<PAGE>
As filed with the Securities and Exchange Commission on April 7, 1998
Registration No. 333-46341
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
US LEC Corp.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<CAPTION>
Delaware 4813 56-2065535
<S> <C> <C>
(State or Other Jurisdiction (Primary Standard Industrial (IRS Employer
of Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
212 South Tryon Street, Suite 1540
Charlotte, North Carolina 28281
(704) 319-1000
(Address, Including Zip Code, and Telephone Number
Including Area Code, of Registrant's Principal Executive Offices)
Tansukh V. Ganatra
President and Chief Operating Officer
US LEC Corp.
212 South Tryon Street, Suite 1540
Charlotte, North Carolina 28281
(704) 319-1000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copies to:
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<S> <C>
Barney Stewart III, Esq. Barry A. Brooks, Esq.
Aaron D. Cowell, Jr., Esq. Paul, Hastings, Janofsky & Walker LLP
Moore & Van Allen, PLLC 399 Park Avenue
100 North Tryon Street, Floor 47 New York, New York 10022-4697
Charlotte, North Carolina 28202-4003
</TABLE>
Approximate date of proposed sale to the public: To commence as soon as
practicable after this Registration Statement becomes effective.
If any of the securities 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, 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(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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance And Distribution.
The following is a list of the estimated expenses to be incurred by US LEC
Corp. (the "Company" or the "Registrant") in connection with the distribution
of the Class A Common Stock being registered hereby. Except for the Securities
and Exchange Commission Registration Fee, the NASD Filing Fee and the Nasdaq
National Market Listing Fee, all amounts are estimates.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee ......... $ 27,989
NASD Filing Fee ............................................. 9,988
Nasdaq National Market Listing Fee .......................... 75,625
Printing and Engraving Costs ................................ 90,000
Accounting Fees and Expenses ................................ 200,000
Legal Fees and Expenses (excluding Blue Sky) ................ 225,000
Transfer Agent and Registrar Fees ........................... 10,000
Miscellaneous ............................................... 11,398
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Total ....................................................... $650,000
========
</TABLE>
Item 14. Indemnification of Directors and Officers.
Certain provisions of the Company's Certificate of Incorporation (the
"Certificate") and Bylaws provide that the Company shall indemnify all of its
directors and officers to the fullest extent permitted by the General
Corporation Law of the State of Delaware (the "Delaware Law"). In addition, the
Certificate authorizes the Registrant to enter into one or more agreements with
any person which provide for indemnification greater or different than that
provided in its Certificate.
Section 145 of the Delaware Law permits a corporation to indemnify its
directors and officers against expenses (including attorney's fees), judgments,
fines and amounts paid in settlements actually and reasonably incurred by them
in connection with any action, suit or proceeding, whether criminal or civil,
brought by a third party if such directors or officers acted in good faith and
in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reason to believe their conduct was unlawful. In a
derivative action, indemnification may be made only for expenses actually and
reasonably incurred by directors and officers in connection with the defense or
settlement of an action or suit and only with respect to a matter as to which
they shall have acted in good faith and in a manner they reasonably believed to
be in or not opposed to the best interest of the corporation, except that no
indemnification shall be made if such person shall have been adjudged liable to
the corporation, unless and only to the extent that the court in which the
action or suit was brought shall determine upon application that the defendant
officers or directors are reasonably entitled to indemnity for such expenses
despite such adjudication of liability.
In addition, Section 102 of the Delaware Law provides that a corporation
may include in its certificate of incorporation a provision eliminating or
limiting the personal liability of directors for monetary damages for breach of
fiduciary duty, provided that such provision shall not eliminate or limit the
liability of a director: (i) for any breach of the director's duty of loyalty
to the corporation or its stockholders; (ii) for acts or omissions not in good
faith that involve intentional misconduct or a knowing violation of the law;
(iii) conduct in violation of Section 174 of the Delaware Law (which section
relates to unlawful distributions); or (iv) for any transaction from which the
director derived an improper personal benefit. The Certificate currently
includes such provisions.
Reference is also hereby made to Section 8 of the Underwriting Agreement,
a copy of which is filed as Exhibit 1 to this Registration Statement, for
information concerning indemnification arrangements among the Company and the
Underwriters.
Item 15. Recent Sales of Unregistered Securities.
On December 31, 1997, US LEC L.L.C., a Delaware limited liability company,
was merged into the Company (the "Merger"). As a result of the Merger, the
Company issued (i) 3,855,000 shares of Class A Common
II-1
<PAGE>
Stock to the holders of all outstanding nonvoting units of membership interest
in US LEC L.L.C (the "Nonvoting Units"), (ii) 16,594,500 shares of Class B
Common Stock to the holders of all outstanding voting units of membership
interest in US LEC L.L.C. (the "Voting Units") and (iii) warrants to purchase
444,000 shares of Class A Common Stock to the holders of all outstanding
warrants to purchase Nonvoting Units (the "Warrants"). Immediately prior to the
Merger, the 2,570 outstanding Nonvoting Units were beneficially owned by a
total of 53 persons, including employees of US LEC L.L.C. and private
investors, the 11,063 outstanding Voting Units were beneficially owned by
Messrs. Aab and Ganatra and the Warrants were held by three employees and a
sales agent of US LEC L.L.C. The transaction was not registered under the
Securities Act pursuant to the exemption provided by Section 4(2) thereof for
transactions not involving any public offering.
In January 1998, the Company granted incentive stock options to 96
employees covering 182,800 shares of Class A Common Stock. These transactions
were not registered under the Securities Act pursuant to the exemption provided
by Rule 701 promulgated thereunder for sales of securities pursuant to
compensatory benefit plans.
In February, 1998, Mr. Aab exchanged a note payable by Company to him in
the amount of $5,000,000 for 480,770 shares of Class B Common Stock. The
transaction was not registered under the Securities Act pursuant to the
exemption provided by Section 4(2) thereof for transactions not involving any
public offering.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits:
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<CAPTION>
Exhibit No. Description
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<S> <C>
1 Form of Underwriting Agreement
3.1 Form of Restated Certificate of Incorporation of the Company*
3.2 Bylaws of the Company*
3.3 Amendment No. 1 to By-laws of the Company*
4 Form of Class A Common Stock Certificate*
5 Opinion of Moore & Van Allen, PLLC*
10.1 US LEC Corp. 1998 Omnibus Stock Plan*
10.2 Promissory Note, dated January 16, 1998, made by the Company to Melrich Associates,
L.P.*
10.3 Security Agreement, dated January 16, 1998, by and between the Company and Melrich
Associates, L.P.*
10.4 Promissory Note, dated January 16, 1998, made by the Company to Tansukh V. Ganatra*
10.5 Security Agreement, dated January 16, 1998, by and between the Company and
Tansukh V. Ganatra*
10.6 Guaranty and Suretyship Agreement, dated January 16, 1998, by and among the
Company and Richard T. Aab, Melrich Associates, L.P. and Tansukh V. Ganatra*
10.7 Contribution Agreement, dated February 14, 1998, by and between US LEC Corp. and
Richard T. Aab*
10.8 Non-transferable Warrant, dated August 4, 1997, issued to David N. Vail*
10.9 Non-transferable Warrant, dated August 4, 1997, issued to Craig K. Simpson*
10.10 Form of Amended and Restated Class B Stockholders Agreement, dated as of January 1, 1998*
10.11 Consulting Agreement, dated December 18, 1997 by and between the Company and
RTA Associates, LLC and related termination letter, dated January 1, 1998*
10.12 Consulting Agreement, dated December 18, 1997 by and between the Company and
Super STAR Associates Limited Partnership and related termination letter, dated January
1, 1998*
21 Subsidiaries of the Registrant*
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Moore & Van Allen, PLLC (included in its opinion filed as Exhibit 5)*
24 Power of Attorney*
</TABLE>
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* Previously filed.
II-2
<PAGE>
Item 17. Undertakings.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, 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
of 1933, 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 item shall be deemed to be
the initial bona fide public offering thereof; and
(3) The undersigned 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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, 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 of 1933 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, 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 whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Charlotte,
State of North Carolina, on April 7, 1998.
US LEC Corp.
By: /s/ DAVID N. VAIL
--------------------------------
David N. Vail,
Executive Vice President --
Finance and
Chief Financial Officer
In accordance with the requirements of the Securities Act of 1933, this
amendment to the Registration Statement was signed by the following persons in
the capacities and on the dates stated:
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<CAPTION>
Signature Title Date
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<S> <C> <C>
/s/ RICHARD T. AAB* Chairman of the Board of Directors, April 7, 1998
------------------------------- Chief Executive Officer and Director
Richard T. Aab
/s/ TANSUKH V. GANATRA* President, Chief Operating Officer and April 7, 1998
------------------------------- Director
Tansukh V. Ganatra
/s/ DAVID N. VAIL Executive Vice President -- Finance and April 7, 1998
------------------------------- Chief Financial Officer (Principal
David N. Vail Accounting Officer)
/s/ DAVID M. FLAUM* Director April 7, 1998
-------------------------------
David M. Flaum
/s/ STEVEN L. SCHOONOVER* Director April 7, 1998
-------------------------------
Steven L. Schoonover
*By: /s/ DAVID N. VAIL
---------------------------
David N. Vail
Attorney-in-Fact
</TABLE>
II-4
US LEC CORP.
5,500,000 Shares(1)
Class A Common Stock
($.01 par value)
Underwriting Agreement
New York, New York
, 1998
Salomon Smith Barney
Smith Barney Inc.
