<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1998
REGISTRATION NO. 333-48559
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
STAR TELECOMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 4813 77-0362681
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) No.)
</TABLE>
223 EAST DE LA GUERRA STREET
SANTA BARBARA, CALIFORNIA 93101
(805) 899-1962
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------------------
KELLY D. ENOS
CHIEF FINANCIAL OFFICER
STAR TELECOMMUNICATIONS, INC.
223 EAST DE LA GUERRA STREET
SANTA BARBARA, CALIFORNIA 93101
(805) 899-1962
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------
COPIES TO:
TIMOTHY F. SYLVESTER, ESQ. NEIL WOLFF, ESQ.
Riordan & McKinzie Wilson Sonsini Goodrich & Rosati,
300 South Grand Avenue, 29th Floor Professional Corporation
Los Angeles, California 90071 650 Page Mill Road
(213) 629-4824 Palo Alto, California 94304-1050
(650) 493-9300
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
NOT APPLICABLE.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If the Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. /X/
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of Common Stock being registered. All amounts are estimates except
the SEC registration fee, the NASD filing fees and the Nasdaq Stock Market
listing fee.
<TABLE>
<S> <C>
SEC Registration fee............................................ $ 48,002
NASD fee........................................................ $ 18,564
Nasdaq National Market listing fee.............................. $ 17,500
Printing and engraving expenses................................. $ 125,000
Legal fees and expenses......................................... $ 250,000
Accounting fees and expenses.................................... $ 175,000
Blue sky fees and expenses...................................... $ 20,000
Transfer agent fees............................................. $ 5,000
Miscellaneous fees and expenses................................. $ 840,934
---------
Total......................................................... $1,500,000
---------
---------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a court to
award or a corporation's Board of Directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Securities Act"). Article VII, Section 6, of the Registrant's
Bylaws provides for mandatory indemnification of its directors and officers and
permissible indemnification of employees and other agents to the maximum extent
permitted by the Delaware General Corporation Law. The Registrant's Amended and
Restated Certificate of Incorporation provides that, pursuant to Delaware law,
its directors shall not be liable for monetary damages for breach of the
directors' fiduciary duty as directors to the Company and its stockholders. This
provision in the Amended and Restated Certificate of Incorporation does not
eliminate the directors' fiduciary duty, and in appropriate circumstances
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Delaware law. In addition, each director will continue to
be subject to liability for breach of the director's duty of loyalty to the
Company for acts or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for actions leading to improper
personal benefit to the director, and for payment of dividends or approval of
stock repurchases or redemptions that are unlawful under Delaware law. The
provision also does not affect a director's responsibilities under any other
law, such as the federal securities laws or state or federal environmental laws.
The Registrant has entered or will enter into Indemnification Agreements with
its officers and directors that provide the Registrant's officers and directors
with further indemnification to the maximum extent permitted by the Delaware
General Corporation Law. Reference is made to Section 7 of the Underwriting
Agreement contained in Exhibit 1.1 hereto, indemnifying officers and directors
of the Registrant against certain liabilities.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since inception, the Company has issued and sold the following unregistered
securities, which amounts have been adjusted to reflect the Stock Split:
1. On March 10, 1998, the Registrant issued 1,353,000 shares of its
Common Stock in exchange for all of the outstanding capital stock of T-One
Corp. in a transaction valued at $25,080,000.
2. On November 30, 1997, the Registrant issued 849,298 shares of Common
Stock in exchange for all of the outstanding capital stock of LD Services,
Inc. in a transaction valued at approximately $13,930,569.
3. As of March 31, 1997, the Registrant had issued 18,450,000 shares of
Common Stock pursuant to direct issuances to employees in consideration for
services and advances provided by such employees for an aggregate purchase
price of approximately $1,103,000.
4. On February 23, 1996, the Registrant issued and sold 2,049,979
shares of Common Stock to a group of six investors for an aggregate purchase
price of $1,500,000.00.
5. On July 12, 1996, the Registrant issued and sold 1,874,532 shares of
Common Stock to Gotel Investments Ltd. for an aggregate purchase price of
$4,068,651.00.
6. On July 25, 1996, the Registrant issued and sold 2,802,446 shares of
Series A Preferred Stock to a group of twenty-two investors for an aggregate
purchase price of $7,500,003.51.
7. Since inception from time to time, as of February 28, 1998, the
Registrant has granted to employees, directors and consultants options to
purchase an aggregate of approximately 4,798,000 shares of Common Stock
pursuant to stock option agreements and the Registrant's stock option plans.
The sales and issuances described above were deemed to be exempt from
registration under the Securities Act in reliance upon Section 4(2) thereof, as
transactions by an issuer not involving any public offering, or in reliance upon
the exemption from registration provided by Rule 701 promulgated under the
Securities Act. In addition, the recipients of securities in each such
transaction represented their intentions to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof and appropriate legends were affixed to the share
certificates issued in such transactions. All recipients had adequate access,
through their relationships with the Registrant, to information about the
Registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS.
The following Exhibits are attached hereto and incorporated herein by
reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Underwriting Agreement.
2.1* Amended and Restated Stock Acquisition Agreement and Plan of Merger dated as of November 30, 1997 by
and among the Registrant, Big Dave's Acquisition Corp., LCCR, Inc., and the shareholders listed on the
signature page thereto.
2.2** Agreement and Plan of Merger dated as of November 19, 1997 by and among the Registrant, IIWII Corp.
and United Digital Network, Inc. (the "UDN Merger Agreement").
2.3** First Amendment to the UDN Merger Agreement dated as of January 30, 1998.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
2.4** Stock Purchase Agreement dated as of January 26, 1998 by and among the Registrant, T-One Corp. and
Taha Mikati, as amended.
3.1** Amended and Restated Certificate of Incorporation of the Registrant.
3.2** Bylaws of the Registrant.
4.1+++ Specimen Common Stock certificate.
4.2+ Registration Rights Agreement, dated September 24, 1996, between the Registrant and the investors
named therein.
4.3+ Registration Rights Agreement, dated July 12, 1996, between the Registrant and the investor named
therein.
4.4+ Investor Rights Agreement dated July 25, 1996, between the Registrant and the investors named therein.
4.5* Registration Rights Agreement dated as of November 30, 1997 by and among the Company and the
shareholders listed on the signature page thereto.
4.6** Registration Rights Agreement dated as of March 10, 1998 between the Registrant and Taha Mikati.
5.1 Opinion of Riordan & McKinzie, a Professional Law Corporation.
10.1+ Form of Indemnification Agreement.
10.2+ 1996 Amended and Restated Stock Incentive Plan.
10.3+ 1996 Outside Director Nonstatutory Stock Option Plan.
10.4++ 1997 Omnibus Stock Incentive Plan.
10.5+ Employment Agreement between the Registrant and Mary Casey dated July 14, 1995, as amended.
10.6+ Employment Agreement between the Registrant and Kelly Enos dated December 2, 1996.
10.7+ Employment Agreement between the Registrant and David Vaun Crumly dated January 1, 1996.
10.8+ Employment Agreement between the Registrant and James Kolsrud dated December 18, 1996.
10.9+ Consulting Agreement between the Registrant and Gordon Hutchins, Jr. dated May 1, 1996.
10.10+ Nonstatutory Stock Option Agreement between the Registrant and Gordon Hutchins, Jr. dated May 15,
1996.
10.11+ Free Standing Commercial Building Lease between the Registrant and Thomas M. Spear, as receiver for De
La Guerra Court Investments, dated for reference purposes as of March 1, 1996.
10.12+ Standard Office Lease--Gross between the Registrant and De La Guerra Partners, L.P. dated for
reference purposes as of July 9, 1996.
10.13+ Office Lease between the Registrant and WHUB Real Estate Limited Partnership dated June 28, 1996, as
amended.
10.14+ Standard Form of Office Lease between the Registrant and Hudson Telegraph Associates dated February
28, 1996.
10.15+ Agreement for Lease between the Registrant and Telehouse International Corporation of Europe Limited
dated July 16, 1996.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
10.16+ Sublease between the Registrant and Borton, Petrini & Conron dated March 20, 1994, as amended.
10.17+ Office Lease between the Registrant and One Wilshire Arcade Imperial, Ltd. dated June 28, 1996.
10.18+ Lease Agreement between the Registrant and Telecommunications Finance Group dated April 6, 1995.
10.19+ Lease Agreement between the Registrant and Telecommunications Finance Group dated January 3, 1996, as
amended.
10.20++ Master Lease Agreement between the Registrant and NTFC Capital Corporation dated December 20, 1996.
10.21+ Variable Rate Installment Note between the Registrant and Metrobank dated October 4, 1996.
10.22+ Assignment of Purchase Order and Security Interest between the Registrant and DSC Finance Corporation
dated January 1, 1996.
10.23++ Line of Credit Promissory Note between the Registrant and Christopher E. Edgecomb dated November 7,
1996, as amended.
10.24++ Office Lease Agreement between the Registrant and Beverly Hills Center LLC effective as of April 1,
1997.
10.25** Credit Agreement dated as of September 30, 1997 among the Registrant, the financial institutions party
thereto and Sanwa Bank California, as amended.
10.26** Office Lease between the Registrant, Hudson Telegraph Associates and American Communications Corp., as
amended.
10.27** Amendment Number Three to Employment Agreement between the Registrant and Mary A. Casey dated as of
July 1, 1997.
10.28** Amendment Number One to Employment Agreement between the Registrant and Kelly D. Enos dated as of
November 12, 1997.
10.29** Amendment Number One to First Restatement of Employment Agreement between the Registrant and James
Kolsrud dated as of June 16, 1997.
10.30** Amendment Number One to Employment Agreement between the Registrant and David Vaun Crumly dated as of
November 11, 1997.
10.31** First Amendment to Amended and Restated 1996 Stock Incentive Plan.
10.32*** Agreement dated as of December 1, 1997 between the Registrant and Nortel Dasa Network Systems GmbH &
Co. KG.
10.33** Leasing Agreement between the Registrant and Nortel Dasa Network Systems GmbH & Co. KG.
10.34** Guarantee Agreement between the Registrant and Nortel Dasa Network Systems GmbH & Co. KG.
10.35** Note and Security Agreement dated as of December 18, 1997 between the Registrant and NationsBanc
Leasing Corporation.
10.36** Amendment of Lease dated as of September 30, 1997 between the Registrant and Hudson Telegraph
(reference is hereby made to Exhibit 10.14).
10.37 Intentionally omitted.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
10.38** Lease Agreement dated July 29, 1996 between the Registrant and Telecommunications Finance Group.
10.39** Promissory Note issued by Christopher E. Edgecomb in favor of the Registrant dated November 26, 1997.
10.40** Stock Pledge Agreement dated November 26, 1997 between the Registrant and Christopher E. Edgecomb.
10.41** Commercial Lease dated October 31, 1997 between the Registrant and Prinzenpark GbR.
10.42** Commercial Lease dated October 9, 1997 between the Registrant and WSL Weststadt Liegenschafts GmbH.
10.43** Office Lease between the Registrant and Airport-Center KGHP Gewerbeban GmbH & Cie.
10.44** Lease dated November 19, 1997 between the Registrant and DIFA Deutsche Immobilien Fonds
Aktiengesellschaft.
21.1*** Subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP, Independent Accountants.
