers may
reasonably request; (ii) ▇▇▇▇▇▇▇, Berlin, Shereff & ▇▇▇▇▇▇▇▇, LLP, special New
York counsel for the Company, to the effect set forth in Exhibit A-2 hereto and
to such further effect as counsel to the Initial Purchasers may reasonably
request; and (iii) Swidler, Berlin, Shereff & ▇▇▇▇▇▇▇▇, LLP, special regulatory
counsel for the Company, to the effect set forth in Exhibit A-3 hereto and to
such further effect as counsel to the Initial Purchasers may reasonably request.
(b) Opinion of Counsel for Initial Purchasers. At the Closing Time, the
Initial Purchasers shall have received the favorable opinion, dated as of the
Closing Time, of ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel for the Initial
Purchasers, with respect to the matters set forth in clause (xi) (solely as to
the information in the Offering Memorandum under "Description of the Notes") and
the penultimate paragraph of Exhibit A-1 hereto and in clauses (i) through
(iii), inclusive, of Exhibit A-2 hereto. In giving such opinion such counsel may
rely, as to all matters governed by the laws of jurisdictions other than the law
of the State of New York and the federal law of the United States and the
General Corporation Law of the State of Delaware, upon the
opinions of counsel satisfactory to the Initial Purchasers. Such counsel may
also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Company and its subsidiaries and certificates of public officials.
(c) Officers' Certificate. At the Closing Time, there shall not have
been since the date hereof or since the respective dates as of which information
is given in the Offering Memorandum 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
Initial Purchasers shall have received a certificate of the chief executive
officer, President or a Vice President of the Company and of the chief financial
or chief accounting officer of the Company, dated as of the Closing Time, to the
effect that (i), there has been no such material adverse change, (ii) the
representations and warranties in Section 1 hereof are true and correct with the
same force and effect as though expressly
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made at and as of the Closing Time, and (iii) the Company has compiled with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Time.
(d) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Initial Purchasers shall have received from KPMG LLP a letter,
dated such date, in form and substance satisfactory to the Initial Purchasers
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to Initial Purchasers with respect to the
financial statements and certain financial information contained in the Offering
Memorandum.
(e) Bring-down Comfort Letter. At the Closing Time, the Initial
Purchasers shall have received from KPMG LLP a letter, dated as of the Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (d) of this Section 5, except that the
specified date referred to shall be a date not more than three business days
prior to the Closing Time.
(f) Transaction Documents. At the Closing Time, the Company shall have
executed the Indenture and the Registration Rights Agreement and the Initial
Purchasers shall have received an original copy thereof, duly executed by the
Company to the extent that such person is a party to such agreements.
(g) PORTAL. At the Closing Time, the Securities shall have been
designated for trading on PORTAL.
(h) Additional Documents. At the Closing Time, counsel for the Initial
Purchasers shall have been furnished with such documents and opinions as they
may require 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 Initial Purchasers
and counsel for the Initial Purchasers.
(i) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Initial Purchasers by notice to the Company
at any time at or prior to the Closing Time, and such termination shall be
without liability of an party to any other party except as provided in Section 4
and except that Sections 1, 7 and 8 shall survive any such termination and
remain in full force and effect.
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SECTION 6. Subsequent Offers and Resales of the Securities.
(a) Offer and Sale Procedures. Each of the Initial Purchasers and the
Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) Offers and Sales only to Qualified Institutional
Buyers or Non-U.S. Persons. Offers and sales of the Securities will be made only
by the Initial Purchasers or Affiliates thereof qualified to do so in the
jurisdictions in which such offers or sales are made. Each such offer or sale
shall only be made (a) to persons whom the offeror or seller reasonably,
believes to be Qualified Institutional Buyers or (b) non-U.S. persons outside
the United States to whom the offeror or seller reasonably believes offers and
sales of the Securities may be made in reliance upon Regulation S under the 1933
Act.
(ii) No General Solicitation. No general solicitation
or general advertising (within the meaning of Rule 502(c) under the 1933 Act)
will be used in the United States in connection with the offering of the
Securities.
