Exhibit 1.1
7,500,000 Shares of Common Stock
COVAD COMMUNICATIONS GROUP, INC.
UNDERWRITING AGREEMENT
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________ __, 1999
Bear, Xxxxxxx & Co. Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
BT Alex. Xxxxx Incorporated
Credit Suisse First Boston Corporation
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Wit Capital Corporation
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
Certain Stockholders named in Schedule II hereto (together with the
Stockholders named in Schedule III hereto, the "Selling Stockholders" of Covad
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Communications Group, Inc., a corporation organized and existing under the
laws of Delaware (the "Company"), propose, subject to the terms and conditions
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stated herein, to sell to Bear, Xxxxxxx & Co. Inc. ("Bear Xxxxxxx"), Xxxxxx
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Xxxxxxx & Co. Incorporated, BT. Xxxx Xxxxx Incorporated, Credit Suisse First
Boston Corporation, Xxxxxxxxx Lufkin Xxxxxxxx Securities Corporation and Wit
Capital Corporation, (collectively, the "Underwriters") an aggregate of
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7,500,000 shares (the "Firm Shares") of the common stock of the Company, par
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value $0.001 per share (the "Common Stock") and, for the sole purpose of
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covering over-allotments in connection with the sale of the Firm Shares, at
the option of the Underwriters, up to an additional 1,125,000 shares (the
"Additional Shares" ) of Common Stock. The Firm Shares and any Additional
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Shares purchased by the Underwriters are referred to herein as the "Shares".
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The Shares are more fully described in the Registration Statement referred to
below.
1. Representations and Warranties of the Company. The Company
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represents and warrants to, and agrees with, each of the Underwriters that:
(i) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1
(No. ___-_____), and any amendments thereto, and related preliminary
prospectuses for the registration
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under the Securities Act of 1933 (the "Securities Act") of shares of common
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stock, which registration statement, as so amended, has been declared
effective by the Commission and copies of which have heretofore been delivered
to the Underwriters. Such registration statement, in the respective form it
was declared effective, as amended, including all exhibits thereto, is
hereinafter referred to as the "Registration Statement". Other than a Rule
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462(b) Registration Statement, which became effective upon filing, no other
document with respect to the Registration Statement has heretofore been filed
with the Commission (other than prospectuses filed pursuant to Rule 424(b) of
the rules and regulations of the Commission under the Securities Act (the
"Securities Act Regulations"), each in the form heretofore delivered to the
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Underwriters). No stop order suspending the effectiveness of either
Registration Statement or the Rule 462(b) Registration Statement, if any, has
been issued and no proceeding for that purpose has been initiated or, to the
Company's knowledge, threatened by the Commission. The Company, if required by
the Securities Act Regulations, proposes to file the Prospectus with the
Commission pursuant to Rule 424(b) of the Securities Act Regulations. The
Prospectus, in the form in which it is to be filed with the Commission
pursuant to Rule 424(b) of the Securities Act Regulations, is hereinafter
referred to as the "Prospectus", except that if any revised prospectus or
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prospectus supplement shall be provided to the Underwriters by the Company for
use in connection with the offering and sale of the Shares (the "Offering")
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which differs from the Prospectus (whether or not such revised prospectus or
prospectus supplement is required to be filed by the Company pursuant to Rule
424(b) of the Securities Act Regulations), the term "Prospectus" shall refer
to such revised prospectus or prospectus supplement, as the case may be, from
and after the time it is first provided to the Underwriters for such use. Any
preliminary prospectus or prospectus subject to completion included in the
Registration Statement or filed with the Commission pursuant to Rule 424 under
the Securities Act is hereafter called a "Preliminary Prospectus". All
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references in this Agreement to the Registration Statement, the Rule 462(b)
Registration Statement, a Preliminary Prospectus and the Prospectus, or any
amendments or supplements to any of the foregoing, shall be deemed to include
any copy thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System ("XXXXX").
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(ii) The Registration Statement and the Prospectus, at the
time the Registration Statement became effective and as of the Closing Date
referred to in Section 2 hereof, complied and comply in all material respects
with the requirements of the Securities Act and the Securities Act
Regulations, and did not and as of the Closing Date do not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading. The
Prospectus, as of the date hereof (unless the term "Prospectus" refers to a
prospectus which has been provided to the Underwriters by the Company for use
in connection with the offering of the Shares which differs from the
Prospectus filed with the Commission pursuant to Rule 424(b) of the Securities
Act Regulations, in which case at the time it is first provided to the
Underwriters for such use) and on the Closing Date, does not and will not
include an untrue statement of a material fact or omit to state a material
fact
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necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the
representations and warranties in this Section (1)(ii) shall not apply to
statements in or omissions from the Registration Statement or Prospectus made
in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by any Underwriter expressly
for use in the Registration Statement or the Prospectus. Each Preliminary
Prospectus and Prospectus filed as part of the Registration Statement, as part
of any amendment thereto or pursuant to Rule 424 under the Securities Act
Regulations, if filed by electronic transmission pursuant to XXXXX (except as
may be permitted by Regulation S-T under the Securities Act) was identical to
the copy thereof delivered to the Underwriters for use in connection with the
offer and sales of the Shares. There are no contracts or other documents
required to be described in the Prospectus or to be filed as exhibits to the
Registration Statement under the Securities Act that have not been described
or filed therein as required, and there are no business relationships or
related-party transactions involving the Company or any subsidiary or any
other person required to be described in the Prospectus that have not been
described therein as required.
(iii) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation and has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus. Each of the Company and each subsidiary is
duly qualified as a foreign corporation to transact business and is in good
standing in the State of California and each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except for such jurisdictions (other than
the State of California) where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a material
adverse change, or any development that could reasonably be expected to result
in a material adverse change, in the condition, financial or otherwise, or in
the business, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and its
subsidiaries, considered as one entity (any such change is called a "Material
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Adverse Change"). The Company does not own or control, directly or indirectly,
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any corporation, association or other entity other than Covad Communications
Company, a California corporation, and DIECA Communications, Inc., a Virginia
corporation. As of the date hereof, (a) the Company has obtained CLEC
regulatory approval in each of the following States: [California, Illinois,
Maryland, Massachusetts, New York, Oregon, Texas, Virginia, Washington,
Delaware, Colorado, New Jersey, New Hampshire, District of Columbia,
Pennsylvania, Michigan, Georgia, Missouri and Florida], and no such regulatory
approval has been withdrawn, and to the Company's knowledge no such regulatory
approval is the subject of any legal challenge (except as disclosed in the
Prospectus) and (b) the Company has not received any notice of rejection or
denial, nor has it withdrawn, any of its applications for CLEC approval in
additional States where such applications, as of the date of the Prospectus,
are pending approval.
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(iv) All of the outstanding shares of capital stock of the
Company (including the Shares) have been duly authorized, validly issued, and
are fully paid and nonassessable and were not issued in violation of any
preemptive or similar rights. At _______ __, 1999, the Company had the pro
forma consolidated capitalization as set forth in the Prospectus under the
caption "Capitalization".
(v) All of the outstanding capital stock of each subsidiary
of the Company is owned, directly or indirectly, by the Company, free and
clear of any security interest, claim, lien limitation on voting rights or
encumbrance; and all such securities have been duly authorized, validly
issued, and are fully paid and nonassessable and were not issued in violation
of any preemptive or similar rights.
(vi) Except as disclosed in the Prospectus, there are not
currently, and will not be as a result of the Offering, any outstanding
subscriptions, rights, warrants, calls, commitments of sale or options to
acquire, or instruments convertible into or exchangeable for, any capital
stock or other equity interest of the Company or any of its subsidiaries.
(vii) The Common Stock (including the Shares) is registered
pursuant to Section 12(g) of the Securities Exchange Act of 1934 (the
"Exchange Act") and is listed for quotation on the Nasdaq National Market
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System ("Nasdaq"), and the Company has taken no action designed to, or likely
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to have the effect of, terminating the registration of the Common Stock under
the Exchange Act or delisting the Common Stock from Nasdaq, nor has the
Company received any notification that the Commission or Nasdaq is
contemplating terminating such registration or listing.
(viii) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby.
(ix) This Agreement has been duly and validly authorized,
executed and delivered by the Company and is the legally valid and binding
agreement of the Company, enforceable against it in accordance with its terms,
except insofar as indemnification and contribution provisions may be limited
by applicable law or equitable principles and subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws
affecting the rights of creditors generally and subject to general principles
of equity.