23.2 Consent of Riordan & McKinzie (contained in Exhibit 5.1).
24.1** Power of Attorney.
27.1** Financial Data Schedule.
</TABLE>
- ------------------------
+ Filed as an exhibit to the Company's Registration Statement on Form S-1
(Registration No. 333-21325) on February 7, 1997 and incorporated by
reference herein.
++ Filed as an exhibit to Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No. 333-21325) on May 16, 1997 and
incorporated by reference herein.
+++ Filed as an exhibit to Amendment No. 2 to the Company's Registration
Statement on Form S-1 (Registration No. 333-21325) on May 29, 1997 and
incorporated by reference herein.
* Filed on December 15, 1997 as an exhibit to the Company's Current Report on
Form 8-K (File No. 000-22581) and incorporated by reference herein.
** Filed as an exhibit to the Company's Registration Statement on Form S-1
(Registration No. 333-48559) on March 24, 1998 and incorporated by reference
herein.
***Filed as an exhibit to the Company's Annual Report on Form 10-K (File No.
000-22581) on March 31, 1998 and incorporated by reference herein.
(B) FINANCIAL STATEMENT SCHEDULES
Schedule II--Valuation and Qualifying Accounts.
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes to provide to the Underwriters at the
closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
II-5
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Delaware General Corporation Law, the Certificate of
Incorporation or the Bylaws of the Registrant, the Underwriting Agreement, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act, and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer,
or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered hereunder, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Post-Effective Amendment No. 1. to the
Registration Statement on Form S-1 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Santa Barbara, State of
California, on this 30th day of April, 1998.
<TABLE>
<S> <C> <C>
STAR TELECOMMUNICATIONS, INC.
By: /s/ KELLY D. ENOS
-----------------------------------------
Kelly D. Enos
Chief Financial Officer
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
* Chief Executive Officer
- ------------------------------ and Director (Principal April 30, 1998
Christopher E. Edgecomb Executive Officer)
*
- ------------------------------ President and Director April 30, 1998
Mary A. Casey
/s/ KELLY D. ENOS Chief Financial Officer
- ------------------------------ (Principal Financial and April 30, 1998
Kelly D. Enos Accounting Officer)
*
- ------------------------------ Director April 30, 1998
Gordon Hutchins, Jr.
*
- ------------------------------ Director April 30, 1998
John R. Snedegar
*
- ------------------------------ Director April 30, 1998
Mark Gershien
*By: /s/ KELLY D. ENOS
-------------------------
Kelly D. Enos
ATTORNEY-IN-FACT
II-7
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To STAR Telecommunications, Inc. and Subsidiaries:
We have audited in accordance with generally accepted auditing standards the
consolidated financial statements of STAR Telecommunications, Inc. and
Subsidiaries, included in this registration statement and have issued our report
thereon dated February 12, 1998. Our audits were made for the purpose of forming
an opinion on the basic consolidated financial statements taken as a whole. The
schedule of valuation and qualifying accounts is the responsibility of the
Company's management and is presented for the purpose of complying with the
Securities and Exchange Commission's rules and is not part of the basic
consolidated financial statements. This schedule has been subjected to the
auditing procedures applied in the audits of the basic consolidated financial
statements and, in our opinion, fairly states, in all material respects, the
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Los Angeles, California
February 12, 1998
S-1
<PAGE>
SCHEDULE II
STAR TELECOMMUNICATIONS, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING END OF
OF PERIOD PROVISION WRITE-OFF PERIOD
----------- ----------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Allowance for doubtful accounts
1995........................................................... $ 81 $ 217 $ -- $ 298
1996........................................................... $ 298 $ 15,753 $ (9,849) $ 6,202
1997........................................................... $ 6,202 $ 7,695 $ (6,152) $ 7,745
Deferred tax asset valuation allowance
1995........................................................... $ -- $ 30 $ -- $ 30
1996........................................................... $ 30 $ 2,854 $ -- $ 2,884
1997........................................................... $ 2,884 $ (1,201) $ -- $ 1,683
Note Receivable
1997........................................................... $ -- $ 2,500 $ -- $ 2,500
</TABLE>
S-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION OF DOCUMENT NUMBERED PAGE
- ---------- ---------------------------------------------------------------------------------------- -----------------
<C> <S> <C>
1.1 Underwriting Agreement.
2.1* Amended and Restated Stock Acquisition Agreement and Plan of Merger dated as of November
30, 1997 by and among the Registrant, Big Dave's Acquisition Corp., LCCR, Inc., and the
shareholders listed on the signature page thereto.
2.2** Agreement and Plan of Merger dated as of November 19, 1997 by and among the Registrant,
IIWII Corp. and United Digital Network, Inc. (the "UDN Merger Agreement").
2.3** First Amendment to the UDN Merger Agreement dated as of January 30, 1998.
2.4** Stock Purchase Agreement dated as of January 26, 1998 by and among the Registrant, T-One
Corp. and Taha Mikati, as amended.
3.1** Amended and Restated Certificate of Incorporation of the Registrant.
3.2** Bylaws of the Registrant.
4.1+++ Specimen Common Stock certificate.
4.2+ Registration Rights Agreement, dated September 24, 1996, between the Registrant and the
investors named therein.
4.3+ Registration Rights Agreement, dated July 12, 1996, between the Registrant and the
investor named therein.
4.4+ Investor Rights Agreement dated July 25, 1996, between the Registrant and the investors
named therein.
4.5* Registration Rights Agreement dated as of November 30, 1997 by and among the Company and
the shareholders listed on the signature page thereto.
4.6** Registration Rights Agreement dated as of March 10, 1998 between the Registrant and Taha
Mikati.
5.1 Opinion of Riordan & McKinzie, a Professional Law Corporation.
10.l+ Form of Indemnification Agreement.
10.2+ 1996 Amended and Restated Stock Incentive Plan.
10.3+ 1996 Outside Director Nonstatutory Stock Option Plan.
10.4++ 1997 Omnibus Stock Incentive Plan.
10.5+ Employment Agreement between the Registrant and Mary Casey dated July 14, 1995, as
amended.
10.6+ Employment Agreement between the Registrant and Kelly Enos dated December 2, 1996.
10.7+ Employment Agreement between the Registrant and David Vaun Crumly dated January 1, 1996.
10.8+ Employment Agreement between the Registrant and James Kolsrud dated December 18, 1996.
10.9+ Consulting Agreement between the Registrant and Gordon Hutchins, Jr. dated May 1, 1996.
10.10+ Nonstatutory Stock Option Agreement between the Registrant and Gordon Hutchins, Jr.
dated May 15, 1996.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION OF DOCUMENT NUMBERED PAGE
- ---------- ---------------------------------------------------------------------------------------- -----------------
<C> <S> <C>
10.11+ Free Standing Commercial Building Lease between the Registrant and Thomas M. Spear, as
receiver for De La Guerra Court Investments, dated for reference purposes as of March 1,
1996.
10.12+ Standard Office Lease--Gross between the Registrant and De La Guerra Partners, L.P.
dated for reference purposes as of July 9, 1996.
10.13+ Office Lease between the Registrant and WHUB Real Estate Limited Partnership dated June
28, 1996, as amended.
10.14+ Standard Form of Office Lease between the Registrant and Hudson Telegraph Associates
dated February 28, 1996.
10.15+ Agreement for Lease between the Registrant and Telehouse International Corporation of
Europe Limited dated July 16, 1996.
10.16+ Sublease between the Registrant and Borton, Petrini & Conron dated March 20, 1994, as
amended.
10.17+ Office Lease between the Registrant and One Wilshire Arcade Imperial, Ltd. dated June
28, 1996.
10.18+ Lease Agreement between the Registrant and Telecommunications Finance Group dated April
6, 1995.
10.19+ Lease Agreement between the Registrant and Telecommunications Finance Group dated
January 3, 1996, as amended.
10.20++ Master Lease Agreement between the Registrant and NTFC Capital Corporation dated
December 20, 1996.
10.21+ Variable Rate Installment Note between the Registrant and Metrobank dated October 4,
1996.
10.22+ Assignment of Purchase Order and Security Interest between the Registrant and DSC
Finance Corporation dated January 1, 1996.
10.23++ Line of Credit Promissory Note between the Registrant and Christopher E. Edgecomb dated
November 7, 1996, as amended.
10.24++ Office Lease Agreement between the Registrant and Beverly Hills Center LLC effective as
of April 1, 1997.
10.25** Credit Agreement dated as of September 30, 1997 among the Registrant, the financial
institutions party thereto and Sanwa Bank California, as amended.
10.26** Office Lease between the Registrant, Hudson Telegraph Associates and American
Communications Corp., as amended.
10.27** Amendment Number Three to Employment Agreement between the Registrant and Mary A. Casey
dated as of July 1, 1997.
10.28** Amendment Number One to Employment Agreement between the Registrant and Kelly D. Enos
dated as of November 12, 1997.
10.29** Amendment Number One to First Restatement of Employment Agreement between the Registrant
and James Kolsrud dated as of June 16, 1997.
10.30** Amendment Number One to Employment Agreement between the Registrant and David Vaun
Crumly dated as of November 11, 1997.
10.31** First Amendment to Amended and Restated 1996 Stock Incentive Plan.
10.32*** Agreement dated as of December 1, 1997 between the Registrant and Nortel Dasa Network
Systems GmbH & Co. KG.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION OF DOCUMENT NUMBERED PAGE
- ---------- ---------------------------------------------------------------------------------------- -----------------
<C> <S> <C>
10.33** Leasing Agreement between the Registrant and Nortel Dasa Network Systems GmbH & Co. KG.
10.34** Guarantee Agreement between the Registrant and Nortel Dasa Network Systems GmbH & Co.
KG.
10.35** Note and Security Agreement dated as of December 18, 1997 between the Registrant and
NationsBanc Leasing Corporation.
10.36** Amendment of Lease dated as of September 30, 1997 between the Registrant and Hudson
Telegraph (reference is hereby made to Exhibit 10.14).
10.37 Intentionally omitted.
10.38** Lease Agreement dated July 29, 1996 between the Registrant and Telecommunications
Finance Group.
10.39** Promissory Note issued by Christopher E. Edgecomb in favor of the Registrant dated
November 26, 1997.
10.40** Stock Pledge Agreement dated November 26, 1997 between the Registrant and Christopher E.
Edgecomb.
10.41** Commercial Lease dated October 31, 1997 between the Registrant and Prinzenpark GbR.
10.42** Commercial Lease dated October 9, 1997 between the Registrant and WSL Weststadt
Liegenschafts GmbH.
10.43** Office Lease between the Registrant and Airport-Center KGHP Gewerbeban GmbH & Cie.
10.44** Lease dated November 19, 1997 between the Registrant and DIFA Deutsche Immobilien Fonds
Aktiengesellschaft.
21.1*** Subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP, Independent Accountants.
23.2 Consent of Riordan & McKinzie (contained in Exhibit 5.1).
24.1** Power of Attorney.
27.1** Financial Data Schedule.
</TABLE>
- ------------------------
+ Filed as an exhibit to the Company's Registration Statement on Form S-1
(Registration No. 333-21325) on February 7, 1997 and incorporated by
reference herein.
++ Filed as an exhibit to Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No. 333-21325) on May 16, 1997 and
incorporated by reference herein.