Bear, Stearns & Co. Inc.
Wheat First Securities, Inc.
As Representatives of the several Underwriters,
c/o Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
US LEC Corp., a Delaware corporation (the "Company"), proposes
to sell to the several underwriters named in Schedule I hereto (the
"Underwriters"), for whom you (the "Representatives") are acting as
representatives, 5,500,000 shares of Class A Common Stock, $.01 par value
("Common Stock"), of the Company (said shares to be issued and sold by the
Company being hereinafter called the "Underwritten Securities"). The Company
also proposes to grant to the Underwriters an option to purchase up to 825,000
additional shares of Common Stock to cover over-allotments (the "Option
Securities"; the Option Securities, together with the Underwritten Securities,
being hereinafter called the "Securities"). To the extent there are no
additional Underwriters listed on Schedule I other than you, the term
Representatives as used herein shall mean you, as Underwriters, and the terms
Representatives and Underwriters shall mean either the singular or plural as the
context requires. Certain terms used herein are defined in Section 17 hereof.
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, each Underwriter as set forth below in this
Section 1.
(a) The Company has prepared and filed with the Commission a
registration statement (file number 333-46341) on Form S-1, including a
related preliminary prospectus, for the registration under the Act of
the offering and sale of the Securities. The Company may have filed one
or more amendments
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(1) Plus an option to purchase from the Company, up to 825,000 additional
Securities to cover over-allotments.
1
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thereto, including a related preliminary prospectus, each of which has
previously been furnished to you. The Company will next file with the
Commission either (1) prior to the Effective Date of such registration
statement, a further amendment to such registration statement
(including the form of final prospectus) or (2) after the Effective
Date of such registration statement, a final prospectus in accordance
with Rules 430A and 424(b). In the case of clause (2), the Company has
included in such registration statement, as amended at the Effective
Date, all information (other than Rule 430A Information) required by
the Act to be included in such registration statement and the
Prospectus. As filed, such amendment and form of final prospectus, or
such final prospectus, shall contain all Rule 430A Information,
together with all other such required information, and, except to the
extent the Representatives shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you prior
to the Execution Time or, to the extent not completed at the Execution
Time, shall contain only such specific additional information and other
changes (beyond that contained in the latest Preliminary Prospectus) as
the Company has advised you, prior to the Execution Time, will be
included or made therein.
(b) On the Effective Date, the Registration Statement did or
will, and when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date (as defined herein)
and on any date on which Option Securities are purchased, if such date
is not the Closing Date (a "settlement date"), the Prospectus (and any
supplements thereto) will, comply in all material respects with the
applicable requirements of the Act, on the Effective Date and at the
Execution Time, the Registration Statement did not or will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading; and, on the Effective Date, the
Prospectus, if not filed pursuant to Rule 424(b), will not, and on the
date of any filing pursuant to Rule 424(b) and on the Closing Date and
any settlement date, the Prospectus (together with any supplement
thereto) will not, include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the Company makes no
representations or warranties as to the information contained in or
omitted from the Registration Statement, or the Prospectus (or any
supplement thereto) in reliance upon and in strict conformity with
written information furnished herein or in writing to the Company by or
on behalf of any Underwriter through the Representatives specifically
for inclusion in the Registration Statement or the Prospectus (or any
supplement thereto).
(c) Each of the Company and its subsidiaries (individually a
"Subsidiary" and collectively, the "Subsidiaries") has been duly
incorporated or organized, as the case may be, and is validly existing
as a corporation or limited liability company, as the case may be, in
good standing under the laws of the jurisdiction of its incorporation
or organization with full corporate power and authority to own or
lease, as the case may be, and to operate its properties and conduct
its business as described in the Prospectus, and is duly qualified to
transact business as a foreign corporation or limited liability
company, as the
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case may be, and is in good standing under the laws of each
jurisdiction which requires such qualification.
(d) All the outstanding shares of capital stock or equity
securities, as the case may be, of each Subsidiary have been duly and
validly authorized and issued and are fully paid and nonassessable,
and, except as otherwise set forth in the Prospectus, all outstanding
shares of capital stock or equity securities, as the case may be, of
the Subsidiaries are owned by the Company either directly or through
wholly owned Subsidiaries free and clear of any perfected security
interest or any other security interests, claims, liens or
encumbrances; and no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of capital
stock of or ownership of interests in the Subsidiaries are outstanding.
(e) The Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms in
all material respects to the description thereof contained in the
Prospectus; the shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully paid
and non-assessable; the Securities being sold hereunder have been duly
and validly authorized, and, when issued and delivered to and paid for
by the Underwriters pursuant to this Agreement, will be fully paid and
nonassessable; the Securities have been duly authorized for listing,
subject to official notice of issuance, on the Nasdaq National Market;
the certificates for the Securities have been duly authorized by the
Company's Board of Directors and are in valid and sufficient form and
comply in all respects with the requirements of the Delaware General
Corporation Law; the holders of outstanding shares of capital stock of
the Company are not entitled to preemptive or other rights to subscribe
for the Securities; and, except as set forth in the Prospectus, no
options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or
exchange any securities for, shares of capital stock of or ownership
interests in the Company are outstanding.
(f) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements in the Prospectus
under the headings "Risk Factors - Risks Associated with Implementation
of Growth Strategy Interconnection Agreements," "Risk Factors -
Uncertainties Related to Reciprocal Compensation," "Risk Factors -
Competition," Risk Factors - Regulation," "Business - Regulation" and
Business - Competition" fairly summarize the matters therein described.
(g) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation
of the Company enforceable in accordance with its terms.
3
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(h) The Company is not and, after giving effect to the offer
and sale of the Securities and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company" as
defined in the Investment Company Act of 1940, as amended.
(i) No consent, approval, authorization, exemption, order or
decree of, or filing, registration, qualification, license or permit of
or with, any court or governmental agency or body is required in
connection with the execution of the Registration Statement and the
execution and delivery of this Agreement and consummation of the
transactions contemplated herein, except such as have been obtained
under the Act and such as may be required under the blue sky laws of
any jurisdiction in connection with the purchase and distribution of
the Securities by the Underwriters in the manner contemplated herein
and in the Prospectus.
(j) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its Subsidiaries
pursuant to, (i) the certificate of incorporation or by-laws (or
equivalent organizational documents) of the Company or any of its
Subsidiaries, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the
Company or any of its Subsidiaries is a party or bound or to which any
of their property is subject, (iii) any statute, law, rule, regulation,
judgment, order, decision or decree applicable to the Company or any of
its Subsidiaries of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction
over the Company or any of its Subsidiaries or any of its or their
properties, or (iv) any license, permit, certificate or authorization.
(k) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
(l) The consolidated historical financial statements of the
Company and its consolidated Subsidiaries included in the Prospectus
and the Registration Statement present fairly in all material respects
the financial condition, results of operations and cash flows of the
Company as of the dates and for the periods indicated, comply as to
form with the applicable accounting requirements of the Act and have
been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods
involved (except as otherwise noted therein). The selected financial
data set forth under the captions "Summary - Summary Historical
Consolidated Financial and Operating Data" and "Selected Historical
Consolidated Financial and Operating Data" in the Prospectus and
Registration Statement fairly present, on the basis stated in the
Prospectus and the Registration Statement, the information included
therein.
(m) No action, suit, complaint, investigation or proceeding by
or before any court or governmental agency, authority or body or any
arbitrator involving
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the Company or any of its Subsidiaries or its or their property is
pending or, to the best knowledge of the Company, threatened that (i)
could reasonably be expected to have a material adverse effect on the
performance of this Agreement or the consummation of any of the
transactions contemplated hereby or (ii) could reasonably be expected
to have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto).
(n) Each of the Company and its Subsidiaries, owns, licenses
or leases all such properties as are necessary to the conduct of its
respective operations as presently conducted; neither the Company nor
any Subsidiary is in violation of any statute, law, rule, regulation,
judgment, order, decision or decree of any court or arbitrator or any
Federal, state or local governmental or regulatory authority having
jurisdiction over the Company or its Subsidiaries or to which any of
their respective properties is subject, or is in non-compliance with
any term or condition of, or has failed to obtain and maintain in
effect, any license, certificate, permit or other authorization
required for the ownership or lease of its property or the conduct of
its business, except as set forth in or contemplated by the Prospectus
(exclusive of any supplement thereto), which violation, non-compliance
or failure would, individually or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its Subsidiaries,
taken as whole; and none of the Company or any Subsidiary has received
notice of any proceedings relating to the revocation or material
modification of any such license, certificate, permit or other
authorization, except as set forth in or contemplated by the
Prospectus.
(o) Neither the Company nor any Subsidiary is in violation or
default of (i) any provision of its certificate of incorporation or
by-laws (or equivalent organizational documents), (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement,
loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or bound or to which its property is
subject, or (iii) any license, permit, certificate or authorization.
(p) Deloitte & Touche LLP, who have certified certain
financial statements of the Company and its consolidated Subsidiaries
and delivered their report with respect to the audited consolidated
financial statements included in the Prospectus, are independent public
accountants with respect to the Company within the meaning of the Act
and the applicable published rules and regulations thereunder.
(q) There are no transfer taxes or other similar fees or
charges under Federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance by the Company
or sale by the Company of the Securities.