(x) Neither the Company nor any of its subsidiaries is, or,
after giving effect to the offering of the Shares, will be (a) in violation of
its charter or bylaws, (b) in default in the performance of any bond,
debenture, note, indenture, mortgage, deed of trust or other agreement or
instrument to which it is a party or by which it is bound or to which any of
its properties is subject, or (c) in violation of any local, state or federal
law, statute, ordinance, rule, regulation, requirement, judgment or court
decree (including,
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without limitation, the Communications Act and the rules and regulations of
the FCC and environmental laws, statutes, ordinances, rules, regulations,
judgments or court decrees) applicable to the Company, its subsidiaries or any
of their assets or properties (whether owned or leased) other than, in the
case of clauses (b) and (c), any default or violation that could not
reasonably be expected to (1) individually or in the aggregate, result in a
material adverse effect on the properties, business, results of operations,
condition (financial or otherwise), affairs or prospects of the Company and
its subsidiaries, taken as a whole, (2) interfere with or adversely affect the
sale of the Shares pursuant hereto or (3) in any manner draw into question the
validity of this Agreement (any of the events set forth in clauses (1), (2) or
(3), a "Material Adverse Effect"). There exists no condition that, with notice,
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the passage of time or otherwise, would constitute a default under any such
document or instrument, except as disclosed in the Prospectus, except for any
such condition which would not reasonably be expected to result in a Material
Adverse Effect.
(xi) None of (a) the execution, delivery or performance by
the Company of this Agreement, (b) the issuance and sale of the Shares and (c)
consummation by the Company of the transactions contemplated hereby violate,
conflict with or constitute a breach of any of the terms or provisions of, or
a default under (or an event that with notice or the lapse of time, or both,
would constitute a default), or require consent which has not been obtained
under, or result in the imposition of a lien on any properties of the Company
or any of its subsidiaries, or an acceleration of any indebtedness of the
Company or any of its subsidiaries pursuant to, (1) the charter or bylaws of
the Company or any of its subsidiaries, (2) any bond, debenture, note,
indenture, mortgage, deed of trust or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the Company or
its subsidiaries or their properties is or may be bound, (3) any statute, rule
or regulation applicable to the Company or any of its subsidiaries or any of
their assets or properties or (4) any judgment, order or decree of any court
or governmental agency or authority having jurisdiction over the Company or
any of its subsidiaries or any of their assets or properties, except in the
case of clauses (2), (3) and (4) for such violations, conflicts, breaches,
defaults, consents, impositions of liens or accelerations that (x) would not
singly, or in the aggregate, have a Material Adverse Effect or (y) which are
disclosed in the Prospectus. Other than as described in the Prospectus, no
consent, approval, authorization or order of, or filing, registration,
qualification, license or permit of or with, (A) any court or governmental
agency, body or administrative agency (including, without limitation, the FCC)
or (B) any other person is required for (1) the execution, delivery and
performance by the Company of this Agreement, (2) the issuance and sale of the
Shares and the transactions contemplated hereby, except (x) such as have been
obtained and made under the Securities Act and state securities or Blue Sky
laws and regulations or such as may be required by the NASD or (y) where the
failure to obtain any such consent, approval, authorization or order of, or
filing registration, qualification, license or permit would not reasonably be
expected to result in a Material Adverse Effect.
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(xii) Except as set forth in the Prospectus, there are no
legal or governmental actions, suits or proceedings pending or, to Company's
knowledge, threatened (a) against or affecting the Company or any of its
subsidiaries, (b) which has as the subject thereof any officer or director (in
any such capacity) of, or property owned or leased by, the Company or any of
its subsidiaries or (c) relating to environmental or discrimination matters,
where in any such case (1) there is a reasonable possibility that such action,
suit or proceeding might be determined adversely to the Company or such
subsidiary and (2) any such action, suit or proceeding, if so determined
adversely, would reasonably be expected to result in a Material Adverse Change
or adversely affect the consummation of the transactions contemplated by this
Agreement. No material labor dispute with the employees of the Company or any
of its subsidiaries exists or, to the Company's knowledge, is threatened or
imminent.
(xiii) No action has been taken and no statute, rule,
regulation or order has been enacted, adopted or issued by any governmental
agency that prevents the issuance of the Shares or prevents or suspends the
use of the Prospectus; no injunction, restraining order or order of any nature
by a federal or state court of competent jurisdiction has been issued that
prevents the issuance of the Shares, prevents or suspends the sale of the
Shares in any jurisdiction referred to in Section 5(d) hereof or that could
adversely affect the consummation of the transactions contemplated by this
Agreement or the Prospectus; and every request of any securities authority or
agency of any jurisdiction for additional information has been complied with
in all material respects.
(xiv) Except as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Change, (a) to the
Company's knowledge, neither the Company nor any of its subsidiaries is in
violation of any federal, state, local or foreign law or regulation relating
to pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including without limitation, laws and
regulations relating to emissions, discharges, releases or threatened releases
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum and petroleum products (collectively, "Materials of
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Environmental Concern"), or otherwise relating to the manufacture, processing,
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distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern (collectively, "Environmental Laws"), which
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violation includes, but is not limited to, noncompliance with any permits or
other governmental authorizations required for the operation of the business
of the Company or its subsidiaries under applicable Environmental Laws, or
noncompliance with the terms and conditions thereof, nor has the Company or
any of its subsidiaries received any written communication, whether from a
governmental authority, citizens group, employee or otherwise, that alleges
that the Company or any of its subsidiaries is in violation of any
Environmental Law; (b) there is no claim, action or cause of action filed with
a court or governmental authority, no investigation with respect to which the
Company or any of its subsidiaries has received written notice, and no written
notice by any person or entity alleging potential liability for investigatory
costs,
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cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, attorneys' fees or penalties arising out of, based
on or resulting from the presence, or release into the environment, of any
Material of Environmental Concern at any location owned, leased or operated by
the Company or any of its subsidiaries, now or in the past (collectively,
"Environmental Claims"), pending or, to Company's knowledge, threatened against
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the Company or any of its subsidiaries or any person or entity whose liability
for any Environmental Claim the Company or any of its subsidiaries has
retained or assumed either contractually or by operation of law; and (c) to
the Company's knowledge, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge, presence or disposal of any Material of
Environmental Concern, that reasonably could result in a violation of any
Environmental Law or form the basis of a potential Environmental Claim against
the Company or any of its subsidiaries or against any person or entity whose
liability for any Environmental Claim the Company or any of its subsidiaries
has retained or assumed either contractually or by operation of law.
(xv) The Company and each of its subsidiaries has (a) good
and marketable title to all of the properties and assets described in the
Prospectus or the financial statements included in the Prospectus as owned by
it, free and clear of all liens, charges, encumbrances and restrictions,
except such as are described in the Prospectus or as would not have a Material
Adverse Effect, (b) peaceful and undisturbed possession to the extent
described in the Prospectus under all material leases to which it is a party
as lessee, (c) all licenses, certificates, permits, authorizations, approvals,
franchises and other rights from, and has made all declarations and filings
with, all federal, state and local authorities (including, without limitation,
the FCC), all self-regulatory authorities and all courts and other tribunals
(each an "Authorization") necessary to engage in the business conducted by the
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Company and its subsidiaries in the manner described in the Prospectus, except
as described in the Prospectus and except insofar as the failure to obtain any
such Authorization would not reasonably be expected to have a Material Adverse
Effect, and no such Authorization contains a materially burdensome restriction
that is not disclosed in the Prospectus and (d) not received any notice that
any governmental body or agency is considering limiting, suspending or
revoking any such Authorization. Except where the failure to be in full force
and effect would not have a Material Adverse Effect, all such Authorizations
are valid and in full force and effect and the Company and each of its
subsidiaries is in compliance in all material respects with the terms and
conditions of all such Authorizations and with the rules and regulations of
the regulatory authorities having jurisdiction with respect thereto. All
material leases to which the Company and each of its subsidiaries is a party
are valid and binding and no default by the Company or any of its subsidiaries
has occurred and is continuing, thereunder and, to the Company's knowledge, no
material defaults by the landlord are existing under any such lease that could
reasonably be expected to result in a Material Adverse Effect.
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(xvi) Except as described in the Prospectus, the Company and
its subsidiaries own, possess or have the right to employ sufficient patents,
patent rights, licenses (including all FCC, state, local or other
jurisdictional regulatory licenses), inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary
or confidential information, software, systems or procedures), trademarks,
service marks and trade names, inventions, computer programs, technical data
and information (collectively, the "Intellectual Property Rights") reasonably
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necessary to conduct their businesses as now conducted; and the expected
expiration of any of such Intellectual Property Rights would not result in a
Material Adverse Change. The Intellectual Property Rights presently employed
by the Company and its subsidiaries in connection with the businesses now
operated by them or which are proposed to be operated by them are owned, to
the Company's knowledge, free and clear of and without violating any right,
claimed right, charge, encumbrance, pledge, security interest, restriction or
lien of any kind of any other person and neither the Company nor any of its
subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing except as would
not reasonably be expected to have a Material Adverse Effect. The use of the
Intellectual Property in connection with the business and operations of the
Company and its subsidiaries does not infringe on the rights of any person,
except as could not reasonably be expected to have a Material Adverse Effect.