+++ Filed as an exhibit to Amendment No. 2 to the Company's Registration
Statement on Form S-1 (Registration No. 333-21325) on May 29, 1997 and
incorporated by reference herein.
* Filed on December 15, 1997 as an exhibit to the Company's Current Report on
Form 8-K (File No. 000-22581) and incorporated by reference herein.
** Filed as an exhibit to the Company's Registration Statement on Form S-1
(Registration No. 333-48559) on March 24, 1998 and incoroporated by
reference herein.
***Filed as an exhibit to the Company's Annual Report on Form 10-K (File No.
000-22581) on March 31, 1998 and incorporated by reference herein.
<PAGE>
6,000,000 Shares
STAR TELECOMMUNICATIONS, INC.
Common Stock
($.001 Par Value)
EQUITY UNDERWRITING AGREEMENT
April 28, 1998
BT Alex. Brown Incorporated
Merrill Lynch , Pierce, Fenner & Smith Incorporated
Hambrecht & Quist LLC
Lehman Brothers Inc.
Furman Selz LLC
As Representatives of the
Several Underwriters
c/o BT Alex. Brown Incorporated
One South Street
Baltimore, Maryland 21202
Ladies and Gentlemen:
Star Telecommunications, Inc., a Delaware corporation (the "Company") and a
certain shareholder of the Company named in Part A of Schedule II hereto (the
"Selling Shareholder") propose to sell to the several underwriters (the
"Underwriters") named in Schedule I hereto for whom you are acting as
representatives (the "Representatives") an aggregate of 6,000,000 shares of the
Company's Common Stock, $.001 par value (the "Firm Shares"). The respective
amounts of the Firm Shares to be so purchased by the several Underwriters are
set forth opposite their names in Schedule I hereto. The Company also proposes
to sell up to 150,000 additional shares of the Company's Common Stock and
certain shareholders of the Company named in Part B of Schedule II hereto (the
"Additional Selling Shareholders") also propose to sell up to 750,000 shares of
the Company's Common Stock (the "Option Shares"), at the Underwriters' option
(the "Underwriters' Option") as set forth below. The Selling Shareholder and
the Additional Selling Shareholders are hereinafter referred to as "Selling
Shareholders." The Company, the Selling Shareholders and the Additional Selling
Shareholders are sometimes referred to herein collectively as the "Sellers."
<PAGE>
As the Representatives, you have advised the Company and the Selling
Shareholders (a) that you are authorized to enter into this Agreement on behalf
of the several Underwriters, and (b) that the several Underwriters are willing,
acting severally and not jointly, to purchase the numbers of Firm Shares set
forth opposite their respective names in Schedule I, plus their pro rata portion
of the Option Shares if you elect to exercise the over-allotment option in whole
or in part for the accounts of the several Underwriters. The Firm Shares and
the Option Shares (to the extent the aforementioned option is exercised) are
herein collectively called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SHAREHOLDERS.
(a) The Company represents and warrants to each of the Underwriters
as follows:
(i) A registration statement on Form S-1 (File No. 333-48559)
with respect to the Shares has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "Act"), and the
Rules and Regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and has been filed with the
Commission. Copies of such registration statement, including any amendments
thereto, the preliminary prospectuses (meeting the requirements of the Rules and
Regulations) contained therein and the exhibits, financial statements and
schedules, as finally amended and revised, have heretofore been delivered by the
Company to you. Such registration statement, together with any registration
statement filed by the Company pursuant to Rule 462 (b) of the Act, herein
referred to as the "Registration Statement," which shall be deemed to include
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, has become effective under the Act and no
post-effective amendment to the Registration Statement has been filed as of the
date of this Agreement. "Prospectus" means the form of prospectus first filed
with the Commission pursuant to Rule 424(b). Each preliminary prospectus
included in the Registration Statement prior to the time it becomes effective is
herein referred to as a "Preliminary Prospectus."
(ii) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement. Each of the
subsidiaries of the Company as listed in Exhibit A hereto (collectively, the
"Subsidiaries") has been duly organized and is validly existing as a corporation
in good standing under the laws of the jurisdiction of its incorporation, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement. The Subsidiaries are the
only material subsidiaries, direct or indirect, of the Company. The Company and
each of the Subsidiaries are duly qualified to transact business in all
jurisdictions in which the conduct of their business requires such qualification
except where the failure to so qualify in any
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<PAGE>
such jurisdiction would not have a material adverse effect on the business,
properties, financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole (a "Material Adverse Effect"). The outstanding
shares of capital stock of each of the Subsidiaries have been duly authorized
and validly issued, are fully paid and non-assessable and are owned by the
Company or another Subsidiary free and clear of all liens, encumbrances and
equities and claims; and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership interests in the
Subsidiaries are outstanding.
(iii) The outstanding shares of Common Stock of the Company,
including all shares to be sold by the Selling Shareholders, have been duly
authorized and validly issued and are fully paid and non-assessable; the portion
of the Shares to be issued and sold by the Company have been duly authorized and
when issued and paid for as contemplated herein will be validly issued, fully
paid and non-assessable; and no preemptive rights of stockholders exist with
respect to any of the Shares or the issue and sale thereof. Neither the filing
of the Registration Statement nor the offering or sale of the Shares as
contemplated by this Agreement gives rise to any rights, other than those which
have been waived or satisfied, for or relating to the registration of any shares
of Common Stock.
(iv) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct. All of the Shares
conform to the description thereof contained in the Registration Statement. The
form of certificates for the Shares conforms to the corporate laws of the State
of Delaware.
(v) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Shares nor to the best knowledge of the Company, instituted proceedings for that
purpose. The Registration Statement contains, and the Prospectus and any
amendments or supplements thereto will contain, all statements which are
required to be stated therein by, and will conform, in all material respects, to
the requirements of the Act and the Rules and Regulations. The Registration
Statement and any amendment thereto do not contain, and will not contain, any
untrue statement of a material fact and do not omit, and will not omit, to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus and any amendments and
supplements thereto do not contain, and will not contain, any untrue statement
of material fact; and do not omit, and will not omit, to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or warranties as to
information contained in or omitted from the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf of
any Underwriter through the Representatives, specifically for use in the
preparation thereof.
(vi) The consolidated financial statements of the Company and
the Subsidiaries, together with related notes and schedules as set forth in the
Registration Statement,
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<PAGE>
present fairly the financial position and the results of operations and cash
flows of the Company and the consolidated Subsidiaries, at the indicated dates
and for the indicated periods. Such financial statements, and related schedules
have been prepared in accordance with generally accepted principles of
accounting, consistently applied throughout the periods involved, except as
disclosed therein, and all adjustments necessary for a fair presentation of
results for such periods have been made. The summary financial, pro forma and
statistical data included in the Registration Statement presents fairly the
information shown therein and such data has been compiled on a basis consistent
with the financial statements presented therein and/or the books and records of
the Company as the case may be. To the Company's best knowledge, based on its
review of the facts and circumstances relating to the acquisition of each of LD
Services, Inc. and T-One Corp., and based in part on a review of such
transactions by the Company's independent auditors, such transactions should be
accounted for as a pooling of interests, provided that the Company makes no
representation as to the view of the Commission with respect to such accounting
treatment.
(vii) To the best of the Company's knowledge, Arthur Andersen
LLP, who have certified certain of the financial statements filed with the
Commission as part of the Registration Statement, are independent public
accountants as required by the Act and the Rules and Regulations.
(viii) There is no action, suit, claim or proceeding pending or,
to the knowledge of the Company, threatened against the Company or any of the
Subsidiaries before any court or administrative agency or otherwise which if
determined adversely to the Company or any of its Subsidiaries could be
reasonably expected to result in any material adverse change in the earnings,
business, management, properties, assets, operations, condition (financial or
otherwise) or prospects of the Company and of the Subsidiaries taken as a whole
or to prevent the consummation of the transactions contemplated hereby, except
as set forth in the Registration Statement.
(ix) The Company and the Subsidiaries have good and marketable
title to all of the properties and assets (other than leased properties and
assets) reflected in the financial statements (or as described in the
Registration Statement) hereinabove described, subject to no lien, mortgage,
pledge, charge or encumbrance of any kind except those reflected in such
financial statements or the related notes and schedules thereto (or as described
in the Registration Statement) or which are not material in amount. The Company
and the Subsidiaries occupy their leased properties under valid and binding
leases.
(x) The Company and the Subsidiaries have filed all Federal,
State, local and foreign tax returns which have been required to be filed and
have paid all taxes indicated by said returns and all assessments received by
them or any of them to the extent that such taxes have become due and are not
being contested in good faith. All tax liabilities have been adequately
provided for in the financial statements of the Company, and the Company does
not know of any actual or proposed additional material tax assessments.
-4-
<PAGE>
(xi) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or supplemented, there
has not been any material adverse change or any development involving a
prospective material adverse change in or affecting the earnings, business,
management, properties, assets, operations, condition (financial or otherwise),
or prospects of the Company and its Subsidiaries taken as a whole, whether or
not occurring in the ordinary course of business, and there has not been any
material transaction entered into or any material transaction that is expected
to be entered into by the Company or the Subsidiaries, other than transactions
in the ordinary course of business and changes and transactions described in the
Registration Statement, as it may be amended or supplemented and other than
changes in the general economic condition of the United States of America. The
Company and the Subsidiaries have no material contingent obligations which are
not disclosed in the Company's financial statements which are included in the
Registration Statement.
(xii) Neither the Company nor any of the Subsidiaries is or
with the giving of notice or lapse of time or both, will be, in violation of or
in default under its Amended and Restated Certificate of Incorporation or
By-Laws or under any agreement, lease, contract, indenture or other material
instrument or obligation to which it is a party or by which it, or material
portions of its properties, is bound except for such violation or default that
would not result in a Material Adverse Effect. The execution and delivery of
this Agreement and the consummation of the transactions herein contemplated and
the fulfillment of the terms hereof will not conflict with or result in a breach
of any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or other material agreement or instrument to
which the Company or any Subsidiary is a party, or of the Amended and Restated
Certificate of Incorporation or By-Laws of the Company or any order, rule or
regulation applicable to the Company or any Subsidiary of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction except for such conflicts, breaches or default that, individually
or in the aggregate would not result in a Material Adverse Effect.
(xiii) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the Commission,
the National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary to qualify the Shares for public offering
by the Underwriters under state securities or Blue Sky laws) has been obtained
or made and is in full force and effect except where the failure to obtain such
approval, consent, order, authorization, designation, declaration or filing
would not result in a Material Adverse Effect.
(xiv) The Company owns or possesses adequate licenses or other
rights to use all patents, copyrights, trademarks and trade secrets (the
"Intellectual Property") described or referred to in the Prospectus as owned and
used by it. Except as disclosed in the Prospectus, the Company has not received
any notice of infringement or conflict with (and knows of no infringement or
conflict with) asserted rights of others with respect to any Intellectual
Property
-5-
<PAGE>
which infringement or conflict is of a material significance in respect of the
condition, financial or otherwise of the Company and its Subsidiaries taken as a
whole or the business, management, properties, assets, operations, condition
(financial or otherwise) or prospects of the Company and the Subsidiaries taken
as a whole. The Company knows of no material infringement by others of any
Intellectual Property owned by or licensed to, and used by, the Company.