5
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(r) The Company and its Subsidiaries have filed all foreign,
federal, state and local tax returns that are required to be filed by
them or have requested extensions thereof (except in any case in which
the failure so to file would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto) and have paid all taxes required
to be paid by them and any other assessment, fine or penalty levied
against them, to the extent that any of the foregoing is due and
payable, except for any such assessment, fine or penalty that is
currently being contested in good faith or as would not have a material
adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its Subsidiaries,
taken as a whole, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated in
the Prospectus (exclusive of any supplement thereto).
(s) No labor problem or dispute with the employees of the
Company or any of its Subsidiaries exists or is threatened or imminent,
and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or its Subsidiaries'
principal suppliers, contractors or customers, that could have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto).
(t) The Company and its Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in
which they are engaged; all policies of insurance insuring the Company
or any of its Subsidiaries or their respective businesses, assets,
employees, officers and directors are in full force and effect; the
Company and its Subsidiaries are in compliance with the terms of such
policies and instruments in all material respects; and there are no
claims by the Company or any of its Subsidiaries under any such policy
or instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause; neither the Company nor
any such Subsidiary has been refused any insurance coverage sought or
applied for; and neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a material adverse effect on
the condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
6
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(u) No Subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distribution on such Subsidiary's capital stock or
equity securities, from repaying to the Company any loans or advances
to such Subsidiary from the Company or from transferring any of such
Subsidiary's property or assets to the Company or any other Subsidiary
of the Company, except as described in or contemplated by the
Prospectus.
(v) The Company and its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to
any differences.
(w) The Company has not taken, directly or indirectly, any
action designed to or which has constituted or which might reasonably
be expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(x) The Company and its Subsidiaries (i) have been and are in
compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health
and safety (including, but not limited to, occupational health and
safety), the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), (ii) have received
and are in compliance with all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) have not received notice of any actual
or potential liability, and are not aware of any conditions that would
give rise to potential liability, for the investigation or remediation
of any disposal or release of hazardous or toxic substances or wastes,
pollutants or contaminants, except where such non-compliance with
Environmental Laws, failure to receive or comply with required permits,
licenses or other approvals, or liability would not, individually or in
the aggregate, have a material adverse change in the condition
(financial or otherwise), prospects, earnings, business or properties
of the Company and its Subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as
set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto). Except as set forth in the Prospectus, neither the
Company nor any of its Subsidiaries has been named as a "potentially
responsible party" under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, or any state
analogs thereto.
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(y) Each of the Company and its Subsidiaries has fulfilled its
obligations, if any, under the minimum funding standards of Section 302
of the United States Employee Retirement Income Security Act of 1974
("ERISA") and the regulations and published interpretations thereunder
with respect to each "plan" (as defined in Section 3(3) of ERISA and
such regulations and published interpretations) in which employees of
the Company and its Subsidiaries are eligible to participate and each
such plan is in compliance in all material respects with the presently
applicable provisions of ERISA and such regulations and published
interpretations. The Company and its Subsidiaries have not incurred any
unpaid liability to the Pension Benefit Guaranty Corporation (other
than for the payment of premiums in the ordinary course) or to any such
plan under Title IV of ERISA.
(z) The Company has made the required disclosures, if any, in
the Prospectus required by the Commission's Staff legal bulletin No. 5
dated October 8, 1997 (as revised on January 12, 1998) related to Year
2000 compliance.
(aa) Each of the Company and its Subsidiaries have in effect
all the telecommunications regulatory licenses, permits, certificates,
authorizations, consents, approvals and orders ("Telecommunications
Licenses") necessary or required to be obtained from the Federal
Communications Commission ("FCC") or the regulatory authority of any
state or local jurisdiction for the Company and its Subsidiaries to
conduct their respective businesses as presently conducted or as
proposed to be conducted and as described in the Registration
Statement. The Telecommunications Licenses obtained by the Company or
its Subsidiaries have been duly and validly issued and are in full
force and effect and are not subject to any conditions outside the
ordinary course, all express conditions in the Telecommunications
Licenses have been satisfied, and no proceedings to revoke, restrict or
modify such Telecommunications Licenses are pending or, to the best of
the Company's knowledge, threatened.
(bb) The Company and its Subsidiaries have operated, in all
material respects, in compliance with (i) all statutes, laws, rules,
regulations, judgments, orders, decisions or decrees of any court,
regulatory body, administrative body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction
over the Company or its Subsidiaries or any of its properties, as
applicable, and (ii) any license, permit, certificate, or authorization
held by or issued to the Company or its Subsidiaries.
(cc) The Company and its Subsidiaries have filed with all
administrative bodies, administrative agencies, governmental bodies,
arbitrators or other authorities having jurisdiction over the Company
or such Subsidiary or any of its properties, as applicable, all
applications, statements, reports, tariffs, information, forms, or any
other documents required under statutes, laws, rules, regulations,
judgments, orders, decisions or decrees, except where the failure to
file would not have a material adverse effect on the Company's ability
to provide its services as described in the Registration Statement. To
the Company's knowledge, such filings or submissions were in compliance
with applicable laws
8
<PAGE>
or regulations when filed or submitted and no deficiencies have been
asserted by any administrative bodies, administrative agencies,
governmental bodies, arbitrators or other authorities with respect to
such filings or submissions except where the deficiency is of such a
nature that failure to cure any such deficiency would not have a
material adverse effect on the Company's ability to provide its
services as described in the Registration Statement. To the Company's
knowledge, the information contained in such filings or submissions was
and continues to be in all material respects, accurate, complete and
up-to-date at the time the filings or submissions were made.
(dd) Except as disclosed in the Prospectus, neither the
Company nor any Subsidiary is a party to any agreement with any "affiliate" (as
defined in the Act) of the Company.
(ee) The merger of the Company with US LEC LLC was duly
authorized and approved by the Company and such merger was consummated in
accordance with all applicable laws.
(ff) The exchange of $5,000,000 of indebtedness owed by the
Company to Richard T. Aab into shares of the Company's Class B Common Stock has
been duly authorized and approved by the Company and such exchange has been
consummated.
Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters in connection
with the offering of the Securities shall be deemed a representation and
warranty by the Company, as to matters covered thereby, to each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions
and in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, at a purchase price of
$[______] per share, the amount of the Underwritten Securities set forth
opposite such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company hereby grants
an option to the several Underwriters to purchase, severally and not jointly, up
to 825,000 Option Securities at the same purchase price per share as the
Underwriters shall pay for the Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the Underwritten
Securities by the Underwriters. Said option may be exercised in whole or in part
at any time (but not more than once) on or before the 30th day after the date of
the Prospectus upon written or telegraphic notice by the Representatives to the
Company setting forth the number of shares of the Option Securities as to which
the several Underwriters are exercising the option and the settlement date.
Delivery of certificates for the shares of Option Securities by the Company, and
payment therefor to the Company, shall be made as provided in Section 3 hereof.
The number of Option Securities to be purchased by each Underwriter shall be the
same percentage of the total number of shares of the Option
9
<PAGE>
Securities to be purchased by the several Underwriters as such Underwriter is
purchasing of the Underwritten Securities, subject to such adjustments as you in
your absolute discretion shall make to eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the third Business
Day prior to the Closing Date) shall be made at 10:00 AM, New York City time, on
[_________], 1998, or at such time on such later date not more than three
Business Days after the foregoing date as the Representatives shall designate,
which date and time may be postponed by agreement between the Representatives
and the Company or as provided in Section 9 hereof (such date and time of
delivery and payment for the Securities being herein called the "Closing Date").
Delivery of the Securities shall be made to the Representatives for the
respective accounts of the several Underwriters against payment by the several
Underwriters through the Representatives of the purchase price thereof to or
upon the order of the Company by wire transfer payable in same-day funds to an
account specified by the Company. Delivery of the Underwritten Securities and
the Option Securities shall be made through the facilities of The Depository
Trust Company unless the Representatives shall otherwise instruct.
If the option provided for in Section 2(b) hereof is exercised
after the third Business Day prior to the Closing Date, the Company will deliver
the Option Securities (at the expense of the Company) to the Representatives on
the date specified by the Representatives (which shall be within three Business
Days after exercise of said option) for the respective accounts of the several
Underwriters, against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to an account specified by
the Company. If settlement for the Option Securities occurs after the Closing
Date, the Company will deliver to the Representatives on the settlement date for
the Option Securities, and the obligation of the Underwriters to purchase the
Option Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements. The Company agrees with the several
Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Securities, the Company will not file any amendment to
the Registration Statement or supplement to the Prospectus or any Rule
462(b) Registration Statement unless the Company has furnished you a
copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object.
Subject to the foregoing sentence, if the Registration Statement has
10
<PAGE>
become or becomes effective pursuant to Rule 430A, or filing of the
Prospectus is otherwise required under Rule 424(b), the Company will
cause the Prospectus, properly completed, and any supplement thereto to
be filed with the Commission pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The Company
will promptly advise the Representatives (1) when the Registration
Statement, if not effective at the Execution Time, shall have become
effective, (2) when the Prospectus, and any supplement thereto, shall
have been filed (if required) with the Commission pursuant to Rule
424(b) or when any Rule 462(b) Registration Statement shall have been
filed with the Commission, (3) when, prior to termination of the
offering of the Securities, any amendment to the Registration Statement
shall have been filed or become effective, (4) of any request by the
Commission or its staff for any amendment of the Registration Statement
or any Rule 462(b) Registration Statement, or for any supplement to the
Prospectus or for any additional information, (5) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (6) of the receipt by the Company of
any notification with respect to the suspension of the qualification of
the Securities for sale in any jurisdiction or the institution or
threatening of any proceeding for such purpose. The Company will use
its best efforts to prevent the issuance of any such stop order or the
suspension of any such qualification and, if issued, to obtain as soon
as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Prospectus as then supplemented would include
any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall
be necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act, the Company promptly will (1) notify
the Representatives of any such event; (2) prepare and file with the
Commission, subject to the second sentence of paragraph (a) of this
Section 5, an amendment or supplement which will correct such statement
or omission or effect such compliance; and (3) supply any supplemented
Prospectus to you in such quantities as you may reasonably request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an
earnings statement or statements of the Company and its Subsidiaries
which will satisfy the provisions of Section 11(a) of the Act and Rule
158 promulgated under the Act.