(xvii) None of the Company or any of its subsidiaries, or, or
to the knowledge of the Company, any of their respective officers, directors,
partners, employees, agents or affiliates or any other person acting on behalf
of the Company or any of its subsidiaries has, directly or indirectly, given
or agreed to give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any customer,
supplier, employee or agent of a customer or supplier, official or employee of
any governmental agency (domestic or foreign), instrumentality of any
government (domestic or foreign) or any political party or candidate for
office (domestic or foreign) or other person who was, is or may be in a
position to help or hinder the business of the Company or any of its
subsidiaries (or assist the Company or any of its subsidiaries in connection
with any actual or proposed transaction) which (a)would reasonably be expected
to subject the Company, or any other individual or entity to any damage or
penalty in any civil, criminal or governmental litigation or proceeding
(domestic or foreign), (b)if not given in the past, would reasonably be
expected to have had a Material Adverse Effect or (c) if not continued if not
continued in the future, would reasonably be expected to have a Material
Adverse Effect.
(xviii) All material tax returns required to be filed by the
Company and its subsidiaries in all jurisdictions have been so filed. All
taxes, including withholding taxes, penalties and interest, assessments, fees
and other charges due or claimed to be due from such entities or that are due
and payable have been paid, other than those being contested in good faith and
for which adequate reserves have been provided or those currently payable
without penalty or interest. To the knowledge of the Company, there are no
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material proposed additional tax assessments against the Company or any of its
subsidiaries or the assets or property of the Company or any of its
subsidiaries. The Company has made adequate charges, accruals and reserves in
the applicable financial statements included in the Prospectus in respect of
all federal, state and foreign income and franchise taxes for all periods as
to which the tax liability of the Company or any of its consolidated
subsidiaries has not been finally determined.
(xix) The Company is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company Act").
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(xx) Except as disclosed in the Prospectus, there are no
holders of securities of the Company or any of its subsidiaries who, by reason
of the execution by the Company of this Agreement to which it is a party or
the consummation by the Company or any of its subsidiaries of the transactions
contemplated hereby, have the right to request or demand that the Company or
any of its subsidiaries register under the Securities Act or analogous foreign
laws and regulations securities held by them, other than such that have been
duly waived.
(xxi) The Company and its subsidiaries each maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that: (a) transactions are executed in accordance with management's
general or specific authorizations; (b) transactions are recorded as necessary
to permit preparation of financial statements in conformity in all material
respects with generally accepted accounting principles and to maintain
accountability for assets; and (c) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(xxii) Each of the Company and its subsidiaries are insured
by recognized, financially sound institutions with policies in such amounts
and with such deductibles and covering such risks as are customary for
similarly situated businesses including, but not limited to, policies covering
real and personal property owned or leased by the Company and its subsidiaries
against theft, damage, destruction and acts of vandalism. The Company has no
reason to believe that it or any subsidiary will not be able (a) to renew its
existing insurance coverage as and when such policies expire or (b) to obtain
comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that would
not result in a Material Adverse Change.
(xxiii) The Company has not (a) taken, directly or indirectly,
any action designed to, or that might reasonably be expected to, cause or
result in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares or (b) since the date
of the Preliminary Prospectus (1) sold, bid for, purchased or paid any person
any compensation for soliciting purchases of, the Shares or (2) paid or
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agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
(xxiv) The Company and its subsidiaries and any "employee
benefit plan" (as defined under the Employee Retirement Income Security Act of
1974, as amended, and the regulations and published interpretations thereunder
(collectively, "ERISA")) established or maintained by the Company, its
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subsidiaries or their "ERISA Affiliates" (as defined below) are in compliance
in all material respects with ERISA. "ERISA Affiliate" means, with respect to
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the Company or a subsidiary, any member of any group of organizations
described in Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations thereunder
(the "Code") of which the Company or such subsidiary is a member. No
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"reportable event" (as defined under ERISA) has occurred or is reasonably
expected to occur with respect to any "employee benefit plan" established or
maintained by the Company, its subsidiaries or any of their ERISA Affiliates.
No "employee benefit plan" established or maintained by the Company, its
subsidiaries or any of their ERISA Affiliates, if such "employee benefit plan"
were terminated, would have any "amount of unfunded benefit liabilities" (as
defined under ERISA). Neither the Company, its subsidiaries nor any of their
ERISA Affiliates has incurred or reasonably expects to incur any liability
under (a) Title IV of ERISA with respect to termination of, or withdrawal
from, any "employee benefit plan" or (b) Sections 412, 4971, 4975 or 4980B of
the Code. Each "employee benefit plan" established or maintained by the
Company, its subsidiaries or any of their ERISA Affiliates that is intended to
be qualified under Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or failure to act, which would cause the loss of
such qualification.
(xxv) Except as otherwise disclosed in the Prospectus,
subsequent to the respective dates as of which information is given in the
Prospectus: (a) there has been no Material Adverse Change; (b) the Company and
its subsidiaries, considered as one entity, have not incurred any material
liability or obligation, indirect, direct or contingent, not in the ordinary
course of business nor entered into any material transaction or agreement not
in the ordinary course of business; (c) there has been no dividend or
distribution of any kind declared, paid or made by the Company or, except for
dividends paid to the Company or other subsidiaries, any of its subsidiaries
on any class of capital stock or repurchase or redemption by the Company or
any of its subsidiaries of any class of capital stock; (d) there has been no
capital expenditure or commitment by the Company or any of its subsidiaries
exceeding $100,000, either individually or in the aggregate except in the
ordinary course of business as generally contemplated by the Prospectus; (e)
there has been no change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by the Company or
any of its subsidiaries; (f) there has been no revaluation by the Company or
any of its subsidiaries of any of their assets; (g) there has been no increase
in the salary or other compensation payable or to become payable by the
Company or any of its subsidiaries to any of their officers, directors,
employees or advisors, nor any declaration, payment or commitment or
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obligation of any kind for the payment by the Company or any of its
subsidiaries of a bonus or other additional salary or compensation to any such
person; (h) there has been no amendment or termination of any material
contract, agreement or license to which the Company or any subsidiary is a
party or by which it is bound; (i) there has been no waiver or release of any
material right or claim of the Company or any subsidiary, including any write-
off or other compromise of any material account receivable of the Company or
any subsidiary; and (j) there has been no change in pricing or royalties set
or charged by the Company or any subsidiary to their respective customers or
licensees or in pricing or royalties set or charged by persons who have
licensed Intellectual Property Rights to the Company or any of its
subsidiaries.
(xxvi) Ernst & Young LLP, who have expressed their opinion
with respect to the financial statements (which term as used in this Agreement
includes the related notes thereto) and supporting schedules included in the
Prospectus are independent public or certified public accountants within the
meaning of Regulation S-X under the Securities Act and the Exchange Act.
(xxvii) The financial statements, together with the related
notes, included in the Prospectus present fairly in all material respects the
consolidated financial position of the Company and its subsidiaries as of and
at the dates indicated and the results of their operations and cash flows for
the periods specified. Such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved, except as may be expressly
stated in the related notes thereto. The financial data set forth in the
Prospectus under the captions "Prospectus Summary-- Summary Financial Data",
"Selected Financial Data" and "Capitalization" fairly present the information
set forth therein on a basis consistent with that of the audited financial
statements contained in the Prospectus.
(xxviii) Except pursuant to this Agreement, there are no
contracts, agreements or understandings between the Company and any other
person that would give rise to a valid claim against the Company or either of
the Underwriters for a brokerage commission, finder's fee or like payment in
connection with the issuance, purchase and sale of the Shares.
(xxix) The statements (including the assumptions described
therein) included in the Prospectus (a) are within the coverage of Rule 175(b)
under the Securities Act to the extent such data constitute forward looking
statements as defined in Rule 175(c) and (b) were made by the Company with a
reasonable basis and reflect the Company's good faith estimate of the matters
described therein.
(xxx) Each certificate signed by any officer of the Company
and delivered to the Underwriters or counsel for the Underwriters pursuant to
this Agreement shall be deemed to be a representation and warranty by the
Company to the Underwriters as to the matters covered thereby.
12
The Company acknowledges that each of the Underwriters and, for
purposes of the opinions to be delivered to the Underwriters pursuant to
Section 10 hereof, counsel to the Company and counsel to the Underwriters,
will rely upon the accuracy and truth of the foregoing representations and
hereby consents to such reliance.
2. Representations and Warranties of the Selling Stockholders. Each
-----------------------------------------------------------
Selling Stockholder severally and not jointly represents and warrants to, and
agrees that:
(a) Such Selling Stockholder has, and immediately prior to the
Closing Date will have, good and valid title to the Shares to be sold by such
Selling Stockholder hereunder on such date, free and clear of all liens,
encumbrances, equities or claims; and upon delivery of such Shares and payment
therefor pursuant hereto, good and valid title to such Shares, free and clear
of all liens, encumbrances, equities or claims, will pass to the several
Underwriters.
(b) Such Selling Stockholder has placed in custody under a custody
agreement (the "Custody Agreement" and, together with all other similar
agreements executed by the other Selling Stockholders, the "Custody
Agreements") with Boston Equiserve, as custodian (the "Custodian"), for
delivery under this Agreement, certificates in negotiable form (with signature
guaranteed by a commercial bank or trust company having an office or
correspondent in the United States or a member firm of the New York or
American Stock Exchanges) representing the Shares to be sold by such Selling
Stockholder hereunder.