(xv) Neither the Company, nor to the Company's knowledge, any
of its affiliates or Subsidiaries, has taken or may take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Shares. The Company acknowledges that the Underwriters may
engage in passive market making transactions in the Shares on the Nasdaq
National Market in accordance with Rule 103 of Regulation M under the Exchange
Act.
(xvi) Neither the Company nor any Subsidiary is an "investment
company" or an "affiliated person" of or "promoter" or "principal underwriter"
for an "investment company", as such terms are defined in the Investment Company
Act of 1940 (as amended, the "1940 Act") and the rules and regulations of the
Commission thereunder.
(xvii) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xviii) The Company and each of its Subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is commercially
reasonable for the conduct of their respective businesses and the value of their
respective properties and as is customary for companies engaged in similar
industries.
(xix) The Company is 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"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for
which the Company would have any liability; the Company has not incurred and
does not expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company would have any liability that is intended to be qualified
under
-6-
<PAGE>
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.
(xx) To the Company's knowledge, there are no affiliations or
associations between any member of the NASD and any of the Company's officers,
directors or 5% or greater security holders, except as set forth in the
Registration Statement.
(xxi) All holders of a material portion of the securities of
the Company and its Subsidiaries having rights to the registration of shares of
Common Stock, or other securities, because of the filing of the Registration
Statement by the Company have waived such rights or such rights have expired by
reason of lapse of time following notification of the Company's intent to file
the Registration Statement.
(xxii) This Agreement has been duly authorized, executed and
delivered by the Company and has been duly executed and delivered by the Selling
Shareholders and constitutes a valid and binding obligation of each of them
enforceable in accordance with its terms except as rights to indemnity and
contribution hereunder may be limited as a matter of applicable public policy or
by applicable laws and except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally, or by general equitable principles.
(xxiii) The Company and its Subsidiaries have all necessary
consents, authorizations, approvals, orders, certificates and permits
(collectively, the "Licenses") of and from, and have made all declarations and
filings with, all U.S. and foreign, local and other governmental authorities,
including the Federal Communications Commission (the "FCC"), all self-regulatory
organizations and all courts and other tribunals, to own, lease, license and use
its properties and assets and to conduct its business in the manner described in
the Prospectus, except to the extent that the failure to obtain such Licenses or
make such declarations or filings would not have Material Adverse Effect and
except as otherwise described in the Prospectus. Except as described in the
Prospectus, neither the Company nor any of its Subsidiaries have received any
notice of proceedings relating to, the limitation, suspension, modification or
revocation of the Licenses which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would have a Material Adverse
Effect.
(xxiv) To the Company's knowledge after inquiry, except as
described in the Prospectus, the Licenses are in full force and effect without
conditions that would have a Material Adverse Effect except for such conditions
imposed generally by the FCC upon such Licenses or conditions stated on the face
of such Licenses, (i) except as disclosed in the Prospectus including, without
limitation, conditions relating to the regulation regarding services over
private lines interconnected to the public switched network, all express
conditions in the Licenses have been satisfied where the failure to satisfy such
conditions would have a Material Adverse Effect, and (ii) except as disclosed in
the Prospectus, neither the Company nor any of its Subsidiaries have
-7-
<PAGE>
received any notification that any revocation or limitation of the Licenses is
threatened or pending that would have a Material Adverse Effect.
(xxv) To the Company's knowledge after inquiry, and except as
disclosed in the Prospectus, the Licenses are validly issued. Except as
disclosed in the Registration Statement or in the Prospectus, the Company and
its Subsidiaries have filed with the FCC, the Regulierungsbehorde fuer
Telekommunikation und Post, or the applicable United Kingdom regulatory
agencies, as applicable, all tariffs, applications, informational reports,
contracts, fee filings, and other document, that, to the Company's knowledge,
are required under the United States Communications Act of 1934 (the
"Communications Act"), the German Telecommunications Act or the United Kingdom
Telecommunications Act of 1984 (collectively, the "Telecommunications Acts"), as
applicable, except where the failure to so file would not have a Material
Adverse Effect and such filings or submissions were in compliance in all
material respects with applicable laws or regulations when filed or submitted
and no deficiencies have been asserted by the FCC, the Regulierungsbehorde fuer
Telekommunikation und Post, or the applicable United Kingdom regulatory
agencies, as applicable, 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.
(xxvi) To the Company's knowledge and except as disclosed in the
Prospectus, there is no proceeding, formal or informal complaint or
investigation before the FCC, the Regulierungsbehorde fuer Telekommunikation und
Post, or the applicable United Kingdom regulatory agencies, as applicable,
against the Company or any of its Subsidiaries or any of the Licenses or based
on any violation or alleged violation by the Company or any of its Subsidiaries
of the Telecommunications Acts except for proceedings affecting the industry
generally to which neither the Company nor any of its Subsidiaries is a specific
party.
(xxvii) To the Company's knowledge, neither the execution,
delivery and performance of the Underwriting Agreement by the Company and the
Selling Stockholders nor the stock issuance and sale described in the
Registration Statement and Prospectus, will conflict with, violate or require
any authorization, approval, or consent under the Telecommunications Acts not
already obtained, or result in a breach or violation of any terms or provisions
of, or constitute a default under, or cause any forfeiture or impairment of, any
of the Licenses except with respect to any conflicts, violations, required
authorizations, approval and consents, or defaults that would not result in a
Material Adverse Effect.
(xxviii) Neither the Company nor, to the Company's knowledge, any
other person associated with or acting on behalf of the Company including,
without limitation, any director, officer, agent, or employee of the Company
has, directly or indirectly, while acting on behalf of the Company, violated any
material provision of the Foreign Corrupt Practices Act of 1977, as amended.
-8-
<PAGE>
(xxix) Except as disclosed in the Prospectus, there is no (i)
legal or governmental proceeding pending or, to the Company's knowledge,
threatened to which the Company or any of its Subsidiaries is a party or to
which any of the properties of the Company or its Subsidiaries is subject; or
(ii) administrative or judicial proceeding pending or, to the Company's
knowledge, threatened to which the Company or any of its Subsidiaries is a party
or to which any of the properties of the Company or its Subsidiaries is subject
arising under any Federal, State or local provisions that have been enacted or
adopted regulating the discharge of materials into the environment or primarily
for the purpose of protecting the environment; or (iii) material effect upon the
Company or any of its Subsidiaries arising from compliance with Federal, State
and local provisions which have been enacted or adopted regulating the discharge
of materials into the environment or otherwise relating to the protection of the
environment, that is required to be described in the Registration Statement or
the Prospectus and is not so described.
(xxx) To the best knowledge of the Company, no action has been
taken by the Company or any of its Subsidiaries or any of the Selling
Shareholders which would constitute a material violation of any noncompetition
(or similar) agreement between Christopher E. Edgecomb and any other person or
entity.
(xxxi) The Shares are listed on the Nasdaq National Market
subject to notice of listing.
(b) The Selling Shareholders severally but not jointly represents and
warrants as follows:
(i) Such Selling Shareholder now has and at the Option
Closing Date (as such date is hereinafter defined) will have good and
marketable title to the Option Shares to be sold by such Selling Shareholder,
free and clear of any liens, encumbrances, equities and claims, and full right,
power and authority to effect the sale and delivery of such Option Shares; and
upon the delivery of, against payment for, such Option Shares pursuant to this
Agreement, the Underwriters will acquire good and marketable title thereto, free
and clear of any liens, encumbrances, equities and claims.
(ii) Such Selling Shareholder has full right, power and
authority to execute and deliver this Agreement, the Power of Attorney, and the
Custodian Agreement referred to below and to perform its obligations under such
agreements. The execution and delivery of this Agreement and the consummation
by such Selling Shareholder of the transactions herein contemplated and the
fulfillment by such Selling Shareholder of the terms hereof will not require any
consent, approval, authorization, or other order of any court, regulatory body,
administrative agency or other governmental body (except as may be required
under the Act, National Association of Securities Dealers, Inc. (the "NASD")
rules or state securities laws or Blue Sky laws) and will not result in a breach
of any indenture, mortgage, deed of trust or other material agreement or
instrument to which such Selling Shareholder is a party, or of any order, rule
or regulation applicable to such Selling
-9-
<PAGE>
Shareholder of any court or of any regulatory body or administrative agency or
other governmental body having jurisdiction.
(iii) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to, or which has constituted, or
which might reasonably be expected to cause or result in the stabilization or
manipulation of the price of the Common Stock of the Company and, other than as
permitted by the Act, the Selling Shareholder will not distribute any prospectus
or other offering material in connection with the offering of the Shares.
(iv) Without having undertaken to determine independently the
accuracy or completeness of either the representations and warranties of the
Company contained herein or the information contained in the Registration
Statement, such Selling Shareholder has no reason to believe that the
representations and warranties of the Company contained in this Section 1 are
not true and correct, is familiar with the Registration Statement and has no
knowledge of any material fact, condition or information not disclosed in the
Registration Statement which has adversely affected or may adversely affect the
business of the Company or any of the Subsidiaries; and the sale of the Option
Shares by such Selling Shareholder pursuant hereto is not prompted by any
material information concerning the Company or any of the Subsidiaries which is
not set forth in the Registration Statement. The information pertaining to such
Selling Shareholder under the caption "Principal and Selling Stockholders" in
the Prospectus is complete and accurate in all material respects.
(v) Neither such Selling Shareholder nor any of such Selling
Shareholder's affiliated directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
or has any other association (within the meaning of Article I, Section l(m) of
the by-laws of the NASD) or affiliation with, any member firm of the NASD.
(vi) Certificates in negotiable form for the total number of
the Option Shares to be sold hereunder by the Selling Shareholders have been
placed in custody with U.S. Stock Transfer Corporation, as custodian (the
"Custodian") pursuant to the Custodian Agreement executed by each Selling
Shareholder for delivery of any Option Shares to be sold hereunder by the
Selling Shareholders. Each of the Selling Shareholders specifically agrees that
any Option Shares represented by the certificates held in custody for the
Selling Shareholders under the Custodian Agreement are subject to the interests
of the Underwriters hereunder, that the arrangements made by the Selling
Shareholders for such custody are to that extent irrevocable, and that the
obligations of the Selling Shareholders hereunder shall not be terminable by any
act or deed of the Selling Shareholders (or by any other person, firm or
corporation including the Company, the Custodian or the Underwriters) or by
operation of law (including the death of an individual Selling Shareholder or
the dissolution of a corporate Selling Shareholder) or by the occurrence of any
other event or events, except as set forth in the Custodian Agreement. If any
such event should occur prior to the delivery to the Underwriters of the Option
Shares hereunder, certificates for the Options Shares shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement as if
such event has not occurred. The Custodian is authorized to receive and
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<PAGE>
acknowledge receipt of the proceeds of sale of the Option Shares held by it
against delivery of such Option Shares.