(d) The Company will furnish to the Representatives and
counsel for the Underwriters signed copies of the Registration
Statement (including exhibits thereto) and to each other Underwriter a
copy of the Registration Statement (without exhibits thereto) and, so
long as delivery of a prospectus by an Underwriter or dealer may be
required by the Act, as many copies of each Preliminary Prospectus and
the Prospectus and any supplement thereto as the Representatives may
reasonably request.
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<PAGE>
(e) The Company will arrange, if necessary, for the
qualification of the Securities for sale under the laws of such
jurisdictions as the Representatives may designate and will maintain
such qualifications in effect so long as required for the distribution
of the Securities; provided that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not
now so qualified or to take any action that would subject it to service
of process in suits, other than those arising out of the offering or
sale of the Securities, in any jurisdiction where it is not now so
subject.
(f) The Company will not, without the prior written consent of
Smith Barney Inc., for a period of 180 days following the Execution
Time, offer, sell or contract to sell, or otherwise dispose of (or
enter into any transaction which is designed to, or might reasonably be
expected to, result in the disposition (whether by actual disposition
or effective economic disposition due to cash settlement or otherwise)
by the Company or any affiliate of the Company or any person in privity
with the Company or any affiliate of the Company) directly or
indirectly, or announce the offering of, any other shares of Common
Stock or any securities convertible into, or exchangeable for, shares
of Common Stock; provided, however, that the Company may issue and sell
Common Stock pursuant to any employee stock option plan in effect at
the Execution Time and the Company may issue Common Stock issuable upon
the conversion of securities or the exercise of warrants outstanding at
the Execution Time.
(g) The Company will not take, directly or indirectly, any
action designed to or which has constituted or which might reasonably
be expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(h) The Company agrees to pay the costs and expenses relating
to the following matters: (i) the preparation, printing or reproduction
and filing with the Commission of the Registration Statement (including
financial statements and exhibits thereto), each Preliminary
Prospectus, the Prospectus, and each amendment or supplement to any of
them; (ii) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of
such copies of the Registration Statement, each Preliminary Prospectus,
the Prospectus, and all amendments or supplements to any of them, as
may, in each case, be reasonably requested for use in connection with
the offering and sale of the Securities; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the
Securities, including any stamp or transfer taxes in connection with
the original issuance and sale of the Securities; (iv) the printing (or
reproduction) and delivery of this Agreement, any blue sky memorandum
and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Securities; (v) the
registration of the Securities under the Exchange Act and the listing
of the Securities on the Nasdaq National Market; (vi) any registration
or qualification of the Securities for offer and sale under the
securities or blue sky laws of the several states (including filing
fees and the reasonable fees and expenses of counsel for the
Underwriters relating to such registration and qualification);
12
<PAGE>
(vii) any filings required to be made with the National Association of
Securities Dealers, Inc. (including filing fees and the reasonable fees
and expenses of counsel for the Underwriters relating to such filings);
(viii) the transportation and other expenses incurred by or on behalf
of Company representatives in connection with presentations to
prospective purchasers of the Securities; (ix) the fees and expenses of
the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company; and (x) all
other costs and expenses incident to the performance by the Company of
its obligations hereunder.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as of
the Execution Time, the Closing Date and any settlement date pursuant to Section
3 hereof, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Representatives agree in
writing to a later time, the Registration Statement will become
effective not later than (i) 5:30 p.m. New York City time on the date
of determination of the public offering price, if such determination
occurred at or prior to 3:00 p.m. New York City time on such date or
(ii) 9:30 a.m. on the Business Day following the day on which the
public offering price was determined, if such determination occurred
after 3:00 p.m. New York City time on such date; if filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule
424(b), the Prospectus, and any such supplement, will be filed in the
manner and within the time period required by Rule 424(b); and no stop
order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Company shall have furnished to the Representatives
the opinion of Moore & Van Allen, PLLC, counsel for the Company dated
the Closing Date and addressed to the Representatives, to the effect
that:
(i) each of the Company and its subsidiaries
(individually a "Subsidiary" and collectively the
"Subsidiaries") has been duly incorporated or organized, as
the case may be, and is validly existing as a corporation or
limited liability company, as the case may be, in good
standing under the laws of the jurisdiction in which it is
incorporated or organized, as the case may be, with full
corporate power and authority to own or lease, as the case may
be, and to operate its properties and conduct its business as
described in the Prospectus, and is duly qualified to do
business as a foreign corporation or limited liability
company, as the case may be, and is in good standing under the
laws of each jurisdiction which requires such qualification;
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<PAGE>
(ii) all the outstanding shares of capital stock or
equivalent equity securities of each Subsidiary have been duly
and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise disclosed in the
Prospectus, all outstanding shares of capital stock or
equivalent equity securities of each of the Subsidiaries are
owned by the Company either directly or through wholly owned
Subsidiaries free and clear of any perfected security interest
and, to the knowledge of such counsel, any other security
interest, claim, lien or encumbrance and, to the knowledge of
such counsel, there are no options, warrants or other rights
to purchase, agreements or other obligations to issue, or
rights to convert any obligations into or exchange any
securities for shares of capital stock of or ownership
interest in any of the Subsidiaries are outstanding;
(iii) the Company's authorized equity capitalization
is as set forth in the Prospectus; the capital stock of the
Company conforms in all material respects to the description
thereof contained in the Prospectus; the issued and
outstanding shares of capital stock of the Company have been
duly and validly authorized and issued and are fully paid and
nonassessable; the Securities have been duly and validly
authorized, and, when issued and delivered to and paid for by
the Underwriters pursuant to this Agreement, will be fully
paid and nonassessable; the Securities are duly listed, and
admitted and authorized for trading, subject to official
notice of issuance on the Nasdaq National Market; the
certificates for the Securities have been duly authorized by
the Company's Board of Directors and are in valid and
sufficient form and comply in all respects with the
requirements of the Delaware General Corporation Law; the
holders of outstanding shares of capital stock of the Company
are not entitled to preemptive or other rights to subscribe
for the Securities and, except as set forth in the Prospectus,
to such counsel's knowledge, no options, warrants or other
rights to purchase, agreements or other obligations to issue,
or rights to convert any obligations into or exchange any
securities for, shares of capital stock of or ownership
interests in the Company are outstanding;
(iv) to the knowledge of such counsel, there is no
pending or threatened action, complaint, investigation, suit
or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or
any of its Subsidiaries or its or their property of a
character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Prospectus,
and there is no franchise, contract or other document of a
character required to be described in the Registration
Statement or Prospectus, or to be filed as an exhibit thereto,
which is not described or filed as required; and the
statements in the Prospectus under the headings "Risk Factors
- Risks Associated with Implementation of Growth Strategy -
Interconnection Agreements," "Risk Factors - Uncertainties
Related to Reciprocal Compensation," "Risk Factors -
Regulation," "Business - Regulation"
14
<PAGE>
and "Business - Legal Proceedings," fairly summarize the
matters therein described;
(v) the Registration Statement has become effective
under the Act; any required filing of the Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b);
to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued,
no proceedings for that purpose have been instituted or
threatened and the Registration Statement and the Prospectus
(other than the financial statements and other financial
information contained therein, as to which such counsel need
express no opinion) comply as to form in all material respects
with the applicable requirements of the Act and the rules
thereunder; and such counsel has no reason to believe that on
the Effective Date or at the Execution Time the Registration
Statement contains or contained any untrue statement of a
material fact or omitted or omits to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus as of
its date and on the Closing Date includes any untrue statement
of a material fact or omitted or omits to state a material
fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading
(in each case, other than the financial statements and other
financial information contained therein, as to which such
counsel need express no belief);
(vi) this Agreement has been duly authorized,
executed and delivered by the Company;
(vii) the Company is not and, after giving effect to
the offering and sale of the Securities and the application of
the proceeds thereof as described in the Prospectus, will not
be, an "investment company" as defined in the Investment
Company Act of 1940, as amended;
(viii) no consent, approval, authorization, filing
with or order of any court or governmental agency or body is
required in connection with the transactions contemplated
herein, except such as have been obtained under the Act and
such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution
of the Securities by the Underwriters in the manner
contemplated in this Agreement and in the Prospectus;
(ix) neither the execution of the Registration
Statement and the execution and delivery of this Agreement nor
the issue and sale of the Securities, nor the consummation of
any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in
a breach or violation of or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or its
Subsidiaries pursuant to, (i) the certificate of incorporation
or by-laws (or equivalent governing documents) of the Company
or any of its
15
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Subsidiaries, (ii) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement
or other agreement, obligation, condition, covenant or
instrument to which the Company or any of its Subsidiaries is
a party or bound or to which its or their property is subject
which is known to such counsel, (iii) any statute, law, rule,
regulation, judgment, order, decision or decree applicable to
the Company or any of its Subsidiaries of any court,
regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the
Company or its Subsidiaries or any of its or their properties,
or (iv) any license, permit, certificate or authorization; and
(x) to such counsel's knowledge, no holders of
securities of the Company have rights to the registration of
such securities under the Registration Statement.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
State of New York, the State of North Carolina, the General Corporation
Law of the State of Delaware or the federal laws of the United States,
to the extent they deem proper and specified in such opinion, upon the
opinion of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters and
(B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public
officials. References to the Prospectus in this paragraph (b) include
any supplements thereto at the Closing Date.