(c) Such Selling Stockholder has duly and irrevocably executed and
delivered a power of attorney (the "Power of Attorney" and, together with all
other similar agreements executed by the other Selling Stockholders, the
"Powers of Attorney") appointing the Custodian and one or more other persons,
as attorneys-in-fact, with full power of substitution, and with full authority
on the terms set forth therein (exercisable by any one or more of them) to
execute and deliver this Agreement and to take such other action as may be
necessary or desirable to carry out the provisions hereof on behalf of such
Selling Stockholder.
(d) Such Selling Stockholder has full right, power and authority
to enter into this Agreement, the Power of Attorney and the Custody Agreement;
the execution, delivery and performance of this Agreement, the Power of
Attorney and the Custody Agreement by such Selling Stockholder and the
consummation by such Selling Stockholder of the transactions contemplated
hereby will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which such Selling Stockholder is a party or by which such Selling Stockholder
is bound or to which any of the property or assets of such Selling Stockholder
is subject, nor will such actions result in any violation of the provisions of
the constituent documents of such Selling Stockholder, if any, or any statute
or any order, rule or regulation of any court or
13
governmental agency or body having jurisdiction over such Selling Stockholder
or the property or assets of such Selling Stockholder; and, except for the
registration of the Shares under the Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
applicable state securities laws in connection with the purchase and
distribution of the Shares by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any such court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement, the Power of Attorney or the Custody Agreement
by such Selling Stockholder and the consummation by such Selling Stockholder
of the transactions contemplated hereby.
(e) To the extent that any statements or omissions made in the
Registration Statement, the Prospectus or any amendment or supplement thereto
are made in reliance upon and in conformity with written information furnished
to the Company by such Selling Stockholder specifically for use therein, the
Registration Statement and the Prospectus and any amendments or supplements
thereto will not, when they become effective or are filed with the Commission,
as the case may be, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading.
(f) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
3. Purchase, Sale and Delivery of the Shares.
------------------------------------------
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein
set forth, each Selling Stockholder agrees to sell the number of Shares set
opposite its name in Schedule II hereto severally, and not jointly, to the
Underwriters and the Underwriters, severally and not jointly, agree to
purchase from the Selling Stockholders, at a purchase price per share of $___,
the number of Firm Shares set forth opposite the respective names of the
Underwriters in Schedule I hereto plus any additional number of Shares which
such Underwriter may become obligated to purchase pursuant to the provisions
of Section 11 hereof.
(b) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the office of Bear, Xxxxxxx
& Co. Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, or at such other place as
shall be agreed upon by the Underwriters and the Company, at _____ A.M. on
_______ __, 1999 (unless postponed in accordance with the provisions of
Section 11 hereof) after the determination of the public offering price of the
Firm Shares, or such other time not later than ten business days after such
date as shall be agreed upon by the Underwriters and the Company (such time
and date of
14
payment and delivery being herein called the "Closing Date"). Payment shall be
------------
made to each Selling Shareholder by wire transfer in same day funds, against
delivery to the Underwriters of certificates for the Shares to be purchased by
them from such Selling Stockholder. Certificates for the Firm Shares shall be
registered in such name or names and in such authorized denominations as the
Underwriters may request in writing at least two full business days hours
prior to the Closing Date. The Company and each Selling Stockholder will
permit the Underwriters to examine and package such certificates for delivery
at least one full business day prior to the Closing Date.
(c) In addition, each Selling Stockholder named in Schedule III
hereto (each an "Option Stockholder") hereby grants to the Underwriters the
option to purchase up to the number of Additional Shares set opposite its name
in Schedule III hereto at the same purchase price per share to be paid by the
Underwriters to the Selling Stockholders for the Firm Shares as set forth in
this Section 3, for the sole purpose of covering over-allotments in the sale
of Firm Shares by the Underwriters. This option may be exercised at any time,
in whole or in part, on or before the thirtieth day following the date of the
Prospectus, by written notice by the Underwriters to the Company and the
Option Stockholders. Such notice shall set forth the aggregate number of
Additional Shares as to which the option is being exercised and the date and
time, as reasonably determined by the Underwriters, when the Additional Shares
are to be delivered (such date and time being herein sometimes referred to as
the "Additional Closing Date"); provided, however, that the Additional Closing
-----------------------
Date shall not be earlier than the Closing Date or earlier than the second
full business day after the date on which the option shall have been exercised
nor later than the eighth full business day after the date on which the option
shall have been exercised (unless such time and date are postponed in
accordance with the provisions of Section 11 hereof). Certificates for the
Additional Shares shall be registered in such name or names and in such
authorized denominations as the Underwriters may request in writing at least
two full business days prior to the Additional Closing Date. The Company and
the Option Stockholders will permit the Underwriters to examine and package
such certificates for delivery at least one full business day prior to the
Additional Closing Date.
(d) The number of Additional Shares to be sold to each Underwriter
shall be the number which bears the same ratio to the aggregate number of
Additional Shares being purchased as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto (or such number
increased as set forth in Section 11 hereof) bears to the total number of Firm
Shares being purchased from the Selling Stockholders, subject, however, to
such adjustments to eliminate any fractional shares as the Underwriters in
their sole discretion shall make.
(e) Payment for the Additional Shares shall be made by wire
transfer in same day funds payable to the order of the relevant Option
Stockholder at the office Bear, Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, or such other location as
15
may be mutually acceptable, upon delivery of the certificates for the
Additional Shares to the Underwriters.
4. Offering. Upon the Underwriters' authorization of the release of
---------
the Firm Shares, the Underwriters propose to offer the Shares for sale to the
public upon the terms set forth in the Prospectus.
5. Covenants of the Company. The Company covenants and agrees with each
-------------------------
of the Underwriters that:
(a) The Company will notify the Underwriters immediately (and, if
requested by the Underwriters, will confirm such notice in writing) (i) when
any posteffective amendment to the Registration Statement becomes effective,
(ii) of any request by the Commission for any amendment of or supplement to
the Registration Statement or the Prospectus or for any additional
information, (iii) of the mailing or the delivery to the Commission for filing
of the Prospectus or any amendment of or supplement to the Registration
Statement or the Prospectus or any document to be filed pursuant to the
Exchange Act during any period when the Prospectus is required to be delivered
under the Securities Act, (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of either Registration Statement or any
post-effective amendment thereto or of the initiation, or the threatening, of
any proceedings therefor, (v) of the receipt of any comments or inquiries from
the Commission, and (vi) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Shares for sale in
any jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any time,
the Company will make every reasonable effort to prevent the issuance of any
such stop order and, if issued, to obtain the lifting of such order as soon as
possible. The Company will not file any post-effective amendment to the
Registration Statement or any amendment of or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Shares which differs from
the prospectus filed with the Commission pursuant to Rule 424(b) of the
Securities Act Regulations, whether or not such revised prospectus is required
to be filed pursuant to Rule 424(b) of the Securities Act Regulations) to
which the Underwriters or Underwriters' Counsel (as hereinafter defined) shall
reasonably object, will furnish the Underwriters with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or
supplement or use any such prospectus to which the Underwriters or counsel for
the Underwriters shall reasonably object.
(b) If any event shall occur as a result of which the Prospectus
would, in the judgment of the Underwriters or the Company, include an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if it shall
be necessary at any time to amend or supplement the Prospectus
16
or either Registration Statement to comply with the Securities Act or the
Securities Act Regulations, the Company will notify the Underwriters promptly
and prepare and file with the Commission an appropriate amendment or
supplement (in form and substance satisfactory to the Underwriters) which will
correct such statement or omission or which will effect such compliance.
(c) The Company has delivered to the Underwriters five signed
copies of the Registration Statement as originally filed, including exhibits,
and all amendments thereto, and the Company will promptly deliver to each of
the Underwriters, from time to time during the period that the Prospectus is
required to be delivered under the Securities Act, such number of copies of
the Prospectus and the Registration Statement, and all amendments of and
supplements to such documents, if any, as the Underwriters may reasonably
request.
(d) The Company will endeavor in good faith, in cooperation with
the Underwriters, to qualify the Shares for offering and sale under the
securities laws relating to the offering or sale of the Shares of such
jurisdictions as the Underwriters may designate and to maintain such
qualification in effect for so long as required for the distribution thereof;
except that in no event shall the Company be obligated in connection therewith
to qualify as a foreign corporation or to execute a general consent to service
of process.
(e) The Company will make generally available (within the meaning
of Section 11(a) of the Securities Act) to its security holders and to the
Underwriters as soon as practicable, but not later than 45 days after the end
of its fiscal quarter in which the first anniversary date of the effective
date of the Registration Statement occurs (or if such fiscal quarter is the
Company's fourth fiscal quarter, not later than 90 days after the end of such
quarter), an earnings statement (in form complying with the provisions of Rule
158 of the Regulations) covering a period of at least twelve consecutive
months beginning after the effective date of the Registration Statement (as
defined in Rule 158(c) under the Securities Act).