(iii) Purchases by Non-Bank Fiduciaries. In the case
of a non- bank Subsequent Purchaser of a Security acting as a fiduciary for one
or more third parties, in connection with an offer and sale to such purchaser
pursuant to clause (a) (i) above, each third party shall, in the reasonable
judgment of the applicable Initial Purchaser, be a Qualified Institutional Buyer
or a non-U.S. person outside the United States.
(iv) Subsequent Purchaser Notification. Each Initial
Purchaser will take reasonable steps to inform, and cause each of its Affiliates
to take reasonable steps to inform, Subsequent Purchasers acquiring Securities
from such Initial Purchaser or affiliate, as the case may be, in the United
States that the Securities (a) have not been and will not be registered under
the 1933 Act, (b) are being sold to them without registration under the 1933 Act
in reliance on Rule 144A or in accordance with another exemption from
registration under the 1933 Act, as the case may be, and (c) may not be offered,
sold or otherwise transferred except (i) to the Company (ii) outside the United
States in accordance with Rule 904 of Regulation S, or (iii) inside the United
States in accordance with (x) Rule 144A to a person whom the seller reasonably
believes is a Qualified Institutional Buyer that is purchasing such Securities
for its own account or for the account of a Qualified Institutional Buyer to
whom notice is given that the offer, sale or transfer is being made in reliance
on Rule 144A or (y) the exemption from registration under the 1933 Act provided
by Rule 144, if available (it being agreed that compliance with clause (vii)
below satisfies the foregoing requirement).
(v) Minimum Principal Amount. No sale of the
Securities to any one Subsequent Purchaser will be for less than U.S. $150,000
principal amount and no
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Security will be issued in a smaller principal amount. If the Subsequent
Purchaser is a non-bank fiduciary acting on behalf of others, each person for
whom it is acting must purchase at least U.S. $150,000 principal amount of the
Securities.
(vi) Restrictions on Transfer. The transfer
restrictions and the other provisions set forth in Section 3.17 of the
Indenture, including the legend required thereby, shall apply to the Securities
except as otherwise agreed by the Company and the Initial Purchasers. Following
the sale of the Securities by the Initial Purchasers to Subsequent Purchasers
pursuant to the terms hereof, the Initial Purchasers shall not be liable or
responsible to the Company for any losses, damages or liabilities suffered or
incurred by the Company, including any losses, damages or liabilities under the
1933 Act, arising from or relating to any subsequent resale or transfer of any
Security.
(vii) Delivery of Offering Memorandum. Each Initial
Purchaser will deliver to each purchaser of the Securities from such Initial
Purchaser, in connection with its original distribution of the Securities, a
copy of the Offering Memorandum, as amended and supplemented at the date of such
delivery.
(b) Covenants of the Company. The Company covenants with each Initial
Purchaser as follows:
(i) Due Diligence. In connection with the original
distribution of the Securities, the Company agrees that, prior to any offer or
resale of the Securities by the Initial Purchasers, the Initial Purchasers and
counsel for the Initial Purchasers shall have the right to make reasonable
inquiries into the business of the Company and its subsidiaries. The Company
also agrees to provide answers to each prospective Subsequent Purchaser of
Securities who so requests concerning the Company and its subsidiaries (to the
extent that such information is available or can be acquired and made available
to prospective Subsequent Purchasers without unreasonable effort or expense and
to the extent the provision thereof is not prohibited by applicable law) and the
terms and conditions of the offering of the Securities, as provided in the
Offering Memorandum.
(ii) Integration. The Company agrees that it has not
previously and it will not and will cause its Affiliates not to make any offer
or sale of securities of the Company of any class if, as a result of the
doctrine of "integration" referred to in Rule 502 under the 1933 Act, such offer
or sale would render invalid (for the purpose of (a) the sale of the Securities
by the Company to the Initial Purchasers, (b) the resale of the Securities by
the Initial Purchasers to Subsequent Purchasers or (c) the resale of the
Securities by such Subsequent Purchasers to others) the exemption from the
registration requirements of the 1933 Act provided by Section 4(2) thereof or by
Rule 144A or by Regulation S thereunder or otherwise.
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(iii) Rule 144A Information. The Company agrees that,
in order to render the Securities eligible for resale pursuant to Rule 144A
under the 1933 Act, while any of the Securities remain outstanding, they will
make available, upon request, to any holder of Securities or prospective
purchasers of Securities the information specified in Rule 144A(d)(4), unless
the Company furnishes information to the Commission pursuant to Section 13 or
15(d) of the 1934 Act (such information, whether made available to holders or
prospective purchasers or furnished to the Commission, is herein referred to as
"Additional Information").