(c) The Company shall have furnished to the Representatives
the opinion of Swidler & Berlin, special federal regulatory counsel for
the Company dated the Closing Date and addressed to the
Representatives, substantially in the form of Exhibit B hereto.
(d) The Company shall have furnished to the Representatives
opinions of local counsel from each state where the Company or its
Subsidiaries hold any license, permit, certificate or authorization,
from counsel acceptable to the Representatives, dated the Closing Date
and addressed to the Representatives substantially in the form of
Exhibit C hereto.
(e) The Representatives shall have received from Paul,
Hastings, Janofsky & Walker LLP, counsel for the Underwriters, such
opinion or opinions, dated the Closing Date and addressed to the
Representatives, with respect to the issuance and sale of the
Securities, the Registration Statement, the Prospectus (together with
any supplement thereto) and other related matters as the
Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters. The opinion or
opinions of such counsel shall be rendered to the Underwriters at the
request of the Company and shall so state therein.
16
<PAGE>
(f) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Prospectus, any supplements to the Prospectus and this Agreement and
that:
(i) the representations and warranties of the Company
in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date and the Company has complied with
all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing
Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in the Prospectus (exclusive of any
supplement thereto), there has been no material adverse effect
on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its
Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(g) At the Execution Time and at the Closing Date, Deloitte &
Touche LLP shall have furnished to the Representatives a letter or
letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the
Representatives, addressed to the Representatives, confirming that they
are independent accountants within the meaning of the Act and the
applicable published rules and regulations thereunder and stating in
effect that:
(i) in their opinion the consolidated financial
statements and financial statement schedules audited by them
and included in the Registration Statement and the Prospectus
and reported on by them comply as to form in all material
respects with the applicable accounting requirements of the
Act and the related published rules and regulations;
(ii) based upon a reading of the latest unaudited
consolidated financial statements made available by the
Company; their limited review in accordance with the standards
established by the American Institute of Certified Public
Accountants ("AICPA") of the unaudited interim financial
information for the date covered by such financial statements
for the period; carrying out certain specified procedures (but
not an examination in accordance with generally accepted
auditing standards) which would not necessarily reveal matters
of significance with respect to the comments set forth in such
letter; such specified procedures would
17
<PAGE>
include, but are not limited to, a reading of minutes of the
shareholders' and directors' meetings (and any meetings of
committees of the Board of Directors) of the Company and its
Subsidiaries; and inquiries of certain officials of the
Company who have responsibility for financial and accounting
matters of the Company and Subsidiaries as to transactions and
events subsequent to December 31, 1997, nothing has come to
their attention that causes them to believe that:
(1) any unaudited financial statements
included in the Registration Statement and the
Prospectus do not comply as to form in all material
respects with applicable accounting requirements of
the Act and with the published rules and regulations
of the Commission with respect to registration
statements on Form S-1; and said unaudited financial
statements are not in conformity with generally
accepted accounting principles applied on a basis
substantially consistent with that of the audited
financial statements included in the Registration
Statement and the Prospectus;
(2) with respect to the period subsequent to
December 31, 1997, there were any changes, at a
specified date not more than five days prior to the
date of the letter, in the long-term debt of the
Company and its Subsidiaries or capital stock of the
Company or decreases in the stockholders' equity of
the Company as compared with the amounts shown on the
December 31, 1997 consolidated balance sheet included
in the Registration Statement and the Prospectus, or
for the period from January 1, 1998 to such specified
date there were any decreases, as compared with the
corresponding period in the preceding year in revenue
or per share amounts of net income of the Company and
its Subsidiaries, except in all instances for changes
or decreases set forth in such letter, in which case
the letter shall be accompanied by an explanation by
the Company as to the significance thereof unless
said explanation is not deemed necessary by the
Representatives; or
(3) the information included in the
Registration Statement and Prospectus in response to
Regulation S-K, Item 301 (Selected Financial Data)
and Item 402 (Executive Compensation) is not in
conformity with the applicable disclosure
requirements of Regulation S-K; and
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its Subsidiaries) set forth in the Registration
Statement and the Prospectus, including the information set
forth under the captions "Prospectus Summary", "Risk Factors",
"Use of Proceeds",
18
<PAGE>
"Dilution", "Capitalization", "Selected Consolidated Financial
and Operating Data", "Management's Discussion and Analysis of
Financial Conditions and Results of Operations", "Business",
"Management", and "Certain Relationships and Related
Transactions" in the Prospectus, agrees with the accounting
records of the Company and its Subsidiaries, excluding any
questions of legal interpretation.
References to the Prospectus in this paragraph (g) include any
supplement thereto at the date of the letter.
The Company shall have received from Deloitte & Touche LLP
(and furnished to the Representatives) a report with respect to a
review of unaudited interim financial information of the Company for
the four quarters ending December 31, 1997, in accordance with
Statement on Auditing Standards No. 71.
(h) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in paragraph
(g) of this Section 6 or (ii) any change, or any development involving
a prospective change, in or affecting the condition (financial or
otherwise), earnings, business or properties of the Company and its
Subsidiaries taken as a whole, whether or not arising from transactions
in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto)
the effect of which, in any case referred to in clause (i) or (ii)
above, is, in the sole judgment of the Representatives, so material and
adverse as to make it impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the
Registration Statement (exclusive of any amendment thereof) and the
Prospectus (exclusive of any supplement thereto).
(i) The Securities shall have been listed and admitted and
authorized for trading on the Nasdaq National Market upon issuance.
(j) At the Execution Time, the Company shall have furnished to
the Representatives a letter substantially in the form of Exhibit A
hereto from each officer and director of the Company and major
shareholders listed in Schedule II hereto addressed to the
Representatives.
(k) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information, certificates
and documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the
19
<PAGE>
Underwriters hereunder may be canceled at, or at any time prior to, the Closing
Date by the Representatives. Such cancellation shall not effect any liability on
the part of the Company for a breach hereunder or otherwise. Notice of such
cancellation shall be given to the Company in writing or by telephone or
facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall
be delivered at the office of Paul, Hastings, Janofsky & Walker LLP, counsel for
the Underwriters, at 399 Park Avenue, New York, New York, on the Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally through Salomon Smith Barney on demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of the
Securities.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in strict conformity with written information
furnished to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion therein. This indemnity agreement
will be in addition to any liability which the Company may otherwise have.
(b) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity to each Underwriter, but only with reference
to written information relating to such Underwriter furnished to the Company by
or on behalf of such
20
<PAGE>
Underwriter through the Representatives specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any Underwriter may otherwise have. The
Company acknowledges that the statements set forth in the last paragraph of the
cover page regarding delivery of the Securities, the legend in block capital
letters on page 2 related to stabilization, syndicate covering transactions and
penalty bids and, under the heading "Underwriting," (i) the sentences related to
concessions and reallowances and (ii) the paragraph related to stabilization,
syndicate covering transactions and penalty bids in any Preliminary Prospectus
and the Prospectus, constitute the only information furnished in writing by or
on behalf of the several Underwriters for inclusion in any Preliminary
Prospectus or the Prospectus.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
21
<PAGE>
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Underwriters severally
agree to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the Company
and one or more of the Underwriters may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and by the Underwriters on the other from the offering of the Securities;
provided, however, that in no case shall any Underwriter (except as may be
provided in any agreement among underwriters relating to the offering of the
Securities) be responsible for any amount in excess of the underwriting discount
or commission applicable to the Securities purchased by such Underwriter
hereunder. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company and the Underwriters severally shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
of the Underwriters on the other in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the total net proceeds from the offering (before deducting expenses) received by
it, and benefits received by the Underwriters shall be deemed to be equal to the
total underwriting discounts and commissions, in each case as set forth on the
cover page of the Prospectus. Relative fault shall be determined by reference
to, among other things, whether any untrue or any alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information provided by the Company on the one hand or the
Underwriters on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriters agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), 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. For purposes of
this Section 8, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
9. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting
22
<PAGE>
Underwriter or Underwriters agreed but failed to purchase; provided, however,
that in the event that the aggregate amount of Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of
the aggregate amount of Securities set forth in Schedule I hereto, the remaining
Underwriters shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the Securities, and if such nondefaulting
Underwriters do not purchase all the Securities, this Agreement will terminate
without liability to any nondefaulting Underwriter or the Company. In the event
of a default by any Underwriter as set forth in this Section 9, the Closing Date
shall be postponed for such period, not exceeding five Business Days, as the
Representatives shall determine in order that the required changes in the
Registration Statement and the Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to the Company and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice given
to the Company prior to delivery of and payment for the Securities, if at any
time prior to such time (i) trading in the Company's Common Stock shall have
been suspended by the Commission or the Nasdaq National Market or trading in
securities generally on the New York Stock Exchange or the Nasdaq National
Market shall have been suspended or limited or minimum prices shall have been
established on such Exchange or National Market, (ii) a banking moratorium shall
have been declared either by Federal or New York State authorities or (iii)
there shall have occurred any outbreak or escalation of hostilities, declaration
by the United States of a national emergency or war or other calamity or crisis
the effect of which on financial markets is such as to make it, in the sole
judgment of the Representatives, impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Prospectus
(exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors or controlling persons referred to in Section 8 hereof,
and will survive delivery of and payment for the Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telefaxed to the Salomon Smith Barney General Counsel (fax
no.: (212) ) and confirmed to the General Counsel, Salomon Smith Barney, at ,
New York, New York, , Attention: General Counsel; or, if sent to the Company,
will be mailed, delivered or telefaxed to (704) 319-1345 and confirmed to it at
212 South Tryon Street, Suite 1540, attention of Tansukh V. Ganatra.
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and
23
<PAGE>
directors and controlling persons referred to in Section 8 hereof, and no other
person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or
trust companies are authorized or obligated by law to close in New York
City.