(f) During the period of 90 days from the date of the Prospectus,
the Company will not, directly or indirectly, without the prior written
consent of Bear Xxxxxxx, offer, sell, contract to sell, grant any option to
purchase, pledge or otherwise dispose (or announce any offer, sale, contract
to sell, grant of an option to purchase, pledge or other disposition) of any
shares of Common Stock of the Company or any securities convertible into or
exercisable or exchangeable for such Common Stock, except that the Company may
issue (i) shares of Common Stock and options to purchase Common Stock under
its 1997 Stock Plan and its 1998 Purchase Plan (as such terms are defined in
the Prospectus), (ii) shares of Common Stock upon exercise of warrants to
purchase Common Stock that were issued and outstanding on the date of the
Prospectus or (iii) shares of Common Stock in connection with strategic
relationships and acquisitions of businesses, technologies and products
complementary to those of the
17
Company, so long as the recipients of such shares agree to be bound by a lock-
up agreement (which shall provide that any transferees and assigns of such
recipients shall be bound by the lock-up agreement) for the remainder of the
90-day lock-up period.
(g) During a period of three years from the date of the
Prospectus, the Company will furnish to the Underwriters copies of (i)all
reports to its stockholders; and (ii) all reports, financial statements and
proxy or information statements filed by the Company with the Commission or
any national securities exchange.
(h) The Company will apply the proceeds from the sale of the
Shares as set forth under "Use of Proceeds" in the Prospectus.
(i) If the Company elects to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement, no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission, and all requests for additional information on
the part of the Commission shall have been complied with to the Underwriters'
reasonable satisfaction.
(j) The Company, during the period when the Prospectus is required
to be delivered under the Securities Act or the Exchange Act, will file all
documents required to be filed with the Commission pursuant to Sections 13, 14
or 15 of the Exchange Act within the time periods required by the Exchange Act
and the rules and regulations thereunder.
6. Covenants of the Selling Stockholders. Each Selling Stockholder
--------------------------------------
covenants and agrees that:
(i) For a period of 90 days from the date of the
Prospectus, it will not, directly or indirectly, sell, offer or agree to sell,
grant any option for the sale of, or otherwise dispose of, directly or
indirectly, any Common Stock (or any securities convertible into, exercisable
for or exchangeable for Common Stock), without the prior written consent of
Bear, Xxxxxx & Co. Inc.
(ii) The Shares to be sold by such Selling Stockholder
hereunder, which are represented by the certificates held in custody for such
Selling Stockholder, are subject to the interest of the Underwriters and the
other Selling Stockholders thereunder, the arrangements made by such Selling
Stockholder for such custody are to that extent irrevocable, and the
obligations of such Selling Stockholder hereunder will not be terminated by
any act of such Selling Stockholder, by operation of law, by the death or
incapacity of any individual Selling Stockholder or, in the case of a trust,
by the death or incapacity of any executor or trustee or the termination of
such trust, or the occurrence of any other event.
18
(iii) If at any time when a prospectus relating to the Shares
is required to be delivered under the Act any information which such Selling
Stockholder has provided to the Company or the Underwriters becomes incorrect,
or if it shall be necessary at any time to amend or supplement any information
provided by such Selling Stockholder to the Company for inclusion in the
Prospectus or Registration Statement to comply with the Act or the
Regulations, such Selling Stockholder will notify the Company and the
Underwriters promptly so that the Company may prepare and file with the
Commission an appropriate amendment or supplement (in form and substance
satisfactory to the Underwriters) which will correct such statement or
omission.
(iv) Such Selling Stockholder will deliver to the
Representatives prior to the Closing Date a properly completed and executed
United States Treasury Department Form W-8 (if such Selling Stockholder is a
non-United States person) or Form W-9 (if such Selling Stockholder is a United
States person).
7. Payment of Expenses. Whether or not the transactions contemplated
--------------------
in this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder, including those in connection with (i)
preparing, printing, duplicating, filing and distributing the Registration
Statement, as originally filed and all amendments thereto (including all
exhibits thereto), any Preliminary Prospectus, the Prospectus and any
amendments or supplements thereto (including, without limitation, fees and
expenses of the Company's accountants and counsel), the underwriting documents
(including this Agreement, the Agreement Among Underwriters and the Selling
Agreement) and all other documents related to the public offering of the
Shares (including those supplied to the Underwriters in quantities as
hereinabove stated), (ii) the issuance, of the Shares and the transfer and
delivery of the Shares to the Underwriters, including any transfer or other
taxes payable thereon, (iii) the qualification of the Shares under state or
foreign securities or Blue Sky laws, including the costs of printing and
mailing a preliminary and final "Blue Sky Memorandum" and the fees of counsel
in connection therewith and such counsel's disbursements in relation thereto,
(iv) listing of the Shares for quotation on the Nasdaq, (v) filing fees of the
Commission and the NASD and (vi) the cost of printing certificates
representing the Shares, (vii) the cost and charges of any transfer agent or
registrar.
8. Conditions of Underwriters' Obligations. The obligations of the
----------------------------------------
Underwriters to purchase and pay for the Firm Shares and the Additional
Shares, as provided herein, shall be subject to the accuracy of the
representations and warranties of the Company and the Selling Stockholders
herein contained, as of the date hereof and as of the Closing Date (for
purposes of this Section 8, "Closing Date" shall refer to the Closing Date for
------------
the Firm Shares and any Additional Closing Date, if different, for the
Additional Shares), to the absence from any certificates, opinions, written
statements or letters furnished to the Underwriters or to Xxxxxxx Xxxxxxx &
Xxxxxxxx ("Underwriters' Counsel") pursuant to this Section 8 of any material
---------------------
misstatement or omission, to the performance by the Company or the Selling
Stockholders of its or their obligations hereunder, and to the following
additional conditions:
19
(a) On the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
Securities Act or proceedings therefor initiated or, to the Company's
knowledge, threatened by the Commission. The Prospectus shall have been filed
or transmitted for filing with the Commission pursuant to Rule 424(b) of the
Securities Act Regulations within the prescribed time period, and prior to
Closing Date the Company shall have provided evidence satisfactory to the
Underwriters of such timely filing or transmittal.
(b) All of the representations and warranties of the Company and
the Selling Stockholders contained in this Agreement shall be true and correct
on the date hereof and on the Closing Date with the same force and effect as
if made on and as of the date hereof, and the Closing Date, respectively. The
Company and the Selling Stockholders shall have performed or complied with all
of the agreements herein contained and required to be performed or complied
with by it or them at or prior to the Closing Date.
(c) The Prospectus shall have been printed and copies distributed
to the Underwriters not later than 10:00 a.m., New York City time, on the
second business day following the date of this Agreement or at such later date
and time as to which the Underwriters may agree, and no stop order suspending
the qualification or exemption from qualification of the Shares in any
jurisdiction referred to in Section 5(d) shall have been issued and no
proceeding for that purpose shall have been commenced or shall be pending or
threatened.
(d) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the Closing Date, prevent the issuance
of the Shares; no action, suit or proceeding shall have been commenced and be
pending against or affecting or, to the best knowledge of the Company,
threatened against, the Company before any court or arbitrator or any
governmental body, agency or official that (1) could reasonably be expected to
result in a Material Adverse Effect and (2) has not been disclosed in the
Prospectus.
(e) Since the respective dates as of which information is given in
the Prospectus, (i) there shall not have been any Material Adverse Change, or
any development that is reasonably likely to result in a Material Adverse
Change, in the capital stock or the long-term debt, or material increase in
the short-term debt, of the Company or any of its subsidiaries from that set
forth in the Prospectus, (ii) no dividend or distribution of any kind shall
have been declared, paid or made by the Company or any of its subsidiaries on
any class of its capital stock, other than as described in the Prospectus,
(iii) neither the Company nor any of its subsidiaries shall have incurred any
liabilities or obligations, direct or contingent, that are material,
individually or in the aggregate, to the Company and its subsidiaries, taken
as a whole, and that are required to be disclosed on the latest balance sheet
or notes thereto included in the Prospectus in accordance with generally
accepted accounting principles and are not so disclosed. Since
20
the date hereof and since the dates as of which information is given in the
Prospectus, there shall not have occurred any Material Adverse Effect.
(f) The Underwriters shall have received a certificate, dated the
Closing Date, signed on behalf of the Company by each of the Company's Chief
Executive Officer and Chief Financial Officer in form and substance reasonably
satisfactory to the Underwriters, confirming, as of the Closing Date, the
matters set forth in paragraphs (a), (b), (d) and (e) of this Section 8 and
that, as of the Closing Date, the obligations of the Company to be performed
hereunder on or prior thereto have been duly performed in all material
respects.
(g) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, in form and substance satisfactory to the
Underwriters and counsel to the Underwriters, of Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, P.C., counsel for the Company, to the effect set forth in Exhibit A
---------
hereto.
(h) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, in form and substance satisfactory to the
Underwriters and counsel to the Underwriters, of Xxxxx Xxxxxx, General Counsel
of the Company, to the effect set forth in Exhibit B hereto.
---------
(i) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, in form and substance satisfactory to the
Underwriters and counsel to the Underwriters, of counsel for each Selling
Stockholder, to the effect set forth in Exhibit C hereto.