(iv) Restriction on Repurchases. Until the expiration
of two years after the original issuance of the Securities, the Company will
not, and will cause its Affiliates not to, purchase or agree to purchase or
otherwise acquire any Securities which are "restricted securities" (as such term
is defined under Rule 144(a)(3) under the 1933 Act), whether as beneficial owner
or otherwise (except as agent acting as a securities broker on behalf of and for
the account of customers in the ordinary course of business in unsolicited
broker's transactions) unless, immediately upon any such purchase, the Company
or any Affiliate shall submit such Securities to the Trustee for cancellation.
(c) Resale Pursuant to Rule 144A. Each Initial Purchaser understands
that the Securities have not been and will not be registered under the 1933 Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Regulation S under
the 1933 Act or pursuant to an exemption from the registration requirements of
the 1933 Act. Each Initial Purchaser represents and agrees, that, except as
permitted by Section 6(a) above, it has offered and sold Securities and will
offer and sell Securities as part of their distribution at any time only in
accordance with Rule 144A and Regulation S under the 1933 Act. Accordingly,
neither the Initial Purchasers, their affiliates nor any persons acting on their
behalf have engaged or will engage in any directed selling efforts with respect
to Securities, and the Initial Purchasers their affiliates and any person acting
on their behalf have complied and will comply with the offering restriction
requirements of Regulation S with respect to any Securities sold in reliance on
Regulation S.
Each Initial Purchaser severally represents and agrees that it has not
entered and will not enter into any contractual arrangements with respect to the
distribution of the Securities, except with its affiliates or with the prior
written consent of the Company.
SECTION 7. Indemnification.
(a) Indemnification of Initial Purchasers. The Company agrees to
indemnify and hold harmless each Initial Purchaser and each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act as follows:
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(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 any Preliminary
Offering Memorandum or the Final Offering Memorandum (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 7(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 ▇▇▇▇▇▇▇
▇▇▇▇▇), 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 any
Initial Purchaser through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Offering
Memorandum (or any amendment thereto); provided further, that this indemnity
agreement with respect to any Preliminary Offering Memorandum shall not inure to
the benefit of any Initial Purchaser from whom the person asserting any losses,
claims, damages, liabilities or actions based upon any untrue statement or
alleged untrue statement of material fact or omission or alleged omission to
state therein a material fact purchased Securities, if a copy of the Final
Offering Memorandum in which such untrue statement or alleged untrue statement
or omission or alleged omission was corrected had not been sent or given to such
person prior to the Closing Time, unless such failure is the result of
noncompliance by the Company with Section 3(a) hereof.
(b) Indemnification of the Company, Directors and Officers. Each
Initial Purchaser severally agrees to indemnify and hold harmless the Company,
its directors, its officers 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,
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as incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Offering Memorandum in reliance upon
and in conformity with written information furnished to the Company by such
Initial Purchaser through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Offering
Memorandum.
(c) Actions against Parties: Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced 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 7(a) above,
counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in
the case of parties indemnified pursuant to Section 7(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 7 or Section
8 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 7(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 reimbursed such
indemnified party for the reasonable fees and expenses of counsel in accordance
with such request prior to the date of such settlement.
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SECTION 8. Contribution. If the indemnification provided for in Section
7 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 Initial Purchasers 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
Initial Purchasers 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
Initial Purchasers on the other hand in connection with the offering of the
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
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Initial
Purchasers, bear to the aggregate initial offering price of the Securities.
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 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 Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Initial Purchasers 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 8. The
appropriate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 8 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 8, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
public were offered to the
24
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public 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 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls an
Initial Purchaser 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 Initial
Purchaser, and each director of the Company 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 Initial Purchasers' respective obligations to contribute pursuant to this
Section 8 are several in proportion to the principal amount of Securities set
forth opposite its names in Schedule A hereto and not joint.
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Initial Purchaser or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Initial Purchasers.
SECTION 10. Termination of Agreement.