"Commission" shall mean the Securities and Exchange
Commission.
"Effective Date" shall mean each date and time that the
Registration Statement, any post-effective amendment or amendments
thereto and any Rule 462(b) Registration Statement became or become
effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 1(a) above and any preliminary prospectus
included in the Registration Statement at the Effective Date that omits
Rule 430A Information.
"Prospectus" shall mean the prospectus relating to the
Securities that is first filed pursuant to Rule 424(b) after the
Execution Time or, if no filing pursuant to Rule 424(b) is required,
shall mean the form of final prospectus relating to the Securities
included in the Registration Statement at the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended
24
<PAGE>
at the Execution Time (or, if not effective at the Execution Time, in
the form in which it shall become effective) and, in the event any
post-effective amendment thereto or any Rule 462(b) Registration
Statement becomes effective prior to the Closing Date, shall also mean
such registration statement as so amended or such Rule 462(b)
Registration Statement, as the case may be. Such term shall include any
Rule 430A Information deemed to be included therein at the Effective
Date as provided by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules
under the Act.
"Rule 430A Information" shall mean information with respect to
the Securities and the offering thereof permitted to be omitted from
the Registration Statement when it becomes effective pursuant to Rule
430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b)
relating to the offering covered by the initial registration statement.
"Salomon Smith Barney" shall mean Smith Barney Inc. or Salomon
Brothers Inc to the extent that either such party is a signatory to
this Agreement.
25
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several Underwriters.
Very truly yours,
US LEC Corp.
By: ________________________
Name:
Title:
The foregoing Agreement is hereby confirmed
and accepted as of the date first above
written.
Smith Barney Inc. Bear, Stearns & Co. Inc.
Wheat First Securities, Inc.
By: Smith Barney Inc.
By:
-----------------------
Name:
Title:
For themselves and the other several
Underwriters named in Schedule I to the
foregoing Agreement.
26
<PAGE>
SCHEDULE I
----------
NUMBER OF UNDERWRITTEN
SECURITIES TO BE
UNDERWRITERS PURCHASED
- ------------ -----------------------
Smith Barney Inc. . . . . . . . .
Bear, Stearns & Co. Inc. . . . .
Wheat First Securities Inc. . . .
----------
Total . . . . . . . . . 5,500,000
=========
27
<PAGE>
SCHEDULE II
-----------
OFFICERS AND DIRECTORS AND MAJOR SHAREHOLDERS
1. Richard T. Aab
2. Joyce M. Aab
3. Tansukh V. Ganatra
4. David C. Conner
5. Gary D. Grefrath
6. Michael K. Simmons
7. David N. Vail
8. David M. Flaum
9. Steven L. Schoonover
10. Craig K. Simpson
11. Melrich Associates, L.P.
12. Super STAR Associates Limited Partnership
28
<PAGE>
EXHIBIT A
[LETTERHEAD OF OFFICER, DIRECTOR OR MAJOR SHAREHOLDER OF US LEC CORP.]
US LEC Corp.
Public Offering of Class A Common Stock
, 1998
Smith Barney Inc. Bear,
Stearns & Co. Inc. Wheat First
Securities, Inc. As
Representatives of theseveral
Underwriters, c/o Smith Barney
Inc. 388 Greenwich Street New
York, New York 10013
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed Underwriting Agreement (the "Underwriting Agreement"), between US LEC
Corp., a Delaware corporation (the "Company"), and each of you as
representatives of a group of Underwriters named therein, relating to an
underwritten public offering of Class A Common Stock, $.01 par value (the
"Common Stock"), of the Company.
In order to induce you and the other Underwriters to enter
into the Underwriting Agreement, the undersigned will not, without the prior
written consent of Smith Barney Inc., offer, sell, contract to sell, pledge or
otherwise dispose of, or file (or participate in the filing of) a registration
statement with the Securities and Exchange Commission in respect of, or
establish or increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder with respect to, any shares of
capital stock of the Company or any securities convertible into or exercisable
or exchangeable for such capital stock, or publicly announce an intention to
effect any such transaction, for a period of 180 days after the date of this
Agreement.
If for any reason the Underwriting Agreement shall be
terminated prior to the Closing Date (as defined in the Underwriting Agreement),
the agreement set forth above shall likewise be terminated.
Yours very truly,
By: __________________________
Name:
Address: __________________
------------------
<PAGE>
EXHIBIT B
_____________, 1998
Smith Barney Inc.
Bear, Stearns & Co. Inc.
Wheat First Securities, Inc.
As Representatives of the several Underwriters
c/o Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
We have acted as special U.S. telecommunications regulatory counsel to
US LEC Corp., a Delaware corporation (the "Company"), and its subsidiaries
(collectively, the "Subsidiaries"). This opinion is being delivered to you
pursuant to Section 6(c) of the Underwriting Agreement dated ________, 1998
("Underwriting Agreement") entered into by the Company, Smith Barney Inc., Bear,
Stearns & Co. Inc., and Wheat First Securities, Inc., for themselves and the
other several Underwriters named in Schedule I to the Underwriting Agreement
(collectively the "Underwriters"). Each capitalized term used but not defined
herein shall have the meaning ascribed to it in the Underwriting Agreement.
Our opinion is limited to certain U.S. telecommunications regulatory
matters specifically related to the Communications Act of 1934, as amended,
including amendments made by the Telecommunications Act of 1996, 47 U.S.C. ss.
151 et seq., and the rules, regulations and orders of the Federal Communications
Commission ("FCC") (collectively the "Communications Act"). We express no
opinion and assume no responsibility as to the applicability of any other U.S.,
state, local, foreign, supranational, or regional laws or regulations,
including, but not limited to, laws governing the corporate organization,
authority to transact business, or tax liability of the Company or the
Subsidiaries.
In this limited capacity, and for the purposes of this opinion, we have
reviewed sections of the Company's Registration Statement on Form S-1
(Registration No. 333-46341) under the captions "Risk Factors-Competition,"
"Risk Factors-Risks Associated with Implementation of Growth
Strategy-Interconnection Agreements," "Risk Factors-Uncertainties Related to
Reciprocal Compensation," "Risk Factors-Regulation," "Business-US LEC's
Network-Interconnection," "Business-Competition,"
"Business-Regulation-Overview," "Business-Regulation-Federal Legislation,"
"Business-Regulation-Federal Regulation and Related Proceedings,"
"Business-Regulation-Eighth Circuit Court of Appeals Decision,"
"Business-Regulation-U.S. District Court Decision," and "Business-Legal
Proceedings."
Although we have acted as special U.S. telecommunications regulatory
counsel in specific telecommunications regulatory matters to the Company and the
Subsidiaries, we draw your attention to the fact that we have not undertaken any
on-site or other physical inspections of their business or properties, and with
respect to business practices, operations, accounts, personnel or day-to-day
affairs have not independently verified the manner in which their respective
businesses are operated.
For purposes of this opinion, we have reviewed the Underwriting
Agreement, the Prospectus, the certificate of the officers of the Company and
the Subsidiaries attached as Schedule A hereto (the "Certificate"), Licenses and
such documents as we have deemed necessary or appropriate to form
<PAGE>
the basis for the opinions hereinafter expressed. In our review, we have assumed
without independent investigation (i) the genuineness of all signatures; (ii)
that where any signature purports to have been made in a corporate,
governmental, fiduciary, or other capacity, the person who affixed such
signature to such document had authority to do so; (iii) the authenticity of all
documents submitted to us as originals; (iv) the conformity to authentic
original documents of all documents submitted to us as certified, conformed, or
photostatic copies; and (v) the conformity of all provisions, terms, and
conditions contained in documents submitted to us in draft form with the
provisions, terms, and conditions contained in the executed final versions of
such documents. We have also assumed, without independent inquiry, that there
are no agreements or understandings between or among the Company and other
parties other than those disclosed in the Underwriting Agreement that would
expand, modify, or otherwise affect the terms of the Underwriting Agreement or
the rights or obligations thereunder of the parties thereto, and that those
documents accurately and completely set forth the agreement of all parties
thereto.
In connection with this opinion as to matters of fact, other than
factual matters relating to the existence of the Communications Act, we have
relied upon the representations and warranties of the Company and the Company's
officers set out in the Underwriting Agreement and the Certificate. We have not
undertaken any independent investigation to verify any such matters, and our
opinion is therefore, as to such factual matters, based solely upon such
representations and warranties. Whenever in this opinion we limit our opinion to
"to our knowledge," our statements are based solely on the Certificate and any
information that became known to the telecommunications attorneys of this firm
who are involved in representing the Company and the Subsidiaries in the course
of their performance of such representation, and a review of the publicly
available files of the FCC. Wherever in our opinion we state that the Company
and the Subsidiaries have filed a tariff at the FCC, we express no opinion
whatsoever concerning whether, and to what extent, such tariff reflects their
current actual rates and services or complies with the specific format, rate
structure, and other tariff rules of the FCC (except as expressly provided in
paragraph 5, below).