---------
(j) All proceedings taken in connection with the sale of the Firm
Shares and the Additional Shares as herein contemplated shall be satisfactory
in form and substance to the Underwriters and to Underwriters' Counsel, and
the Underwriters shall have received from Underwriters' Counsel a favorable
opinion, dated as of the Closing Date with respect to the issuance and sale of
the Shares, the Registration Statement and the Prospectus and such other
related matters as the Underwriters may reasonably require, and the Company
shall have furnished to Underwriters' Counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(k) At the time this Agreement is executed and at the Closing
Date, the Underwriters shall have received a letter from Ernst & Young LLP,
independent public accountants for the Company, dated, respectively, as of the
date of this Agreement and as of the Closing Date addressed to the
Underwriters and in form and substance reasonably satisfactory to the
Underwriters, containing statements and information of the type ordinarily
included in auditors' "comfort letters" to underwriters with respect to
financial statements and certain information of the Company and its
subsidiaries contained or incorporated by reference (if any) in the
Registration Statement and the Prospectus.
21
(l) At the time this Agreement is executed, the Underwriters
shall have received a "lock-up" agreement, substantially in the form attached
as Exhibit D hereto, from each of the officers, directors and stockholders of
---------
the Company identified on Exhibit E hereto.
---------
(m) At the Closing Date, the Shares shall have been approved for
quotation on the Nasdaq.
(n) At the time this Agreement is executed, and at the Closing
Time, the NASD shall not have withdrawn, or given notice of an intention to
withdraw, its approval of the fairness of the underwriting terms and
arrangements of the offering of the Shares by the Underwriters.
(o) Each of the Strategic Alliance Agreements shall be in full
force and effect, and no party to any such agreement shall have given any
notice of termination or amendment of any material provision thereof, or of
any intention to terminate or amend any material provision thereof, to any
other party.
(p) All opinions, certificates, letters and other documents
required by this Section 8 to be delivered by the Company will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Underwriters. The Company will furnish the
Underwriters with such conformed copies of such opinions, certificates,
letters and other documents as Bear Xxxxxxx shall reasonably request. Prior to
the Closing Date, the Company shall have furnished to the Underwriters such
further information, certificates and documents as the Underwriters may
reasonably request.
If any of the conditions specified in this Section 8 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to the
Underwriters or to Underwriters' Counsel pursuant to this Section 8 shall not
be in all material respects reasonably satisfactory in form and substance to
the Underwriters and to Underwriters' Counsel, all obligations of the
Underwriters hereunder may be canceled by the Underwriters at, or at any time
prior to, the Closing Date and the obligations of the Underwriters to purchase
the Additional Shares may be canceled by the Underwriters at, or at any time
prior to, the Additional Closing Date. Notice of such cancellation shall be
given to the Company and each Selling Stockholder in writing, or by telephone,
telex or telegraph, confirmed in writing.
9. Indemnification.
----------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act against any and all losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to attorneys' fees and any
and all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim
22
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (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 either the Registration Statement,
as originally filed or any amendment thereof, or any related Preliminary
Prospectus or the Prospectus, or in any supplement thereto or amendment
thereof, 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; provided, however, that the
Company will not be liable in any such case (i) to the extent but only to the
extent that any such loss, liability, claim, damage or expense 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 conformity
with written information furnished to the Company by or on behalf of any
Underwriter expressly for use therein and (ii) with respect to any preliminary
prospectus or preliminary prospectus supplement to the extent that any such
loss, claim, damage or liability results from the fact that an Underwriter
sold Shares to a person as to whom it shall be established that there was not
sent or given, at or prior to written confirmation of such sale, a copy of the
prospectus or prospectus supplement as then amended or supplemented in any
case where such delivery is required by the Securities Act if the Company has
previously furnished copies thereof in sufficient quantity to such Underwriter
and with sufficient time to effect a recirculation pursuant to Rule 461 under
the Securities Act and the loss, claim, damage or liability of the
Underwriters results from an untrue statement or omission of a material fact
contained in the preliminary prospectus or preliminary prospectus supplement
which was identified in writing prior to the effective date of the
registration statement to such underwriter and corrected in the prospectus or
prospectus supplement as then amended, and such correction would have cured
the defect giving rise to such loss, claim, damage or liability. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have, including under this Agreement.
(b) Each Selling Stockholder severally, and not jointly, agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act, against any and all losses,
liabilities, claims, damages and expenses whatsoever as incurred (including
but not limited to attorneys' fees and any and all expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which they or
any of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses
(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, as originally filed or any amendment thereof, or any
related Preliminary Prospectus or the Prospectus, or in any
23
supplement thereto or amendment thereof, 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, but
in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company or the
Underwriters by or on behalf of such Selling Stockholder specifically for
inclusion therein. Notwithstanding the provisions of this Section 9(b), the
aggregate liability of any Selling Stockholder under this Section 9(b) shall
not exceed the proceeds received by such Selling Stockholder from the sale of
Shares under this Agreement. The Underwriters and the Company acknowledge that
the statements specifically relating to each Selling Stockholder under the
caption "Principal and Selling Stockholders" in the Prospectus constitute the
only information furnished in writing by or on behalf of such Selling
Stockholder expressly for use in the Registration Statement as originally
filed or in any amendment thereof, any related Preliminary Prospectus or the
Prospectus or in any amendment thereof or supplement thereto, as the case may
be. This indemnity agreement will be in addition to any liability which the
Selling Stockholders may otherwise have, including under this Agreement;
provided, however, that in no event shall the aggregate liability of any
--------
Selling Stockholder for any breach of the representations and warranties
contained in Section 2(e) (when combined with any liability under the
indemnity above) exceed the proceeds received by such Selling Stockholder from
the sale of Shares under this Agreement.
(c) Each Underwriter severally, and not jointly, agrees to
indemnify and hold harmless the Company, each Selling Stockholder, each of the
directors of the Company, each of the officers of the Company who shall have
signed the Registration Statement, and each other person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act, against any and all losses, liabilities, claims,
damages and expenses whatsoever as incurred (including but not limited to
attorneys' fees and any and all expenses whatsoever incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (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 either Registration Statement, as
originally filed or any amendment thereof, or any related preliminary
prospectus, preliminary prospectus supplement or 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, in
each case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense 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 conformity with written information
furnished to the Company by or on behalf of any Underwriter expressly for
24
use therein, provided, however, that in no case, shall any Underwriter be
liable or responsible for any amount in excess of the underwriting discount
applicable to the Shares purchased by such Underwriter hereunder. This
indemnity will be in addition to any liability which any Underwriter may
otherwise have including under this Agreement.
(d) Promptly after receipt by an indemnified party under Subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve the indemnifying
party from any liability which it may have under this Section 9, except to the
extent that the indemnifying party has been prejudiced in any material respect
by such failure or from any liability that it may have otherwise). In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent it may elect by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses shall be borne by the indemnifying parties.
Anything in this Subsection to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its written consent; provided, however, that such consent was not
unreasonably withheld.
10. Contribution. In order to provide for contribution in circumstances
-------------
in which the indemnification provided for in Section 9 hereof is for any
reason held to be unavailable from any indemnifying party or is insufficient
to hold harmless a party indemnified thereunder, the Company, the Selling
Stockholders and the Underwriters shall contribute to the aggregate losses,
claims, damages, liabilities and expenses of the nature contemplated by such
indemnification provision (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claims asserted, but after deducting in
the case of losses, claims, damages, liabilities and expenses suffered by the
Company any contribution received by the Company from persons, other than the
Underwriters, who may also be liable for contribution, including persons who
control the Company within the
25
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, officers of the Company who signed the Registration Statement and
directors of the Company) as incurred to which the Company and one or more of
the Underwriters may be subject, in such proportions as is appropriate to
reflect the relative benefits received by the Company, the Selling
Stockholders and the Underwriters from the offering of the Shares or, if such
allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 9 hereof, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the relative fault
of the Company, the Selling Stockholders and the Underwriters in connection
with the statements or omissions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Selling Stockholders on
the one hand and the Underwriters on the other hand shall be deemed to be in
the same proportion as (x) the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Selling Stockholders and (y) the underwriting discounts and commissions
received by the Underwriters, respectively, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company
and the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, the Selling Stockholders or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Selling
Stockholders and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 10 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the provisions
of this Section 10, (i) in no case shall any Underwriter be liable or
responsible for any amount in excess of the underwriting discount applicable
to the Shares purchased by such Underwriter hereunder, and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Notwithstanding the
provisions of this Section 10 and the preceding sentence, no Underwriter shall
be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. For purposes of this
Section 10, each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act shall have the same rights to contribution as such Underwriter, and each
person, if any, who controls the Company within the meaning of Section 15 of
the Securities Act or Section 20(a) of 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 clauses (i) and (ii) of this Section 10. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties, notify each party
26
or parties from whom contribution may be sought, but the omission to so notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 10 or otherwise. No party shall be liable for contribution with
respect to any action or claim settled without its consent, provided, however,
that such consent was not unreasonably withheld.