(a) Termination; General. The Initial Purchasers may terminate this
Agreement, by notice to the Company, at any time at or prior to the 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 Offering
Memorandum, 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 Initial Purchasers, 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 limited by the Commission or the
NASDAQ National Market System, or if trading generally on the American Stock
Exchange or the New York Stock Exchange or in the NASDAQ National Market System
has been suspended or limited, or minimum or maximum prices for trading have
been
25
26
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 National Association of
Securities Dealers, Inc. or any other governmental authority, or (iv) if a
banking moratorium has been declared by either Federal or New York or Texas
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, 7 and 8 shall survive such termination and remain in full force and effect.
SECTION 11. Default by One or More of the Initial Purchasers. If one or
more of the Initial Purchasers shall fail at the Closing Time to purchase the
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), within 24 hours thereafter, one or more of the
non-defaulting Initial Purchasers, or any other Initial Purchaser, may make
arrangements 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 Initial Purchasers 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
aggregate principal amount of the Securities to be purchased hereunder, each of
the non-defaulting Initial Purchasers 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 Initial Purchasers, or
(b) if the number of Defaulted Securities exceeds 10% of the aggregate
principal amount of the Securities to be purchased hereunder, this Agreement
shall terminate, without liability on the part of any non-defaulting Initial
Purchaser.
No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Initial Purchasers or the Company shall have the
right to postpone the Closing Time for a period not exceeding seven days in
order to effect any required changes in the Offering Memorandum or in any other
documents or arrangements. As used herein, the term "Initial Purchaser" includes
any person substituted for an Initial Purchaser under this Section 11.
SECTION 12. Notices. All notices and other communications hereunder
shall be in writing, and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchasers shall be directed to them at North Tower, World Financial Center, New
York, New York 10281-
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1201, attention of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇; and notices to the Company shall be
directed to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., CapRock Communications Corp., ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, with a copy to ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇, P.C., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇.
SECTION 13. Parties. This Agreement shall each inure to the benefit of
and be binding upon the Initial Purchasers and the Company and its successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Initial
Purchasers, the Company and its successors and the controlling persons and
officers and directors referred to in Sections 7 and 8 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 Initial Purchasers, 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 Initial Purchaser shall be
deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 15. 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.
SECTION 16. Counterparts. This Agreement may be executed in one or more
counterparts and in separate counterparts and, when this Agreement has been
executed by each party in multiple or separate counterparts, all such
counterparts taken together shall constitute one and the same agreement.
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28
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 Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
CAPROCK COMMUNICATIONS CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
CHASE SECURITIES INC.
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name:
Title:
For itself and as Representative of the other Initial Purchasers named in
Schedule A hereto.
29
SCHEDULE A
Principal
Amount of
Name of Initial Purchaser Securities
------------------------- ------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated............................................................ $105,000,000
Chase Securities Inc................................................................ $ 42,000,000
Bear, ▇▇▇▇▇▇▇ & Co. Inc............................................................. $ 21,000,000
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation................................. $ 21,000,000
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co................................................................. $ 21,000,000
------------
Total............................................................................... $210,000,000
============
30
SCHEDULE B
CAPROCK COMMUNICATIONS CORP.
$210,000,000 of 11 1/2% Senior Notes due 2009
1. The initial public offering price of the Securities shall be 98.541%
of the principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the Initial Purchasers for the
Securities shall be 96.041% of the principal amount thereof.
3. Interest on the Securities shall accrue at an annual rate of 11 1/2%
and will be payable on May 1 and November 1 of each year, commencing on November
1, 1999.
4. The redemption prices to be supplied in the Offering Memorandum
under the caption "Description of the Notes - Optional Redemption" (and
correspondingly in the Indenture) shall be on or after May 1 of the years
appearing below:
YEAR REDEMPTION
PRICE
2004 105.750%
2005 103.834%
2006 101.917%
2007 and thereafter 100.000%
5. Equity Clawback. On or prior to May 1, 2002, the Company may redeem
up to 35% of the aggregate principal amount of Notes originally issued at a
redemption price of 111.50% of the principal amount thereof, together with
accrued and unpaid interest to the date of redemption.
Sch B-1
31
Exhibit A-1
FORM OF OPINION OF COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)(i)
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Texas.