For purposes of this opinion, we have made such examination of the
Communications Act as we have deemed necessary. In the course of developing this
opinion, we have examined only actions and approvals arising out of, relating
to, or taken pursuant to the provisions of the Communications Act. We have not
undertaken to determine the existence of any actions, approvals, or proceedings,
whether outstanding, pending, or threatened, before persons or entities other
than the FCC.
This opinion is given as of the date hereof, and we assume no
obligation to notify you of any changes in this opinion as a result of any facts
that may come to our attention in the future, nor do we assume any obligation to
update or supplement this opinion to reflect any facts or circumstances which
may hereafter occur or come to our attention, or to assess the likelihood of any
event, including any proceeding or appeal which hereafter may be initiated by or
before the FCC, or any federal or state court or government agency, or any
changes in laws, rules or regulations, or the interpretation of such, which may
hereafter occur, or of any material changes in the terms of the transactions
contemplated in the Underwriting Agreement.
On the basis of the foregoing, and subject to the assumptions,
limitations and exceptions set forth herein, we are of the opinion that:
1. Schedule B hereto accurately and completely lists all of the
certificates and authorizations of the Company and the Subsidiaries
issued by the FCC. Each of the Company and its Subsidiary have the
certificates and authorizations, if any, required by the Communications
Act (collectively the "Licenses") for the provision of interstate and
foreign
<PAGE>
telecommunications services within the United States as described in
the Registration Statement.
2. To our knowledge, neither the Company nor any of the Subsidiaries are
subject to any pending or threatened complaint, investigation or
proceeding before the FCC based on any alleged violation by the Company
or any Subsidiary in connection with its provision of or failure to
provide telecommunications service.
3. To our knowledge, (i) the Licenses are validly issued; (ii) the
Licenses are in full force and effect and are not subject to conditions
outside the ordinary course; and (iii) all express conditions in the
Licenses have been satisfied.
4. The statements in the Registration Statement and Prospectus under the
heading of "Risk Factors-Competition,""Risk Factors-Risks Associated
with Implementation of Growth Strategy-Interconnection Agreements,"
"Risk Factors-Uncertainties Related to Reciprocal Compensation," "Risk
Factors-Regulation," "Business-US LEC's Network- Interconnection,"
"Business-Competition," "Business-Regulation-Overview,"
"Business-Regulation-Federal Legislation," "Business-Regulation-Federal
Regulation and Related Proceedings," "Business -Regulation-Eighth
Circuit Court of Appeals Decision," "Business-Regulation-U.S. District
Court Decision," and "Business-Legal Proceedings" insofar as such
statements constitute a summary of the legal matters, documents or
proceedings of the FCC with respect to telecommunications matters
referred to therein, are accurate in all material respects, and fairly
summarize the matters therein described.
5. All regulatory tariffs applicable to the Company's and the
Subsidiaries' interexchange, exchange access, and international
operations, (the "FCC Tariffs") are in full force and effect in
accordance with their terms, and to our knowledge, there is no
outstanding notice of suspension, cancellation or termination or any
threatened suspension, cancellation or termination with respect to any
of the FCC Tariffs. Each of the Company and the Subsidiaries are not
subject to any restrictions or conditions applicable to its FCC Tariffs
that limit or would limit the operations of the Company and the
Subsidiaries (other than restrictions or conditions generally
applicable to tariffs of that type). Each such FCC Tariff has been
accepted by the FCC. To our knowledge, the Company and the Subsidiaries
are not in violation under the terms and conditions of the FCC Tariffs.
6. The Company and the Subsidiaries have the consents or approvals, if
any, of the FCC, and have made any necessary or required filings,
required for the consummation of the transactions contemplated in the
Underwriting Agreement.
7. Neither the execution and delivery of the Underwriting Agreement by the
Company nor the performance by the Company of its obligations under the
Underwriting Agreement will violate the Communications Act.
8. Based upon a review of public files of the FCC, appropriate files of
this firm and an inquiry of lawyers in this firm who have substantial
responsibility for the Company's and the Subsidiaries' legal matters
handled by this firm, we confirm that except as disclosed in the
Underwriting Agreement: (a) there is no unsatisfied adverse FCC order,
decree or ruling outstanding against the Company or any Subsidiary or
any of the Licenses; (b) none of the Company or any Subsidiary is a
party to any complaint, action or other proceeding at the FCC,
including complaints against other licensees or applicants; (c)
Schedule B hereto includes all applications on behalf of the
Company or any Subsidiary or with respect to the Licenses that are now
pending before the FCC; and (d) the Company and the Subsidiaries
<PAGE>
have not been the subject of any final adverse order, decree or ruling
of the FCC (including any notice of forfeiture which has been paid).
No facts have come to the attention of those attorneys in the Firm who
regularly render service on behalf of the Company and the Subsidiaries to cause
us to believe, and we have no reason to believe, that both as of the Effective
Date and as of the Closing Date, the statements in the Registration Statement
and the Prospectus under the captions "Risk Factors-Risks Associated with
Implementation of Growth Strategy-Interconnection Agreements," "Risk
Factors-Uncertainties Related to Reciprocal Compensation," "Risk
Factors-Regulation," "Business-US LEC's Network - Interconnection,"
"Business-Competition," "Business-Regulation-Overview,"
"Business-Regulation-Federal Legislation," "Business-Regulation-Federal
Regulation and Related Proceedings," "Business -Regulation-Eighth Circuit Court
of Appeals Decision," "Business-Regulation-U.S. District Court Decision," and
"Business - Legal Proceedings" that pertain to the Communications Act, contained
or contains any untrue statement of a material fact or omitted or omits 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.
The opinions expressed in this letter are subject in all respects to
the following additional qualifications: (a) this opinion addresses only the
transactions that are being consummated on the date hereof and does not address
any transaction that may take place after the Closing Date; (b) any action that
would transfer DE FACTO (actual) or DE JURE (legal) control of the Company is
subject to the requirement for prior approval from the FCC; (c) no opinion is
rendered as to matters not specifically referred to herein or as to any fact or
circumstance that hereafter may come to our attention or any change in law that
hereafter may occur, and under no circumstances are you to infer from anything
stated or not stated herein any opinion with respect to such matters; (d) all
opinions expressed in this letter are limited solely to the effect of the
Communications Act as presently in effect on the telecommunications business of
the Company and the Subsidiaries, and we express no opinion as to the effect of
any other federal, state, local, foreign, supranational or regional statute or
equitable doctrine or common law or of the regulations of any other agency or
administrative body; (e) other than as expressly stated in numbered paragraphs
one (1) through (8), no opinion is rendered as to the compliance of the Company
and the Subsidiaries in the past or in the future with any or all conditions or
other requirements of the FCC contained in the orders, if any, authorizing the
operations of the Company and the Subsidiaries or otherwise imposed by statute,
rule, regulation or policy, and we assume no obligation to ensure that the
Company or any Subsidiary complies with such conditions or requirements; (f) we
express no opinion as to the effect of any failure by the Company and the
Subsidiaries to comply with any conditions or requirements of the FCC; and (g)
we express no opinion with respect to any parties or entities other than the
Company and the Subsidiaries.
This opinion is given solely for the benefit of, and may be relied upon
only by, the Underwriters. No other person has the right to rely upon it, nor
may it be quoted, used, relied upon, redelivered, or referred to by any
governmental agency or any other person or entity, without the prior written
consent of this firm.
---------------------------------
Swidler & Berlin, Chartered
<PAGE>
EXHIBIT C
_____________, 1998
Smith Barney Inc.
Bear, Stearns & Co. Inc.
Wheat First Securities, Inc.
As Representatives of the several Underwriters
c/o Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
We have acted as special [State] telecommunications regulatory counsel
to US LEC Corporation of ___________, a [State] corporation (the "Company").
This opinion is being delivered to you pursuant to Section 6(d) of the
Underwriting Agreement dated ________, 1998 ("Underwriting Agreement") entered
into by U.S. LEC Corp., the parent corporation of the Company (the "Parent"),
Smith Barney Inc., Bear, Stearns & Co. Inc., and Wheat First Securities, Inc.,
for themselves and the other several Underwriters named in Schedule I to the
Underwriting Agreement (collectively the "Underwriters"). Each capitalized term
used but not defined herein shall have the meaning ascribed to it in the
Underwriting Agreement.
Our opinion is limited to certain [State] telecommunications regulatory
matters specifically related to the statutes of [State] governing intrastate
telecommunications, and the rules, regulations and orders of [State Public
Utility Commission] (hereinafter, the "Commission") with primary regulatory
jurisdiction over intrastate telecommunications services of the Company
(collectively "State Telecommunications Laws"). We express no opinion and assume
no responsibility as to the applicability of any other U.S., state, local,
foreign, supranational, or regional laws or regulations, including, but not
limited to, laws governing the corporate organization, authority to transact
business, or tax liability of the Parent or the Company.