(vii) This Agreement has been duly executed and delivered by
the Selling Shareholders and constitutes a valid and binding obligation of each
of them enforceable in accordance with its terms except as rights to indemnity
and contribution hereunder may be limited as a matter of applicable public
policy or by applicable laws and except as the enforcement hereof may be limited
by applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally, or by general equitable principals.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES AND THE OPTION SHARES.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Company
and the Selling Shareholder agree to sell to the Underwriters and each
Underwriter agrees, severally and not jointly, to purchase, at a price of
$25.78 per share, the number of Firm Shares set forth opposite the name of
each Underwriter in Schedule I hereof, subject to adjustments in accordance
with Section 9 hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be made in
New York Clearing House funds by Federal (same day) funds against delivery of
certificates therefor to the Representatives for the several accounts of the
Underwriters. Such payment and delivery are to be made through the facilities
of the Depository Trust Company, New York, New York at 10:00 a.m., New York
time, on the third business day after the date of this Agreement or at such
other time and date not later than five business days thereafter as you and the
Company shall agree upon, such time and date being herein referred to as the
"Closing Date." (As used herein, "business day" means a day on which the New
York Stock Exchange is open for trading and on which banks in New York are open
for business and are not permitted by law or executive order to be closed.)
(c) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company and the Selling Shareholders hereby grant an option to the several
Underwriters to purchase the Option Shares at the price per share as set forth
in the first paragraph of this Section 2. The option granted hereby may be
exercised in whole or in part by giving written notice (i) at any time before
the Closing Date and (ii) only once thereafter within 30 days after the date of
this Agreement, by you, as Representatives of the several Underwriters, to the
Company and the Selling Shareholders setting forth the number of Option Shares
as to which the several Underwriters are exercising the option, the names and
denominations in which the Option Shares are to be registered and the time and
date at which such certificates are to be delivered. The time and date at which
certificates for Option Shares are to be delivered shall be determined by the
Representatives but shall not be earlier than three nor later than 10 full
business days after the exercise of such option, nor in any event prior to the
Closing Date (such time and date being herein referred to as the "Option Closing
Date"). If the date of exercise of the option is three or more days before the
Closing Date, the notice of exercise shall set the Closing Date as the Option
Closing Date. The number of Option Shares to be purchased by each
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Underwriter shall be in the same proportion to the total number of Option Shares
being purchased as the number of Firm Shares being purchased by such Underwriter
bears to the number of Firm Shares, adjusted by you in such manner as to avoid
fractional shares. The option with respect to the Option Shares granted
hereunder may be exercised only to cover over-allotments in the sale of the Firm
Shares by the Underwriters. You, as Representatives of the several
Underwriters, may cancel such option at any time prior to its expiration by
giving written notice of such cancellation to the Company and the Selling
Shareholders. To the extent, if any, that the option is exercised, payment for
the Option Shares shall be made on the Option Closing Date in Federal (same day)
funds drawn to the order of the Company for the Option Shares to be sold by it
and to the order of the Custodian for the Option Shares to be sold by the
Selling Shareholders against delivery of certificates therefor through the
facilities of the Depository Trust Company in New York, New York.
(d) If on the Option Closing Date, any Selling Shareholder fails to
sell the Option Shares which such Selling Shareholder has agreed to sell on such
date as set forth in Schedule II hereto, the Company agrees that it will sell or
arrange for the sale of that number of shares of Common Stock to the
Underwriters which represent the Option Shares which such Selling Shareholder
has failed to so sell, as set forth in Schedule II thereto, or such lesser
number as may be requested by the Representatives.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deems it advisable to
do so. The Firm Shares are to be initially offered to the public at the public
offering price set forth in the Prospectus. The Representatives may from time
to time thereafter change the public offering price and other selling terms. To
the extent, if at all, that any Option Shares are purchased pursuant to
Section 2 hereof, the Underwriters will offer them to the public on the
foregoing terms.
It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters, a copy of which shall be furnished to the Company prior to the
Closing Date.
4. COVENANTS OF THE COMPANY AND THE SELLING SHAREHOLDERS.
(a) The Company covenants and agrees with the several Underwriters
that:
(i) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A of
the Rules and Regulations is followed, to prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a form
approved (which approval shall not be unreasonably withheld or delayed) by the
Representatives containing information previously omitted at the time of
effectiveness of the Registration Statement in reliance on Rule 430A of the
Rules and Regulations
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and (B) not file any amendment to the Registration Statement or supplement to
the Prospectus of which the Representatives shall not previously have been
advised and furnished with a copy or to which the Representatives shall have
reasonably objected in writing or which is not in compliance with the Rules and
Regulations.
(ii) The Company will advise the Representatives promptly
(A) when the Registration Statement or any post-effective amendment thereto
shall have become effective, (B) of receipt of any comments from the Commission,
(C) of any request of the Commission for amendment of the Registration Statement
or for supplement to the Prospectus or for any additional information, and
(D) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the use of the Prospectus or of
the institution of any proceedings for that purpose. The Company will use its
best efforts to prevent the issuance of any such stop order preventing or
suspending the use of the Prospectus and to obtain as soon as possible the
lifting thereof, if issued.
(iii) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports, and other documents, as are or
may be required to continue such qualifications in effect for so long a period
as the Representatives may reasonably request for distribution of the Shares.
(iv) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver to, or
upon the order of, the Representatives during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives at or
before the Closing Date, four signed copies of the Registration Statement and
all amendments thereto including all exhibits filed therewith, and will deliver
to the Representatives such number of copies of the Registration Statement
(including such number of copies of the exhibits filed therewith that may
reasonably be requested), and of all amendments thereto, as the Representatives
may reasonably request.
(v) The Company will comply with the Act and the Rules and
Regulations, and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder, so as to
permit the completion of the distribution of the Shares as contemplated in this
Agreement and the Prospectus. If during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, any event shall
occur as a result of which, in the judgment of the Company or in the reasonable
opinion of the
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Underwriters, it becomes necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances existing
at the time the Prospectus is delivered to a purchaser, not misleading, or, if
it is necessary at any time to amend or supplement the Prospectus to comply with
any law, the Company promptly will prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will not, in the
light of the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with the law.
(vi) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
15 months after the effective date of the Registration Statement, an earning
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earning statement shall satisfy the requirements
of Section 11(a) of the Act and Rule 158 of the Rules and Regulations and will
advise you in writing when such statement has been so made available.
(vii) Prior to the Closing Date, the Company will furnish to
the Underwriters, as soon as they have been prepared by or are available to the
Company, a copy of any unaudited interim financial statements of the Company for
any period subsequent to the period covered by the most recent financial
statements appearing in the Registration Statement and the Prospectus.
(viii) No offering, sale, short sale or other disposition of any
shares of Common Stock or other securities convertible into or exchangeable or
exercisable for shares of Common Stock or derivative of Common Stock (or
agreement for such) will be made for a period of 90 days after the date of this
Agreement, directly or indirectly, by the Company otherwise than hereunder or
with the prior written consent of BT Alex. Brown Incorporated. The foregoing
sentence shall not apply to (A) the Shares to be sold to the Underwriters
pursuant to this Agreement, (B) shares of Common Stock issued by the Company
upon the exercise of options granted under the stock options plans of the
Company (the "Options Plans") all as described in footnote 1 to the table under
the caption "Capitalization" in the Prospectus, (C) the grant of options to
purchase Common Stock under the Option Plans, and (D) shares of Common Stock or
securities convertible into, or exercisable for, shares of Common Stock pursuant
to an acquisition transaction.
(ix) The Company has caused each officer and director of the
Company and certain stockholders (Dan Maxwell, the entities affiliated with the
Hunt Family Trusts and Gotel Investment, Ltd.) to furnish to you, on or prior to
the date of this Agreement, a letter or letters, in form and substance
satisfactory to the Underwriters, pursuant to which each such person shall agree
not to offer, sell, sell short or otherwise dispose of any shares of Common
Stock of the Company or other capital stock of the Company, or any other
securities convertible, exchangeable or exercisable for Common Shares or
derivative of Common Shares owned by such person or request the registration for
the offer or sale of any of the foregoing (or as to which such person has the
right to direct the disposition of) for a period of 90 days, and in certain
cases, for a period of 45 days, after
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the date of this Agreement, directly or indirectly, except with the prior
written consent of BT Alex. Brown Incorporated ("Lockup Agreements").
(x) The Company shall apply the net proceeds of its sale of
the Shares as set forth in the Prospectus.
(xi) The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Shares in such a manner as
would require the Company or any of the Subsidiaries to register as an
investment company under the 1940 Act.
(xii) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
for the Common Stock.
(xiii) The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company, provided that the actions of any of the
Underwriters in that regard shall not be deemed actions of the Company.
(b) The Selling Shareholder and subject to the exercise of the
Underwriters' Option, each of the Additional Selling Shareholders covenants and
agrees with the several Underwriters that:
(i) No offering, sale, short sale or other disposition of any
shares of Common Stock or other capital stock of the Company or other securities
convertible, exchangeable or exercisable for Common Stock or derivative of
Common Stock owned by such Selling Shareholder or request the registration for
the offer or sale of any of the foregoing (or as to which such Selling
Shareholder has the right to direct the disposition of) will be made for a
period of 90 days after the date of this Agreement, directly or indirectly, by
such Selling Shareholder otherwise than hereunder or with the prior written
consent of BT Alex. Brown Incorporated.
(ii) In order to document the Underwriters' compliance with
the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 and the Interest and Dividend Tax Compliance Act of
1983 with respect to the transactions herein contemplated, each of the Selling
Shareholders agrees to deliver to you prior to or at the Option Closing Date a
properly completed and executed United States Treasury Department Form W-8 or
W-9 (or other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
(iii) Such Selling Shareholder will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or manipulation
of the price of Common Stock, provided that the actions of any of the
Underwriters in that regard shall not be deemed actions of such Selling
Shareholder.
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5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Sellers under this Agreement, including,
without limiting the generality of the foregoing, the following: accounting
fees of the Company; the fees and disbursements of counsel for the Company and
the Selling Shareholders; the cost of printing and delivering to, or as
requested by, the Underwriters copies of the Registration Statement, Preliminary
Prospectuses, the Prospectus, this Agreement, the Underwriters' Selling
Memorandum, the Underwriters' Invitation Letter, the Blue Sky Survey and any
supplements or amendments thereto; the filing fees of the Commission; the filing
fees and expenses (including legal fees and disbursements) incident to securing
any required review by the NASD of the terms of the sale of the Shares; the
Listing Fee of the Nasdaq National Market; and the expenses, including the fees
and disbursements of counsel for the Underwriters, incurred in connection with
the qualification of the Shares under State securities or Blue Sky laws which
fees and expenses of such counsel shall not exceed $20,000. The Selling
Shareholders have agreed with the Company to reimburse the Company for a portion
of such expenses. To the extent, if at all, that any of the Selling
Shareholders engage special legal counsel to represent them in connection with
this offering, the fees and expenses of such counsel shall be borne by such
Selling Shareholder. Any transfer taxes imposed on the sale of the Shares to
the several Underwriters will be paid by the Sellers pro rata. The Company
agrees to pay all costs and expenses of the Underwriters, including the fees and
disbursements of counsel for the Underwriters, incident to the offer and sale of
directed shares of the Common Stock by the Underwriters to employees and persons
having business relationships with the Company and its Subsidiaries. The
Sellers shall not, however, be required to pay for any of the Underwriters
expenses (other than those related to qualification under NASD regulation and
State securities or Blue Sky laws and subject to the limit described above)
except that, if this Agreement shall not be consummated because the conditions
in Section 6 hereof are not satisfied, or because this Agreement is terminated
by the Representatives pursuant to Section 11 hereof, or by reason of any
failure, refusal or inability on the part of the Company or the Selling
Shareholders to perform any undertaking or satisfy any condition of this
Agreement or to comply with any of the terms hereof on their part to be
performed, unless such failure to satisfy said condition or to comply with said
terms be due to the default or omission of any Underwriter, then the Company
shall reimburse the several Underwriters for reasonable out-of-pocket expenses,
including fees and disbursements of counsel, reasonably incurred in connection
with investigating, marketing and proposing to market the Shares or in
contemplation of performing their obligations hereunder; but the Company and the
Selling Shareholders shall not in any event be liable to any of the several
Underwriters for damages on account of loss of anticipated profits from the sale
by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm
Shares on the Closing Date and the Option Shares, if any, on the Option Closing
Date are subject to the accuracy, as of the Closing Date or the Option Closing
Date, as the case may be, of the representations and warranties of the Company
and the Selling Shareholders contained herein, and to the performance by
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the Company and the Selling Shareholders of their covenants and obligations
hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule 424
and Rule 430A of the Rules and Regulations shall have been made, and any request
of the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representatives and
complied with to their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company or the Selling Shareholders, shall be
contemplated by the Commission and no injunction, restraining order, or order of
any nature by a Federal or state court of competent jurisdiction shall have been
issued as of the Closing Date which would prevent the issuance of the Shares.