(ii) The Company has the corporate authority to own, lease and operate
its properties and to conduct its business as described in the Offering
Memorandum and to enter into and perform its obligations under the Purchase
Agreement, the Indenture, the Securities and the Registration Rights Agreement.
(iii) The Company 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 result in a Material Adverse Effect.
(iv) Each Subsidiary has been duly incorporated or formed and is
validly existing as a corporation or limited partnership in good standing under
the laws of the jurisdiction of its incorporation or formation, has corporate or
partnership power and authority to own, lease and operate its properties and to
conduct its business as described in the Offering Memorandum and is duly
qualified as a foreign corporation or partnership 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 its
business, except where the failure so to qualify or to be in good standing would
not result in a Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, all of the issued and outstanding capital stock or
equity interests of each Subsidiary has been duly authorized and validly issued,
is fully paid and non-assessable and is owned of record by the Company, directly
or through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance (other than those imposed by the 1933 Act), or claim;
none of the outstanding shares of capital stock of any Subsidiary was issued in
violation of the preemptive or similar rights of any securityholder of such
Subsidiary arising under the articles of incorporation or bylaws of the Company,
Texas law, or to such counsel's Actual Knowledge, otherwise.
(v) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
(vi) The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company.
Exh A-1 - 1
32
(vii) The Indenture has been duly authorized, executed and delivered by
the Company.
(viii) The Securities are in the form contemplated by the Indenture and
have been duly authorized by the Company.
(ix) The Securities and the Indenture conform in all material respects
to the descriptions thereof contained in the Offering Memorandum.
(x) To our Actual Knowledge, other than as set forth on Schedule 1,
there are no pending or threatened actions, suits, proceedings, inquiries,
complaints or investigations, to which the Company or any of its subsidiaries is
a party, or to which the assets or properties of the Company or any of its
subsidiaries is subject, before or brought by any court or governmental agency
or body and no such action, suit, proceeding, inquiry, complaint or
investigation might reasonably be expected to materially and adversely affect
the consummation of the transactions contemplated in the Purchase Agreement or
any other Transaction Document.
(xi) The information in the Offering Memorandum under "Business--
Properties", "Business--Legal Proceedings", "Description of the Notes",
"Description of Capital Stock" (but only to the extent such information relates
to provisions of the articles of incorporation or bylaws of the Company) and
"Certain Federal Income Tax Considerations" to the extent that it constitutes
matters of law, summaries of legal matters, the Company's charter and bylaws or
legal proceedings, or legal conclusions, has been reviewed by such counsel and
is correct in all material respects.
(xii) All descriptions in the Offering Memorandum of contracts and
other documents to which the Company or its subsidiaries is a party are accurate
in all material respects. To our Actual Knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments that would be required to be described in the Offering Memorandum
that are not described in the Offering Memorandum.
(xiii) To our Actual Knowledge, neither the Company nor any Subsidiary
is in violation of its charter or bylaws (or equivalent organizational
documents).
(xiv) No filing with, authorization, approval, consent, license,
registration, qualification, decree or order of any court or governmental
authority or agency (other than such as may be required under the applicable
securities laws of the various jurisdictions in which the Securities will be
offered or sold, and other than as may be required by the Federal Communications
Commission ("FCC") and any state public utility commission or similar authority
("State PUC") or otherwise addressed in the opinion of counsel delivered
pursuant to Section 5(a)(iii) as to which such counsel need express no opinion)
is required in connection with the due authorization, execution and delivery of
the Purchase Agreement or the due execution, delivery or performance of the
Indenture or any other
Exh A-1 - 2
33
Transaction Document by the Company or for the offering, issuance, sale or
delivery of the Securities to the Initial Purchasers or the resale by the
Initial Purchasers in accordance with the Purchase Agreement and as contemplated
by the Offering Memorandum.
(xv) Assuming the accuracy of the representations and warranties and
compliance with the agreements of the Company and the Initial Purchasers in the
Purchase Agreement and the information set forth under the captions "Plan of
Distribution" and "Notice to Investors" in the Offering Memorandum and the
compliance by Subsequent Purchasers with the transfer restrictions contained in
the Indenture, it is not necessary in connection with the offer, sale and
delivery of the Securities to the Initial Purchasers and to each Subsequent
Purchaser in the manner contemplated by the Purchase Agreement and the Offering
Memorandum to register the Securities under the 1933 Act or to qualify the
Indenture under the 1939 Act.