In this limited capacity, and for the purposes of this opinion, we have
reviewed sections of the Parent's Registration Statement on Form S-1
(Registration No. 333-46341) filed by the Parent, under the captions "Risk
Factors-Competition," "Risk Factors-Risks Associated with Implementation of
Growth Strategy-Interconnection Agreements," "Risk Factors-Uncertainties Related
to Reciprocal Compensation," "Risk Factors-Regulation," "Business-US LEC's
Network-Interconnection," "Business-Regulation-State Regulation,"
"Business-Regulation-BellSouth North Carolina PUC Proceeding,"
"Business-Competition," and "Business-Legal Proceedings."
Although we have acted as special [State] telecommunications regulatory
counsel in specific telecommunications regulatory matters to the Company, we
draw your attention to the fact that we have not undertaken any on-site or other
physical inspections of their business or properties, and with respect to
business practices, operations, accounts, personnel or day-to-day affairs have
not independently verified the manner in which their respective businesses are
operated.
For purposes of this opinion, we have reviewed the Underwriting
Agreement, the Prospectus, the certificate of the officers of the Company
attached as Schedule A hereto (the "Certificate"), Licenses and such documents
as we have deemed necessary or appropriate to form the basis for the
<PAGE>
opinions hereinafter expressed. In our review, we have assumed without
independent investigation (i) the genuineness of all signatures; (ii) that where
any signature purports to have been made in a corporate, governmental,
fiduciary, or other capacity, the person who affixed such signature to such
document had authority to do so; (iii) the authenticity of all documents
submitted to us as originals; (iv) the conformity to authentic original
documents of all documents submitted to us as certified, conformed, or
photostatic copies; and (v) the conformity of all provisions, terms, and
conditions contained in documents submitted to us in draft form with the
provisions, terms, and conditions contained in the executed final versions of
such documents. We have also assumed, without independent inquiry, that there
are no agreements or understandings between or among the Parent or the Company
and other parties other than those disclosed in the Underwriting Agreement that
would expand, modify, or otherwise affect the terms of the Underwriting
Agreement or the rights or obligations thereunder of the parties thereto, and
that those documents accurately and completely set forth the agreement of all
parties thereto.
In connection with this opinion as to matters of fact, other than
factual matters relating to the existence of the State Telecommunications Laws,
we have relied upon the representations and warranties of the Parent set out in
the Underwriting Agreement and by the Company's officers in the Certificate. We
have not undertaken any independent investigation to verify any such matters,
and our opinion is therefore, as to such factual matters, based solely upon such
representations and warranties. Whenever in this opinion we limit our opinion to
"to our knowledge," our statements are based solely on the Certificate and any
information that became known to the telecommunications attorneys of this firm
who are involved in representing the Company in the course of their performance
of such representation, and a review of the publicly available files of the
Commission. Wherever in our opinion we state that the Company has filed a tariff
at the Commission, we express no opinion whatsoever concerning whether, and to
what extent, such tariff reflects their current actual rates and services or
complies with the specific format, rate structure, and other tariff rules of the
Commission (except as expressly provided in paragraph 5, below).
For purposes of this opinion, we have made such examination of the
State Telecommunications Laws as we have deemed necessary. In the course of
developing this opinion, we have examined only actions and approvals arising out
of, relating to, or taken pursuant to the provisions of the State
Telecommunications Laws. We have not undertaken to determine the existence of
any actions, approvals, or proceedings, whether outstanding, pending, or
threatened, before persons or entities other than the Commission.
This opinion is given as of the date hereof, and we assume no
obligation to notify you of any changes in this opinion as a result of any facts
that may come to our attention in the future, nor do we assume any obligation to
update or supplement this opinion to reflect any facts or circumstances which
may hereafter occur or come to our attention, or to assess the likelihood of any
event, including any proceeding or appeal which hereafter may be initiated by or
before the Commission, or any federal or state court or government agency, or
any changes in laws, rules or regulations, or the interpretation of such, which
may hereafter occur, or of any material changes in the terms of the transactions
contemplated in the Underwriting Agreement.
On the basis of the foregoing, and subject to the assumptions,
limitations and exceptions set forth herein, we are of the opinion that:
1. Schedule B hereto accurately and completely lists all of the
certificates and authorizations of the Company in [specify State]. The
Company has the certificates and authorizations, if any, required by
the State Telecommunications Laws (collectively the "Licenses") for the
provision of intrastate telecommunications services in [specify State]
as described in the Registration Statement.
<PAGE>
2. To our knowledge, the Company is not subject to any pending or
threatened complaint, investigation or proceeding before the Commission
based on any alleged violation by the Company in connection with its
provision of or failure to provide telecommunications service.
3. To our knowledge, (i) the Licenses are validly issued; (ii) the
Licenses are in full force and effect and are not subject to conditions
outside the ordinary course; and (iii) all express conditions in the
Licenses have been satisfied.
4. The statements in the Registration Statement and Prospectus under the
heading of "Risk Factors-Competition,""Risk Factors-Risks Associated
with Implementation of Growth Strategy-Interconnection Agreements,"
"Risk Factors-Uncertainties Related to Reciprocal Compensation," "Risk
Factors-Regulation," "Business-US LEC's Network-Interconnection,"
"Business - Regulation - State Regulation,"
"Business-Regulation-BellSouth North Carolina PUC Proceeding,"
"Business-Competition," and "Business-Legal Proceedings" insofar as
such statements constitute a summary of the legal matters, documents or
proceedings of the Commission with respect to telecommunications
matters referred to therein, are accurate in all material respects, and
fairly summarize the matters therein described.
5. All regulatory tariffs applicable to the Company's local exchange,
and/or intrastate interexchange, and/or exchange access operations in
[specify State] (the "State Tariffs") are in full force and effect in
accordance with their terms, and to our knowledge, there is no
outstanding notice of suspension, cancellation or termination or any
threatened suspension, cancellation or termination with respect to any
of the Company's State Tariffs. The Company is not subject to any
restrictions or conditions applicable to its State Tariffs that limit
or would limit the operations of the Company (other than restrictions
or conditions generally applicable to Tariffs of that type). Each such
Tariff has been accepted by the Commission. To our knowledge, the
Company is not in violation under the terms and conditions of any such
Tariffs.
6. The Company has the consents or approvals, if any, of the Commission,
and has made any necessary or required filings, required for the
consummation of the transactions contemplated in the Underwriting
Agreement.
7. Neither the execution and delivery of the Underwriting Agreement by the
Parent nor the performance by the Parent of its obligations under the
Underwriting Agreement will violate the State Telecommunications Laws
applicable to the Company.
8. Based upon a review of public files of the Commission, appropriate
files of this firm and an inquiry of lawyers in this firm who had
substantial responsibility for the Company's legal matters handled by
this firm, we confirm that, except as disclosed in the Underwriting
Agreement: (a) there is no unsatisfied adverse Commission order, decree
or ruling outstanding against the Company or any of the Licenses; (b)
the Company is not a party to any complaint, action or other proceeding
at the Commission, including complaints against other licensees or
applicants; (c) Schedule B hereto includes all applications on
behalf of the Company or with respect to the Licenses that are now
pending before the Commission; and (d) the Company has not been the
subject of any final adverse order, decree or ruling of the Commission
(including any notice of forfeiture which has been paid).
No facts have come to the attention of those attorneys in the Firm who
regularly render service on behalf of the Company to cause us to believe, and we
have no reason to believe, that both
<PAGE>
as of the Effective Date and as of the Closing Date, the statements in the
Registration Statement and the Prospectus under the captions "Risk Factors-Risks
Associated with Implementation of Growth Strategy-Interconnection Agreements,"
"Risk Factors-Uncertainties Related to Reciprocal Compensation," "Risk
Factors-Regulation," "Business-US LEC's Network-Interconnection,"
"Business-Regulation-State Regulation," "Business-Regulation-BellSouth North
Carolina PUC Proceeding," "Business-Competition," and "Business-Legal
Proceedings" that pertain to the Communications Act or State Telecommunications
Laws, contained or contains any untrue statement of a material fact or omitted
or omits 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.
The opinions expressed in this letter are subject in all respects to
the following additional qualifications: (a) this opinion addresses only the
transactions that are being consummated on the date hereof and does not address
any transaction that may take place after the Closing Date; (b) any action that
would transfer DE FACTO (actual) or DE JURE (legal) control of the Company is
subject to the requirement for prior approval from the Commission; (c) no
opinion is rendered as to matters not specifically referred to herein or as to
any fact or circumstance that hereafter may come to our attention or any change
in law that hereafter may occur, and under no circumstances are you to infer
from anything stated or not stated herein any opinion with respect to such
matters; (d) all opinions expressed in this letter are limited solely to the
effect of the State Telecommunications Laws as presently in effect on the
telecommunications business of the Company, and we express no opinion as to the
effect of any other federal, state, local, foreign, supranational or regional
statute or equitable doctrine or common law or of the regulations of any other
agency or administrative body; (e) other than as expressly stated in numbered
paragraphs one (1) through (8), no opinion is rendered as to the compliance of
the Company in the past or in the future with any or all conditions or other
requirements of the Commission contained in the orders, if any, authorizing the
operations of the Company or otherwise imposed by statute, rule, regulation or
policy, and we assume no obligation to ensure that the Company complies with
such conditions or requirements; (f) we express no opinion as to the effect of
any failure by the Company to comply with any conditions or requirements of the
Commission; and (g) we express no opinion with respect to any parties or
entities other than the Company.
This opinion is given solely for the benefit of, and may be relied upon
only by, the Underwriters. No other person has the right to rely upon it, nor
may it be quoted, used, relied upon, redelivered, or referred to by any
governmental agency or any other person or entity, without the prior written
consent of this firm.
-------------------
[Law Firm]