11. Default by an Underwriter.
--------------------------
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Shares or Additional Shares hereunder, and
if the Firm Shares or Additional Shares with respect to which such default
relates do not (after giving effect to arrangements, if any, made by the
Underwriters pursuant to Subsection (b) below) exceed in the aggregate 10% of
the number of Firm Shares or Additional Shares, the Firm Shares or Additional
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase shall be purchased by the non-defaulting Underwriters in
proportion to the respective proportions which the numbers of Firm Shares set
forth opposite their respective names in Schedule I hereto bear to the
aggregate number of Firm Shares set forth opposite the names of the non-
defaulting Underwriters.
(b) In the event that such default relates to more than 10% of the
Firm Shares or Additional Shares, as the case may be, the Underwriters may in
their discretion arrange for themselves or for another party or parties
(including any non-defaulting Underwriter or Underwriters who so agree) to
purchase such Firm Shares or Additional Shares, as the case may be, to which
such default relates on the terms contained herein. In the event that within 5
calendar days after such a default the Underwriters do not arrange for the
purchase of the Firm Shares or Additional Shares, as the case may be, to which
such default relates as provided in this Section 11, this Agreement, or in the
case of a default with respect to the Additional Shares, the obligations of
the Underwriters to purchase and of the Option Stockholders to sell the
Additional Shares, shall thereupon terminate, without liability on the part of
the Company or the Selling Stockholders with respect thereto (except in each
case as provided in Section 7, 9(a) and 10 hereof) or the Underwriters, but
nothing in this Agreement shall relieve a defaulting Underwriter or
Underwriters of its or their liability, if any, to the other Underwriter, the
Company, or the Selling Stockholders for damages occasioned by its or their
default hereunder.
(c) In the event that the Firm Shares or Additional Shares to
which the default relates are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as aforesaid,
the Underwriters, the Company and the Selling Stockholders shall have the
right to postpone the Closing Date or Additional Closing Date, as the case may
be, for a period, not exceeding five business days, in order to effect
whatever changes may thereby be made necessary in the Registration Statement
or the Prospectus or in any other documents and arrangements, and the Company
agrees to file promptly any amendment or supplement to the Registration
Statement or the Prospectus which, in the opinion of Underwriters' Counsel,
may thereby be made necessary or
27
advisable. The term "Underwriter" as used in this Agreement shall include any
party substituted under this Section 11 with like effect as if it had
originally been a party to this Agreement with respect to such Firm Shares or
Additional Shares.
12. Survival of Representations and Agreements. All representations
------------------------------------------
and warranties, covenants and agreements of the Underwriters, the Company and
the Selling Stockholders contained in this Agreement, including the agreements
contained in Section 7, the indemnity agreements contained in Section 9 and
the contribution agreements contained in Section 10, shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any Underwriter or any controlling person thereof or by or on behalf
of the Company, any of its officers and directors, or any controlling person
of the Company or by or on behalf of any Selling Stockholder or controlling
person thereof, and shall survive delivery of and payment for the Shares to
and by the Underwriters. The representations contained in Section 1 and the
agreements contained in Sections 7, 9, 10, 13(d) and 14 hereof shall survive
the termination of this Agreement, including termination pursuant to Section
11 or 13 hereof.
13. Effective Date of Agreement; Termination.
----------------------------------------
(a) This Agreement shall become effective upon the execution and
delivery of a counterpart hereof by each of the parties hereto.
(b) The Underwriters shall have the right to terminate this
Agreement at any time prior to the Closing Date or the obligations of the
Underwriters to purchase the Additional Shares at any time prior to the
Additional Closing Date, as the case may be, if on or prior to such date, (i)
the Company or any Selling Stockholder shall have failed, refused or been
unable to perform in any material respect any agreement on its part to be
performed hereunder, (ii) any other condition to the obligations of the
Underwriters hereunder as provided in Section 8 is not fulfilled when and as
required in any material respect, (iii) in the reasonable judgment of the
Underwriters any Material Adverse Change shall have occurred since the
respective dates as of which information is given in the Prospectus, other
than as set forth in the Prospectus, (iv) any downgrading shall have in the
rating accorded the Company's debt securities by any "nationally recognized
statistical rating organization", as that term is defined by the Commission
for purposes of Rule 436(g)(2) under the Securities Act, or any such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the
Company's debt securities, or (v)(A) any domestic or international event or
act or occurrence has materially disrupted, or in the opinion of the
Underwriters will in the immediate future materially disrupt, the market for
the Company's securities or for securities in general; or (B) trading in
securities generally on the New York Stock Exchange ("NYSE") or quotations on
the Nasdaq shall have been suspended or materially limited, or minimum or
maximum prices for trading shall have been established, or maximum ranges for
prices for securities shall have been required, on such exchange, or by such
exchange or other regulatory body or governmental authority having
jurisdiction; or (C) a banking moratorium shall have been declared by federal
or state authorities, or a
28
moratorium in foreign exchange trading by major international banks or persons
shall have been declared; or (D) there is an outbreak or escalation of armed
hostilities involving the United States on or after the date hereof, or if
there has been a declaration by the United States of a national emergency or
war, the effect of which shall be, in the Underwriters' judgment, to make it
inadvisable or impracticable to proceed with the offering, sale and delivery
of the Firm Shares or the Additional Shares, on the terms and in the manner
contemplated by the Prospectus; or (E) there shall have been such a material
adverse change in general economic, political or financial conditions or if
the effect of international conditions on the financial markets in the United
States shall be such as, in the Underwriters' judgment, makes it inadvisable
or impracticable to proceed with the offering, sale and delivery of the Firm
Shares or the Additional Shares, as the case may be, on the terms and in the
manner contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 13 shall be
by telephone, telex, telegraph or telephonic facsimile, confirmed in writing
by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (other than pursuant to Section 11(b) or 13(b) hereof), or
if the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company of any Selling Stockholders to perform any agreement herein or comply
with any provision hereof, the Company will, subject to demand by the
Underwriters, reimburse the Underwriters for all out-of-pocket expenses
(including the fees and expenses of their counsel), incurred by the
Underwriters in connection herewith.
14. Underwriters' Information. The Company, the Underwriters and each
--------------------------
Selling Stockholder severally acknowledge that the statements set forth in (i)
the last paragraph of the outside front cover of the Prospectus concerning the
delivery of the shares of Common Stock to the Underwriters and the offering of
such shares by the Underwriters; (ii) the paragraph on the inside front cover
of the Prospectus Supplement concerning transactions that stabilize, maintain,
or otherwise affect the price of the Common Stock; (iii) the third paragraph
under the caption "Underwriting" in the Prospectus concerning the proposed
public offering price, discount and concession; and (iv) the tenth and
eleventh paragraphs under the caption "Underwriting" in the Prospectus
concerning transactions that stabilize, maintain, or otherwise affect the
price of the Common Stock, constitute the only information furnished in
writing by or on behalf of any Underwriter expressly for use in the
Registration Statement, as originally filed or in any amendment thereof, any
related Preliminary Prospectus or preliminary prospectus supplement or the
Prospectus or in any amendment thereof or supplement thereto, as the case may
be.
15. Notices. All communications hereunder, except as may be otherwise
--------
specifically provided herein, shall be in writing and, if sent to the
Underwriters, shall be mailed, delivered, or telexed, telegraphed or
telecopied and confirmed in writing to Bear, Xxxxxxx & Co. Inc.,
_________________ and __________, c/o Bear, Xxxxxxx & Co. Inc., 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate Finance Department,
telecopy number: (212) 272-
29
3092, with a copy, which shall not constitute notice, to Xxxxxxx Xxxxxxx &
Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; Attn: Xxxx X.
Xxxxxxx, telecopy number: (000) 000-0000; and if sent to the Company, shall be
mailed, delivered or telexed, telegraphed or telecopied and confirmed in
writing to Covad Communications Group, Inc., 0000 Xxxxxxx Xxxxxxxxxx, Xxxxx
Xxxxx, Xxxxxxxxxx 00000, Attention: Chief Executive Officer, telecopy number:
(000) 000-0000, with a copy, which shall not constitute notice, to Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, P.C., 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx
00000, Attn: Xxxxx Xxxxxx, telecopy number: (000) 000-0000 and if sent to any
Selling Stockholder, shall be mailed, delivered, or telexed, telegraphed or
telecopied and confirmed in writing to such Selling Stockholder c/o [Xxxxxx
Xxxxxxx, Xxxxxxxx & Xxxxxx, P.C., 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx
00000, Attn: Xxxxx Xxxxxx, telecopy number: (000) 000-0000.]
16. Parties. This Agreement shall inure solely to the benefit of, and
--------
shall be binding upon, the Underwriters, the Selling Stockholders and the
Company and the controlling persons, directors, officers, employees and agents
referred to in Section 9 and 10, and their respective successors and assigns,
and no other person shall have or be construed to have any legal or equitable
right, remedy or claim under or in respect of or by virtue of this Agreement or
any provision herein contained. The term "successors and assigns" shall not
include a purchaser, in its capacity as such, of Shares from any of the
Underwriters.