(xvi) The execution, delivery and performance of the Purchase Agreement
and each other Transaction Document and the consummation of the transactions
contemplated in the Purchase Agreement, in any other Transaction Document and in
the Offering Memorandum (including the use of the proceeds from the sale of the
Securities as described in the Offering Memorandum under the caption "Use Of
Proceeds") and compliance by the Company with its obligations under the Purchase
Agreement and any other Transaction Document will not, whether with or without
the giving of notice or lapse of time or both, constitute a breach of, or
default or Repayment Event (as defined in the Purchase Agreement) under or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries thereof pursuant to
any contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or any other agreement or instrument, of which we have Actual
Knowledge, to which the Company or any of its subsidiaries 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 of its subsidiaries is subject (except for such breaches
or defaults, Repayment Events or liens, charges or encumbrances that would not
have a Material Adverse Effect), nor will such action result in any violation of
the provisions of the charter or by-laws (or equivalent organizational document)
of the Company or any of its Subsidiaries, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, of which we have Actual Knowledge
of any government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of its
properties, assets or operations (other than those laws, statutes, rules,
regulations, judgments, orders, writs or decrees promulgated by or administered
by the FCC or the State PUCs or otherwise addressed in the opinion of counsel
delivered pursuant to Section 5(a)(iii) of the Purchase Agreement, as to which
no opinion is hereby expressed).
(xvii) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the 1940
Act.
In addition, we have participated in conferences with officers and
other representatives of the Company, the Initial Purchasers, their counsel and
the independent
Exh A-1 - 3
34
certified public accountants of the Company, at which such conferences the
contents of the Offering Memorandum and related matters were discussed, and
although we have not verified and are not passing upon and do not assume
responsibility for the accuracy or completeness of the statements contained in
the Offering Memorandum (except to the extent set forth in paragraph (xi)
above), nothing has come to our attention which would have caused us to believe
that, at the date of the Final Offering Memorandum and at all times subsequent
thereto up to and on the date hereof, the Final Offering Memorandum (other than
the financial statements including the notes thereto, the auditors' report
thereon, other financial information derived therefrom or omitted therefrom and
other financial information included therein and other than the information
contained in the Offering Memorandum under the captions "Risk Factors -- Our
ability to provide local telephone service is dependent on incumbent local
exchange carriers," "Risk Factors -- The regulatory environment for
telecommunications businesses creates risks," "Risk Factors -- Our ability to
provide long distance service is dependent on other long distance carriers,"
"Risk Factors -- Communications laws and state corporate laws may make it harder
for someone to acquire control of CapRock" (except for the discussion of Article
13.03 of the Texas Business Corporation Act), "Risk Factors - We need
franchises, rights of way and permits to build our fiber network," "Risk Factors
- We may incur liability as an Internet service provider," and "Regulations and
Licenses", as to which no opinion is expressed) contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
The opinions expressed herein are subject to the following additional
assumptions, qualifications, limitations and exceptions:
The opinions expressed herein are limited to the substantive laws of
the State of Texas and the federal laws of the United States, and we assume no
responsibility as to the applicability thereto, or the effect thereon, of the
laws of any other jurisdiction.