(b) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinion of Riordan & McKinzie,
counsel for the Company, dated the Closing Date or the Option Closing Date, as
the case may be, addressed to the Underwriters (and stating that it may be
relied upon by counsel to the Underwriters) to the effect that:
(i) The Company has been organized and is validly existing as
a corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement; each of the Company's
United States Subsidiaries has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement; and the
outstanding shares of capital stock of each of the Subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable and are
owned by the Company or a Subsidiary; and, to the best of such counsel's
knowledge, the outstanding shares of capital stock of each of the United States
Subsidiaries is owned free and clear of all liens, encumbrances and equities and
claims, and to such counsel's knowledge, no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to convert
any obligations into any shares of capital stock or of ownership interests in
the Subsidiaries are outstanding.
(ii) The Company has authorized and outstanding capital stock
as set forth under the caption "Capitalization" in the Prospectus; the
outstanding shares of the Company's Common Stock, including the Shares to be
sold by the Selling Shareholders, have been duly authorized and validly issued
and are fully paid and non-assessable; all of the Shares conform to the
description thereof contained in the Prospectus; the certificates for the
Shares, assuming they are in
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the form filed with the Commission, are in due and proper form under the
Delaware General Corporation Law; the shares of Common Stock, including the
Option Shares, if any, to be sold by the Company pursuant to this Agreement have
been duly authorized and will be validly issued, fully paid and non-assessable
when issued and paid for as contemplated by this Agreement; and no preemptive
rights of stockholders exist under the Amended and Restated Articles of
Incorporation with respect to any of the Shares or the issue or sale thereof.
(iii) Except as described in or contemplated by the Prospectus
or as provided on a schedule attached to the opinion, to the knowledge of such
counsel, there are no outstanding securities of the Company convertible or
exchangeable into or evidencing the right to purchase or subscribe for any
shares of capital stock of the Company and there are no outstanding or
authorized options, warrants or rights of any character obligating the Company
to issue any shares of its capital stock or any securities convertible or
exchangeable into or evidencing the right to purchase or subscribe for any
shares of such stock; and except as described in the Prospectus, to the
knowledge of such counsel, no holder of any securities of the Company nor any
other person has the right, contractual or otherwise, which has not been
satisfied or effectively waived, to cause the Company to sell or otherwise issue
to them, or to permit them to underwrite the sale of, any of the Shares or the
right to have any Common Shares or other securities of the Company included in
the Registration Statement or the right, as a result of the filing of the
Registration Statement, to require registration under the Act of any shares of
Common Stock or other securities of the Company.
(iv) The Registration Statement has become effective under the
Act and, to the knowledge of such counsel, no stop order proceedings with
respect thereto have been instituted or are pending or threatened under the Act.
(v) The Registration Statement, the Prospectus and each
amendment or supplement thereto comply as to form in all material respects with
the requirements of the Act and the applicable rules and regulations thereunder
(except that such counsel need express no opinion as to the financial statements
and related schedules, footnotes and other financial and statistical information
contained therein).
(vi) The statements under the captions "Management---1997
Omnibus Stock Incentive Plan;" "Management---1996 Outside Director Nonstatutory
Stock Option Plan;" "Management---Employment Contracts and Change of Control
Arrangements;" "Description of Capital Stock;" and "Shares Eligible for Future
Sale" in the Prospectus, insofar as such statements constitute a summary of
documents referred to therein or matters of law, fairly summarize in all
material respects the information called for with respect to such documents and
matters.
(vii) Such counsel does not know of any material contracts or
documents required to be filed as exhibits to the Registration Statement or
described in the Registration Statement or the Prospectus which are no so filed
or described as required, and such contracts and documents as are summarized in
the Registration Statement or the Prospectus are fairly summarized in all
material respects.
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(viii) Based solely on our review of the letter of Seed Mackall
& Cole LLP regarding litigation matters relating to the Company or any of its
Subsidiaries, such counsel knows of no material legal or domestic governmental
proceedings pending or threatened against the Company or any of the Subsidiaries
except as set forth in the Prospectus.
(ix) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, the Certificate of Incorporation or By-Laws of the
Company, or any material agreement or instrument known to such counsel and filed
as an Exhibit to the Registration Statement to which the Company or any of the
Subsidiaries is a party or any applicable United States federal, California or
Delaware law or regulation, or so far as is known to such counsel, any order,
writ or injunction that is material to the Company or its United States
Subsidiaries, taken as a whole, of any United States federal or California or
Delaware state jurisdiction, court or governmental instrumentality.
(x) This Agreement has been duly authorized, executed and
delivered by the Company.
(xi) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery of
this Agreement and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or as required by state securities
laws as to which such counsel need express no opinion) except such as have been
obtained or made, specifying the same.
(xii) The Company is not, and will not become, as a result of
the consummation of the transactions contemplated by this Agreement, and
application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the 1940 Act.
(xiii) This Agreement has been executed and delivered on behalf
of the Selling Shareholders.
(xiv) Each Selling Shareholder has full legal right, power and
authority, and any approval required by law (other than as required by State
securities and Blue Sky laws as to which such counsel need express no opinion),
to sell, assign, transfer and deliver the portion of the Shares to be sold by
such Selling Shareholder.
(xv) The Custodian Agreement and the Power of Attorney
executed and delivered by each Selling Shareholder is valid and binding.
(xvi) The Underwriters (assuming that they are bona fide
purchasers within the meaning of the Uniform Commercial Code) have acquired good
and marketable title to the
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Shares being sold by each Selling Shareholder on the Closing Date, and the
Option Closing Date, as the case may be, free and clear of all liens,
encumbrances, equities and claims.
(xvii) The Shares have been listed by the Nasdaq National
Market.
In rendering such opinion Riordan & McKinzie may rely as to matters
governed by the laws of states other than California or Delaware or Federal laws
on local counsel in such jurisdictions, provided that in each case such counsel
shall state that they believe that they and the Underwriters are justified in
relying on such other counsel. In rendering such opinion with respect to the
Selling Shareholders, Riordan & McKinzie may rely on Seed Mackall & Cole,
counsel for the Selling Shareholders, provided that Riordan & McKinzie shall
state that they believe that they and the Underwriters are justified in relying
on Seed Mackall & Cole, counsel for the Selling Shareholders. In addition to
the matters set forth above, such opinion shall also include a statement to the
effect that nothing has come to the attention of such counsel which leads them
to believe that (i) the Registration Statement, at the time it became effective
under the Act (but after giving effect to any modifications incorporated therein
pursuant to Rule 430A under the Act) and as of the Closing Date or the Option
Closing Date, as the case may be, contained an 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 not misleading, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed pursuant to the
Rules and Regulations and as of the Closing Date or the Option Closing Date, as
the case may be, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements, in the light of
the circumstances under which they are made, not misleading (except that such
counsel need express an opinion as to the financial statements and related
schedules, footnotes and other financial and statistical information contained
therein). With respect to such statement, Riordan & McKinzie may state that
their belief is based upon the procedures set forth therein, but is without
independent check and verification.
(c) The Representatives shall have received from Wilson Sonsini
Goodrich & Rosati, P.C. ("WSGR"), counsel for the Underwriters, an opinion dated
the Closing Date or the Option Closing Date, as the case may be, to the effect
that:
(i) The Shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the terms of the
Underwriting Agreement, will be validly issued, fully paid and non-assessable.
(ii) The Underwriting Agreement has been duly authorized,
executed and delivered by the Company and is a valid and binding agreement of
the Company, except as rights to indemnity or contribution pursuant to Section 8
thereunder may be limited under applicable law and except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws generally
affecting creditors' rights.
In rendering such opinion WSGR may rely as to all matters governed
other than by the laws of the State of California or Federal laws on the opinion
of counsel referred to in
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Paragraph (b) of this Section 6. In addition to the matters set forth above,
such opinion shall also include a statement to the effect that nothing has come
to the attention of such counsel which leads them to believe that (i) the
Registration Statement, or any amendment thereto, as of the time it became
effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) as of the Closing Date
or the Option Closing Date, as the case may be, contained an 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 not misleading, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed pursuant to the
Rules and Regulations and as of the Closing Date or the Option Closing Date, as
the case may be, contained an untrue statement of a material fact or omitted to
state a material fact, necessary in order to make the statements, in the light
of the circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, WSGR may
state that their belief is based upon the procedures set forth therein, but is
without independent check and verification.
(d) The Representatives shall have received at or prior to the
Closing Date from WSGR a memorandum or summary, in form and substance
satisfactory to the Representatives, with respect to the qualification for
offering and sale by the Underwriters of the Shares under the state securities
laws of such jurisdictions as the Representatives may reasonably have designated
to the Company.
(e) You shall have received, on each of the dates hereof, the Closing
Date and the Option Closing, as the case may be, a letter dated the date hereof,
the Closing Date or the Option Closing Date, as the case may be, in form and
substance satisfactory to you, of Arthur Andersen LLP confirming that they are
independent public accountants within the meaning of the Act and the applicable
published Rules and Regulations thereunder and stating that in their opinion the
financial statements and schedules examined by them and included in the
Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the related published Rules
and Regulations; and containing such other statements and information as is
ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and Prospectus.
(f) The Representatives shall have received from Arthur Andersen LLP
a letter stating that their review of the Company's system of internal
accounting controls, to the extent they deemed necessary in establishing the
scope of their examination of the Company's financial statements as of December
31, 1997, did not disclose any weakness in internal controls that they
considered to be material weaknesses.
(g) The Representatives shall have received from counsel for the
Selling Shareholders an opinion, addressed to Riordan & McKinzie and dated the
Closing Date, in form reasonably acceptable to counsel for the Underwriters, and
if Option Shares are purchased at any date after the Closing Date, an additional
opinion from such counsel, addressed to Riordan &
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McKinzie and dated the Option Closing Date, confirming that the statements
expressed as of the Closing Date in such opinion remain valid as of such later
date.