17. GOVERNING LAW; Construction. This Agreement shall be construed
----------------------------
in accordance with the internal laws of the State of New York applicable to
agreements made and to be performed within such State, without giving any effect
to any provisions thereof relating to conflicts of law. TIME IS OF THE ESSENCE
IN THIS AGREEMENT.
18. Captions. The captions included in this Agreement are included
---------
solely for convenience of reference and are not to be considered a part of this
Agreement.
19. Counterparts. This Agreement may be executed in various
-------------
counterparts which together shall constitute one and the same instrument.
30
If the foregoing, correctly sets forth the understanding among the
Underwriters and the Company, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
among us.
Very truly yours,
COVAD COMMUNICATIONS GROUP, INC.
By_____________________________________
Name___________________________________
Title__________________________________
Accepted as of the date first above written
BEAR, XXXXXXX & CO. INC.
XXXXXX XXXXXXX & CO. INCORPORATED
BT ALEX. XXXXX INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
WIT CAPITAL CORPORATION
BEAR, XXXXXXX & CO. INC.
By______________________________
Name____________________________
Title___________________________
[INSERT NAMES OF SELLING STOCKHOLDERS]
By: ___________________________________
Name: _________________________________
Title: ________________________________
SCHEDULE I
Number of Shares
Name of Underwriters to be Purchased
-------------------- ---------------
Bear, Xxxxxxx & Co. Inc................................... [ ]
Xxxxxx Xxxxxxx & Co. Incorporated.........................
BT Alex. Xxxxx Incorporated ..............................
Credit Suisse First Boston Corporation....................
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation.......
Wit Capital Corporation...................................
------------------
Total.............................................................7,500,000
SCHEDULE II
Number of Firm
Name of Selling Stockholder Shares to be Sold
--------------------------- -----------------
SCHEDULE III
Maximum Number
of Additional
Name of Selling Stockholder Shares to be Sold
--------------------------- -----------------
Warburg, Xxxxxx Ventures, L.P. ......................
------------------
Total................................ 1,125,000
Exhibit A
Form of Opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
Exhibit B
Form of Opinion of Xxxxx Xxxxxx, General Counsel of the Company
Exhibit C
Form of Opinion of Counsel to Selling Stockholders
1. The Underwriting Agreement has been duly authorized, executed
and delivered by or on behalf of, and is a valid and binding agreement of, the
Selling Stockholder, enforceable in accordance with its terms, except as rights
to indemnification thereunder may be limited by applicable law and except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles.
2. The execution and delivery by the Selling Stockholder of, and
the performance by the Selling Stockholder of its obligations under, the
Underwriting Agreement and its Custody Agreement and its Power of Attorney will
not contravene or conflict with, result in a breach of, or constitute a default
under, the charter or by-laws, partnership agreement, trust agreement or other
organizational documents, as the case may be, of the Selling Stockholder, or, to
the best of such counsel's knowledge, violate or contravene any provision of
applicable law or regulation, or violate, result in a breach of or constitute a
default under the terms of any other agreement or instrument to which the
Selling Stockholder is a party or by which it is bound, or any judgment, order
or decree applicable to the Selling Stockholder of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction over
the Selling Stockholder.
3. The Selling Stockholder has good and valid title to all of the
Common Shares which may be sold by the Selling Stockholder under the
Underwriting Agreement and has the legal right and power, and all authorizations
and approvals required under its Declaration of Trust, as amended, to enter into
the Underwriting Agreement and its Custody Agreement and its Power of Attorney,
to sell, transfer and deliver all of the Common Shares which may be sold by the
Selling Stockholder under the Underwriting Agreement and to comply with its
other obligations under the Underwriting Agreement, its Custody Agreement and
its Power of Attorney.
4. Each of the Custody Agreement and Power of Attorney of the
Selling Stockholder has been duly authorized, executed and delivered by the
Selling Stockholder and is a valid and binding agreement of the Selling
Stockholder, enforceable in accordance with its terms, except as rights to
indemnification thereunder may be limited by applicable law and except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles.
5. Assuming that the Underwriters purchase the Common Shares which
are sold by the Selling Stockholder pursuant to the Underwriting Agreement for
value, in good faith and without notice of any adverse claim, the delivery of
such Common Shares pursuant to the Underwriting Agreement will pass good and
valid title to such Common Shares, free and clear of any security interest,
mortgage, pledge, lien encumbrance or other claim.
6. To the best of such counsel's knowledge, no consent, approval,
authorization or other order of, or registration or filing with, any court or
governmental authority or agency, is required for the consummation by the
Selling Stockholder of the transactions contemplated in the Underwriting
Agreement, except as required under the Securities Act of 1933, applicable state
securities or blue sky laws, and from the NASD.
Very truly yours,
----------------------------
Exhibit D
Covad Communications Group, Inc.
0000 Xxxxxxx Xxxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Lock-Up Agreement
___________, 1999
Bear, Xxxxxxx & Co. Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
BT Alex. Xxxxx Incorporated
Credit Suisse First Boston Corporation
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Wit Capital Corporation
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Ladies and Gentlemen:
The undersigned understands that Bear, Xxxxxxx & Co. Inc. (the
"Representative") of the several underwriters (the "Underwriters"), proposes to
enter into an Underwriting Agreement with Covad Communications Group, Inc. (the
"Company") and certain stockholders (the "Selling Stockholders") of the Company
named in Schedule II of the Underwriting Agreement providing for the offering
(the "Offering") by the Underwriters, including the Representative, of the
shares of the Company's Common Stock, par value $.001 per share (the "Common
Stock") which are owned by the Selling Stockholders.
In consideration of the Underwriters' agreement to purchase and
undertake the Offering and for other good and valuable consideration, receipt of
which is hereby acknowledged, the undersigned, pursuant to this letter agreement
(this "Agreement"), agrees that, without the prior written consent of the
Representative, the undersigned will not, directly or indirectly, offer, sell,
contract to sell, grant any option to purchase, pledge or otherwise dispose of
any shares of Common Stock of the Company (including, without limitation, shares
of Common Stock of the Company that may be deemed to be beneficially owned by
the undersigned in accordance with the rules and regulations of the Securities
and Exchange Commission and shares of Common Stock that may be issued upon
exercise of a stock option or warrant) or any securities convertible into or
exercisable or exchangeable for such Common Stock (such Common Stock and
securities are referred to herein as, collectively, "Securities"), or, in any
manner, transfer all or a portion of the economic consequences associated with
the ownership of Securities, for a period (the "Lock-Up Period") of [90] days
after the date of the
Prospectus used by the Company in connection with the Offering (any of the
foregoing, a "Disposition"); provided, however, that the undersigned may make a
Disposition: (i) as a bona fide gift or gifts, provided that the donee or donees
thereof agree in writing to be bound by the terms of this Agreement; (ii) as a
distribution to limited partners or shareholders of the undersigned, provided
that the distributees thereof agree in writing to be bound by the terms of this
Agreement; (iii) if the undersigned is an individual, either during his or her
lifetime or on death by will or intestacy to his or her immediate family or to a
trust the beneficiaries of which are exclusively the undersigned and/or a member
or members of his or her immediate family, provided that prior to any such
transfer each transferee agrees in writing to be bound by the terms of this
Agreement; or (iv) with the prior written consent of the Representative. For the
purposes of this paragraph, "immediate family" shall mean spouse, lineal
descendant, father, mother, brother or sister of the transferor.
In addition, the undersigned agrees that the Company may, and that the
undersigned will, (i) with respect to any shares for which the undersigned is
the record holder, cause the transfer agent for the Company to note stop
transfer instructions with respect to such shares on the transfer books and
records of the Company and (ii) with respect to any shares for which the
undersigned is the beneficial holder but not the record holder, cause the record
holder of such shares to cause the transfer agent for the Company to note stop
transfer instructions with respect to such shares on the transfer books and
records of the Company.
The foregoing restrictions are expressly agreed to preclude the holder
of any Securities from engaging in any hedging or other transaction that is
designed to or is reasonably expected to lead to or result in a Disposition of
Securities during the Lock-Up Period even if such Securities would be disposed
of by someone other than the undersigned. Such prohibited hedging or other
transactions would include, without limitation, any short sale (whether or not
against the box) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any of the Securities or any
security (other than a broad-based market basket or index) that includes,
relates to or derives any significant part of its value from any of the
Securities.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to enter into this Agreement, and that, upon
request, the undersigned will execute any additional documents necessary or
desirable in connection with the enforcement hereof. All authority herein
conferred or agreed to the conferred shall survive the death or incapacity of
the undersigned and any obligations of the undersigned shall be binding upon the
heirs, personal representatives, successors, and assigns of the undersigned.
[signature page follows]
ii
The undersigned hereby executes this Agreement and agrees to its terms
as of the date first written above.
Very truly yours,
_________________________________________
(Signature)
Please type:______________________________
(Name)
_________________________________________
(Address)
_________________________________________
(Social Security or
Taxpayer Identification No.)
Number of shares owned or subject to Certificate numbers:
warrants, options or convertibles
securities:
iii
Exhibit E
Individuals Delivering a Lock-Up Agreement Pursuant to Section 8(k)