We have assumed, with your permission and without any independent
investigation, inquiry or verification, (i) that except with respect to the
Company, each other party has all requisite corporate power to execute and
deliver and perform their obligations under the Transaction Documents and to
execute and deliver the Transaction Documents; (ii) the execution, delivery and
performance of the Transaction Documents has been duly authorized by all
requisite corporate action on the part of each party other than the Company;
(iii) the due execution and delivery of the Transaction Documents by each party
other than the Company or on behalf of each party other than the Company; (iv)
that the Transaction Documents constitute the legal, valid and binding
obligation of each party other than the Company, enforceable against each party
other than the Company in accordance with its respective terms; (v) that the
representations and warranties as to factual matters made by the Company in the
Transaction Documents are true, accurate and complete in all respects at the
date of this opinion; (vi) that as to factual matters, the statements contained
in the certificates of officers and representatives of the Company and the
Subsidiaries and the certificates of public officials and the certificate of
Exh A-1 - 4
35
the Trustee and the Transfer Agent, each of which is described on Exhibit A
attached hereto, are true, accurate and complete in all respects at the date of
this opinion and as of the date of such certificates; (vii) the authenticity of
all documents submitted to us as original documents; (viii) the conformity to
authentic, original documents of all documents submitted to us as copies
(whether telecopies, photocopies or conformed copies) and that each document
submitted to us is accurate and complete; (ix) the genuineness of all signatures
(and the competency of any signatories who are natural persons) and that where
any such signature purports to have been made in a corporate, governmental,
fiduciary, or other capacity, the person who affixed such signature to such
document had authority to do so; (x) that all information submitted to us was
accurate and complete (including the completeness of all documents furnished to
us, and that no amendments, modifications or revisions to such documents are in
existence); (xi) that the Company will use the proceeds of the offering as set
forth in the Offering Memorandum and the Company is engaged primarily in a
business other than that of investing, reinvesting, owning, holding or trading
in securities; (xiii) there are no agreements or understandings among the
parties, written or oral, and there is no usage of trade or course of prior
dealing among the parties that would, in either case, define, supplement or
qualify the terms of the Transaction Documents; and (xiv) that no mutual mistake
of fact or misunderstanding, fraud, duress, undue influence or dishonesty exists
with respect to any of the matters relevant to our opinions.
For purposes of the foregoing opinions, "Actual Knowledge" shall mean
the current actual awareness each of the attorneys of the firm of ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇, P.C. who has given substantive legal attention to the affairs of
the Company in connection with the Offering to be effected pursuant to the
Offering Memorandum, or certain other matters with respect to the Company for
which they have been specifically engaged.
In rendering the opinions set forth in Paragraphs (xiv) and (xvi), we
express no opinion as to the absence of a violation of any applicable federal or
state antifraud, antitrust or fraudulent conveyance statute, rule or regulation
or any state securities or blue sky statute, rule or regulation or any FCC or
State PUC statute, rule or regulation. Except as otherwise provided herein, this
opinion letter and the matters addressed herein are as of the date hereof, and
we undertake no, and hereby disclaim any, obligation to advise you of any change
in any matter set forth herein occurring after the date hereof or the date
referred to herein, as the case may be. This opinion letter is limited to the
matters stated herein and no opinion is implied or may be inferred beyond the
matters expressly stated.
This opinion letter is solely for your benefit and may be relied upon
solely for the transactions set forth in the Transaction Documents and no other
persons shall be entitled to rely upon the opinions herein expressed. This
opinion is being delivered to and accepted by you with the understanding that
such delivery and acceptance of this opinion are conditioned upon your agreement
that neither you nor your counsel have knowledge of any incorrect statement or
omission relating to the facts or opinions set forth herein. Without our prior
written consent, this opinion letter may not be quoted in whole or in
Exh A-1 - 5
36
part or otherwise referred to in any document and may not be furnished to any
other person or entity.
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
Exh A-1 - 6
37
Exhibit A-2
FORM OF OPINION OF COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)(ii)
(i) The Registration Rights Agreement constitutes a valid and binding
agreement of the Company, enforceable against it in accordance with its terms
except as enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law) and the enforceability of any right to indemnification or contribution
provided therein violates the public policy of any law, rule or regulation.
(ii) The Indenture (assuming the due authorization, execution and
delivery thereof by the Trustee) constitutes a valid and binding agreement of
the Company, enforceable against it in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws relating to or affecting enforcement of
creditors' rights generally, or by general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law) and the
enforceability of any right to indemnification or contribution provided therein
violates the public policy of any law, rule or regulation.
(iii) The Securities, when executed by the Company and authenticated by
the Trustee in the manner provided in the Indenture (assuming the due
authorization, execution and delivery of the Indenture by the Trustee) and
delivered against payment of the purchase price therefor, will constitute valid
and binding obligations of the Company, enforceable against it in accordance
with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium (including, without
limitation, all laws relating to fraudulent transfers), or other similar laws
relating to or affecting enforcement of creditor's rights generally or by
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law) and the enforceability of any right to
indemnification or contribution provided therein violates the public policy of
any law, rule or regulation, and will be entitled to the benefits of the
Indenture.
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
Exh A-2 - 1