(h) The Representatives shall have received from Baker & McKenzie,
United Kingdom Regulatory counsel for the Company, an opinion, addressed to the
Underwriters and dated the Closing Date, in form reasonably acceptable to
counsel for the Underwriters, and if Option Shares are purchased at any date
after the Closing Date, an additional opinion from such counsel, addressed to
the Underwriters and dated the Option Closing Date, confirming that the
statements expressed as of the Closing Date in such opinion remain valid as of
such later date.
(i) The Representatives shall have received from Doser Amereller
Noack/Baker & McKenzie, Federal Republic of Germany Regulatory counsel for the
Company, an opinion, addressed to the Underwriters and dated the Closing Date,
in form reasonably acceptable to counsel for the Underwriters, and if Option
Shares are purchased at any date after the Closing Date, an additional opinion
from such counsel, addressed to the Underwriters and dated the Option Closing
Date, confirming that the statements expressed as of the Closing Date in such
opinion remain valid as of such later date.
(j) The Representatives shall have received from Koteen & Naftalin,
United States Regulatory counsel for the Company, an opinion, addressed to the
Underwriters and dated the Closing Date, covering the matters set forth in
Exhibit B hereto, and if Option Shares are purchased at any date after the
Closing Date, an additional opinion from such counsel, addressed to the
Underwriters and dated the Option Closing Date, confirming that the statements
expressed as of the Closing Date in such opinion remain valid as of such later
date.
(k) The Representatives shall have received from The Rebensdorf
Group, United States state regulatory counsel for the Company, an opinion,
addressed to the Underwriters and dated the Closing Date, in form reasonably
acceptable to counsel for the Underwriters, and if Option Shares are purchased
at any date after the Closing Date, an additional opinion from such counsel,
addressed to the Underwriters and dated the Option Closing Date, confirming that
the statements expressed as of the Closing Date in such opinion remain valid as
of such later date.
(l) The Representatives shall have received from Seed, Mackall & Cole
LLP, counsel for the Company, a letter addressed to the Underwriters and dated
the Closing Date, stating that except as set forth in such letter, such counsel
is not aware of any pending or threatened litigation involving the Company or
any of its Subsidiaries, and if Option Shares are purchased at any date after
the Closing Date, an additional letter from such counsel, addressed to the
Underwriters and dated the Option Closing Date, confirming that the statements
expressed as of the Closing Date in such letter remain valid as of such later
date.
(m) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, a certificate or certificates of
the Chief Executive Officer or
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<PAGE>
President and the Chief Financial Officer of the Company to the effect that, as
of the Closing Date or the Option Closing Date, as the case may be, each of them
severally represents as follows:
(i) The Registration Statement has become effective under the
Act and no stop order suspending the effectiveness of the Registrations
Statement has been issued, and no proceedings for such purpose have been taken
or are, to his or her knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing Date or the
Option Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to
Rules 424 or 430A under the Act have been made;
(iv) He or she has carefully examined the Registration
Statement and the Prospectus and, in his or her opinion, as of the effective
date of the Registration Statement, the statements contained in the Registration
Statement were true and correct, and such Registration Statement and Prospectus
did not omit to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading, and since the effective
date of the Registration Statement, no event has occurred which should have been
set forth in a supplement to or an amendment of the Prospectus which has not
been so set forth in such supplement or amendment; and
(v) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been any
material adverse change or any development involving a prospective material
adverse change in or affecting the condition, financial or otherwise, of the
Company and its Subsidiaries taken as a whole or the earnings, business,
management, properties, assets, operations, condition (financial or otherwise)
or prospects of the Company and the Subsidiaries taken as a whole, whether or
not arising in the ordinary course of business.
(n) The Company and the Selling Shareholders shall have furnished to
the Representatives such further certificates and documents confirming the
representations and warranties, covenants and conditions contained herein and
related matters as the Representatives may reasonably have requested.
(o) The Lockup Agreements described in Section 4(ix) are in full
force and effect.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects reasonably satisfactory to the Representatives and to WSGR,
counsel for the Underwriters.
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<PAGE>
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company and the Selling Shareholders of
such termination in writing or by telegram at or prior to the Closing Date or
the Option Closing Date, as the case may be.
In such event, the Selling Shareholders, the Company and the
Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 5 and 8 hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE SELLERS.
The obligations of the Sellers to sell and deliver the portion of the
Shares required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or the Option Closing Date,
as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company agrees:
(i) to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of the Act,
against any losses, claims, damages or liabilities to which such Underwriter or
any such controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading any act or failure to act; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement, or omission or alleged omission
made in the Registration Statement, any Preliminary Prospectus, the Prospectus,
or such amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof.
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<PAGE>
(ii) to reimburse each Underwriter and each such controlling
person upon demand for any legal or other out-of-pocket expenses reasonably
incurred by such Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage or liability, action or
proceeding or in responding to a subpoena or governmental inquiry related to the
offering of the Shares, whether or not such Underwriter or controlling person is
a party to any action or proceeding. In the event that it is finally judicially
determined that the Underwriters were not entitled to receive payments for legal
and other expenses pursuant to this subparagraph, the Underwriters will promptly
return all sums that had been advanced pursuant hereto.
(b) The Selling Shareholders severally and not jointly agree to
indemnify the Underwriters and each person, if any, who controls any Underwriter
within the meaning of the Act, against any losses, claims, damages or
liabilities to which such Underwriter or controlling person may become subject
under the Act or otherwise to the same extent as indemnity is provided by the
Company pursuant to Section 8(a) above. In no event, however, shall the
liability of any Selling Shareholder for indemnification and contribution under
this Section 8 exceed the proceeds received by such Selling Shareholder from the
Underwriters in the offering. This indemnity obligation will be in addition to
any liability which the Company may otherwise have.
(c) The obligation of the Company pursuant to Section 8 herein shall
be joint and several with the obligation of each of the Selling Shareholders,
provided, however, that the obligation of a Selling Shareholder pursuant to
Section 8 herein shall be several and not joint with the obligation of the
Company or any other Selling Shareholder. The Company and the Selling
Shareholders may agree, as among themselves and without limiting the rights of
the Underwriters under this Agreement, as to the respective amounts of such
liability for which they shall be responsible.
(d) Each Underwriter severally and not jointly will indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, the Selling Shareholders, and each person, if
any, who controls the Company or the Selling Shareholders within the meaning of
the Act, against any losses, claims, damages or liabilities to which the Company
or any such director, officer, Selling Shareholder or controlling person may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or (ii) the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; and will reimburse any
legal or other expenses reasonably incurred by the Company or any such director,
officer, Selling Shareholder or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, action or
proceeding; provided, however, that each Underwriter will be liable in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or such
amendment or
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<PAGE>
supplement, in reliance upon and in conformity with written information
furnished to the Company by or through the Representatives specifically for use
in the preparation thereof. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(e) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 8, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in
Section 8(a), (b) or (d) shall be available to any party who shall fail to give
notice as provided in this Section 8(e) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have related and
was materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 8(a), (b) or (d). In
case any such proceeding shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party and shall pay as incurred the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel at its own expense.
Notwithstanding the foregoing, the indemnifying party shall pay as incurred (or
within 30 days of presentation) the fees and expenses of the counsel retained by
the indemnified party in the event (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel,
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them or (iii) the indemnifying party shall
have failed to assume the defense and employ counsel acceptable to the
indemnified party within a reasonable period of time after notice of
commencement of the action. It is understood that the indemnifying party shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm for all such indemnified parties. Such firm shall be designated
in writing by you in the case of parties indemnified pursuant to Section 8(a) or
(b) and by the Company and the Selling Shareholders in the case of parties
indemnified pursuant to Section 8(d). The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written consent
but if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or judgment. In
addition, the indemnifying party will not, without the prior written consent of
the indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (whether or not any indemnified party is
an actual or potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action or
proceeding.
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<PAGE>
(f) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a), (b) or (d) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company and the Selling Shareholders on the
one hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the Selling Shareholders
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Shareholders on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Shareholders and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this
Section 8(f) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 8(f). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to above in this Section 8(f) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (e), (i) no
Underwriter shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter, and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation, and (iii) no Selling Shareholder shall be required to
contribute any amount in excess of the proceeds received by such Selling
Shareholder from the Underwriters in the offering. The Underwriters'
obligations in this Section 8(f) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(g) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom
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<PAGE>
contribution may be sought under this Section 8 hereby consents to the
jurisdiction of any court having jurisdiction over any other contributing party,
agrees that process issuing from such court may be served upon him or it by any
other contributing party and consents to the service of such process and agrees
that any other contributing party may join him or it as an additional defendant
in any such proceeding in which such other contributing party is a party.
(h) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any persons
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter, or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may be,
any Underwriter shall fail to purchase and pay for the portion of the Shares
which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company or a Selling
Shareholder), you, as Representatives of the Underwriters, shall use your
reasonable efforts to procure within 36 hours thereafter one or more of the
other Underwriters, or any others, to purchase from the Company and the Selling
Shareholders such amounts as may be agreed upon and upon the terms set forth
herein, the Firm Shares or Option Shares, as the case may be, which the
defaulting Underwriter or Underwriters failed to purchase. If during such 36
hours you, as such Representatives, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option Shares, as
the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Firm Shares or
Option Shares, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Shares or Option Shares, as the case may be,
which such defaulting Underwriter or Underwriters failed to purchase, or (b) if
the aggregate number of shares of Firm Shares or Option Shares, as the case may
be, with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the Company and the
Selling Shareholders or you as the Representatives of the Underwriters will have
the right, by written notice given within the next 36-hour period to the parties
to this Agreement, to terminate this Agreement without liability on the part of
the non-defaulting Underwriters or of the Company or of the Selling Shareholders
except to the extent provided in Section 8 hereof. In the event of a default by
any Underwriter or Underwriters, as set forth in this Section 9, the Closing
Date or Option
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<PAGE>
Closing Date, as the case may be, may be postponed for such period, not
exceeding seven days, as you, as Representatives, may determine in order that
the required changes in the Registration Statement or in the Prospectus or in
any other documents or arrangements may be effected. The term "Underwriter"
includes any person substituted for a defaulting Underwriter. Any action taken
under this Section 9 shall not relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or telegraphed
and confirmed as follows: if to the Underwriters, to BT Alex. Brown
Incorporated, One South Street, Baltimore, Maryland 21202, Attention: General
Counsel; with a copy to BT Alex. Brown Incorporated, One Bankers Trust Plaza,
130 Liberty Street, New York, New York 10006, Attention: General Counsel; if to
the Company, to
Kelly D. Enos
STAR Telecommunications
223 East De La Guerra Street
Santa Barbara, CA 93101
with a copy to:
Timothy Sylvester
Riordan & McKinzie
300 South Grand Avenue
Los Angeles, CA 90071
if to the Selling Shareholders, to
The Selling Shareholders
c/o Christopher E. Edgecomb, attorney-in-fact
STAR Telecommunications
223 East De La Guerra Street
Santa Barbara, CA 93101
with a copy to:
Joe Cole
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<PAGE>
Seed, Mackall & Cole LLP
1332 Anacopa, Suite 200
Santa Barbara, CA 93101
11. TERMINATION.
(a) This Agreement may be terminated by you by notice to the Company
at any time prior to the Closing Date if any of the following has occurred:
(i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or affecting the
condition, financial or otherwise, of the Company and its Subsidiaries taken as
a whole or the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company and
its Subsidiaries taken as a whole, whether or not arising in the ordinary course
of business, (ii) any outbreak or escalation of hostilities or declaration of
war or national emergency or other national or international calamity or crisis
or change in economic or political conditions if the effect of such outbreak,
escalation, declaration, emergency, calamity, crisis or change on the financial
markets of the United States would, in your reasonable judgment, make it
impracticable or inadvisable to market the Shares or to enforce contracts for
the sale of the Shares, or (iii) suspension of trading in securities generally
on the New York Stock Exchange or the American Stock Exchange or limitation on
prices (other than limitations on hours or numbers of days of trading) for
securities on either such Exchange, (iv) the enactment, publication, decree or
other promulgation of any statute, regulation, rule or order of any court or
other governmental authority which in your opinion materially and adversely
affects or may materially and adversely affect the business or operations of the
Company, (v) declaration of a banking moratorium by United States or New York
State authorities, (vi) any downgrading, or placement on any watch list for
possible downgrading, in the rating of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Exchange Act); (vii) the suspension of trading of the
Company's common stock by the Nasdaq National Market, the Commission, or any
other governmental authority or, (viii) the taking of any action by any
governmental body or agency in respect of its monetary or fiscal affairs which
in your reasonable opinion has a material adverse effect on the securities
markets in the United States; or
(b) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters, the Company and the Selling Shareholders and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign merely because of such
purchase.
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<PAGE>
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company, the Selling Shareholders and the Underwriters acknowledge
and agree that the only information furnished or to be furnished by any
Underwriter to the Company for inclusion in any Prospectus or the Registration
Statement consists of the information set forth in the last paragraph on the
front cover page (insofar as such information relates to the Underwriters),
legends required by Item 502(d) of Regulation S-K under the Act and the
information under the caption "Underwriting" in the Prospectus.
14. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of
any Underwriter or controlling person thereof, or by or on behalf of the Company
or its directors or officers and (c) delivery of and payment for the Shares
under this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Maryland.
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Selling Shareholders, the
Company and the several Underwriters in accordance with its terms.
(REMAINDER OF PAGE LEFT INTENTIONALLY BLANK)
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<PAGE>
Any person executing and delivering this Agreement as Attorney-in-Fact for
a Selling Shareholder represents by so doing that he has been duly appointed as
Attorney-in-Fact by such Selling Shareholder pursuant to a validly existing and
binding Power of Attorney which authorizes such Attorney-in-Fact to take such
action.
Very truly yours,
STAR TELECOMMUNICATIONS, INC.
By
--------------------------------------------
Kelly D. Enos, Chief Financial Officer
SELLING SHAREHOLDERS LISTED ON SCHEDULE II
MARY A. CASEY
By:
- -------------------------------- ----------------------------------
Christopher E. Edgecomb Christopher E. Edgecomb
Attorney-in-Fact
David Vaun Crumly
By:
---------------------------------
Christopher E. Edgecomb
Attorney-in-Fact
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
BT ALEX. BROWN INCORPORATED
MERRILL LYNCH & CO.
HAMBRECHT & QUIST LLC
LEHMAN BROTHERS
FURMAN SELZ LLC
By BT Alex. Brown Incorporated
By:
--------------------------------------
Title:
-----------------------------------
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<PAGE>
Acting on behalf of the several Underwriters, including themselves, named in
Schedule I thereto.
SCHEDULE I
SCHEDULE OF UNDERWRITERS
<TABLE>
<CAPTION>
Number of Firm Shares
Underwriter to be Purchased
------------------------------------------------ -------------------------
<S> <C>
BT Alex. Brown Incorporated 1,803,000
Merrill Lynch, Pierce, Fenner & Smith ----------
Incorporated 1,803,000
----------
Hambrecht & Quist LLC 798,000
----------
Lehman Brothers Inc. 798,000
----------
Furman Selz LLC 798,000
----------
TOTAL 6,000,000
----------
----------
</TABLE>
<PAGE>
SCHEDULE II
SCHEDULE OF SELLING SHAREHOLDERS
PART A
<TABLE>
<CAPTION>
NUMBER OF FIRM SHARES
NAME OF UNDERWRITTEN SELLING SHAREHOLDER TO BE SOLD
----------------------------------------------------- ---------------------
<S> <C>
Christopher E. Edgecomb 315,000
--------
TOTAL 315,000
--------
</TABLE>
PART B
<TABLE>
<CAPTION>
NUMBER OF OPTION
SHARES
NAME OF ADDITIONAL SELLING SHAREHOLDERS TO BE SOLD
------------------------------------------------------- -----------------
<S> <C>
Christopher E. Edgecomb 650,000
--------
David Vaun Crumly 25,000
--------
Mary A. Casey 75,000
--------
TOTAL 750,000
--------
--------
</TABLE>
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
LIST OF SUBSIDIARIES
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION
- ------------------ -----------------------------
<S> <C>
Arvilla Telecommunications, Inc. California
IIWII Corp. Delaware
L.D. Services, Inc. California
T-One Corp. Delaware
Helvey Com., Inc. California
Lucius Enterprises, Inc. California
STAR Europe, Ltd. United Kingdom
Romborg Holding, B.V. Netherlands
STAR Telecommunications Deutschland, GmbH Germany
Grupo Industriale Arvilla SA de CV Mexico
Servicios Sumosierra SA de CV Mexico
</TABLE>
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<PAGE>
EXHIBIT B
MATTERS TO BE COVERED IN THE OPINION OF KOTEEN & NAFTALIN
Counsel has read the Registration Statement and the Prospectus regarding
Star Telecommunications, Inc. (the "Company") including particularly the
portions of the Registration Statement and the Prospectus referring to
regulatory issues and it is such counsel's opinion that:
1. Nothing has come to the attention of those attorneys in the firm who
regularly render service on behalf of the Company to cause us to believe that as
of the Closing Date the statements in the Registration Statement and the
Prospectus under the captions "Risk Factors--Risks Inherent in Acquisition
Strategy, --Potential Adverse Effects of Government Regulation, --Risks of
International Telecommunications Business and --Significant Competition"
"Business--Industry Background, --Network, --Competition and --Government
Regulation," that pertain to the Communications Act or constitute a summary of
U.S. telecommunications legal and regulatory matters or government proceedings
referred to therein, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances in which they were made not
misleading.
2. The descriptions in the Registration Statement and the Prospectus
under the captions "Risk Factors--Potential Adverse Effects of Government
Regulation and --Significant Competition" "Business--Industry Background,
- --Network, --Competition and --Government Regulation," of U.S. federal
telecommunications statutes and regulations or legal or governmental proceedings
of the FCC with respect to telecommunications regulatory matters fairly
summarize the matters therein described.
3. Schedule 1 hereto accurately and completely lists all of the licenses,
permits, and authorizations issued by the FCC (collectively the "Licenses") to
the Company and, except as qualified in the Registration and Prospectus, which
are necessary for the Company to carry on its business as described therein. To
our knowledge, Schedule 2 hereto accurately and completely lists all pending
applications filed by the Company with the FCC.
4. To our knowledge, the Licenses are validly issued. "Validly issued"
as used herein means that the Licenses have been issued through the means of
regular FCC procedures applied in conformity with the Communications Act and
prior FCC practice . To our knowledge, the Licenses are in full force and
effect. "Full force and effect" as used herein means (i) the orders issuing the
Licenses have become effective under the Communications Act, (ii) the Licenses
contain no conditions that would have a material adverse effect on the Company's
operations except for such conditions imposed generally by the FCC, and except
with respect to conditions relating to the regulatory and reporting requirements
applicable to private lines interconnected to the public switched network,
conditions in the
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<PAGE>
License have been satisfied where the failure to satisfy such conditions would
have a material adverse effect on the Company's ability to provide service ,
provided, however, that our understanding of the Company's service and
operations is based solely on the Certificate of Officer of the Company, (iv) no
stay of effectiveness has been issued and (v) the Company has not received any
notification that any revocation or limitation of the Licenses is threatened or
pending that would, if adopted, have a material adverse effect on the Company's
operations as described in the Registration Statement and Prospectus.
5. Except as identified in Schedule 3 hereto, the Company has filed with
the FCC all tariffs, applications, informational reports, contracts, fee
filings and other documents required under the Communications Act, except where
the failure to so file would not have a material adverse effect on the Company's
ability to provide it services as described in the Registration Statement and
the Prospectus and, except as indentified in Schedule 3 hereto (i) such filings
or submissions were in substantial compliance in all material respects with
applicable federal telecommunications laws or regulations when filed or
submitted, based solely on the Certificate of Officer; (ii) no deficiency has
been asserted by the FCC with respect to such filings or submissions ; and
(iii) based solely on the Certificate of Officer, the information contained in
such filings or submissions was, in all material respects, accurate, complete
and up-to-date at the time the filings or submissions were made.
6. Except as identified on Schedule 4, based solely on the attached
Certificate of Officer of the Company and on a review of the public files of the
FCC as of [May][April] __, 1998, there is no proceeding, formal or informal
complaint or investigation pending before the FCC against the Company of any of
its Licenses or based on any violation or alleged violation by the Company of
the Communications Act, except for proceedings affecting the industry generally
to which the Company is not a specific party.
7. Neither the execution, delivery or performance of the Underwriting
Agreement by the Company nor the stock issuance and sale described in the
Registration Statement and Prospectus will violate, result in a breach of or
require any authorization, approval or consent under the Communications Act not
already obtained.
-4-
<PAGE>
EXHIBIT 5.1
April 28, 1998
Ladies and Gentlemen:
We have acted as counsel to STAR Telecommunications, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities act of 1933, as amended (the "1933 Act"), of the sale in an
underwritten public offering of up to 5,835,000 authorized but unissued
shares of the common stock, $0.001 par value per share (the "Common Stock")
of the Company (the "Company Shares"), and up to 1,065,000 shares of Common
Stock issued by certain selling stockholders (collectively with the Company
Shares, the "Shares"). This opinion is delivered to you in connection with
the Registration Statement on Form S-1, Registration No. 333-48559, as
amended to date (the "Registration Statement"), for the aforementioned sale,
filed with the Securities and Exchange Commission (the "Commission") under
the 1933 Act.
In rendering the opinion set forth herein, we have made such
investigations of fact and law, and examined such documents and instruments,
or copies thereof established to our satisfaction to be true and correct
copies thereof, as we have deemed necessary under the circumstances.
Based upon the foregoing and such other examinations of law and
fact as we have deemed necessary, and in reliance thereon, we are of the
opinion that, subject to the issuance of an appropriate order by the
Commission declaring the Registration Statement effective, and the compliance
with applicable state securities and "blue sky" laws, the Shares have been
duly authorized and have been, or in the case the Company Shares, will be upon
sale and delivery thereof and receipt by the Company of full payment therefor
as set forth in the Registration Statement, validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Prospectus which is a part of the Registration
Statement.
Very truly yours,
/s/ Riordan & McKinzie
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports dated February 12, 1998 (except with respect to the stock split
discussed in Note 14 of the Notes to Consolidated Financial Statements as to
which the date is March 31, 1998) and to all references to our firm included in
or made a part of this registration statement on Form S-1.
ARTHUR ANDERSEN LLP
Los Angeles, California
April 30, 1998
