8,900,000 SHARES
HARVARDNET INC.
COMMON STOCK, PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
August [_], 1999
August [ ], 1999
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated
Xxxxxxx Xxxxx Barney Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxx Xxxxx International
Xxxxxxx Xxxxx Barney International Limited
c/o Morgan Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs and Mesdames:
HarvardNet Inc., a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the several Underwriters (as defined below)
8,900,000 shares of its Common Stock, par value $.01 per share (the "FIRM
SHARES").
It is understood that, subject to the conditions hereinafter
stated, 7,120,000 Firm Shares (the "U.S. FIRM SHARES") will be sold to the
several U.S. Underwriters named in Schedule I hereto (the "U.S. UNDERWRITERS")
in connection with the offering and sale of such U.S. Firm Shares in the United
States and Canada to United States and Canadian Persons (as such terms are
defined in the Agreement Between U.S. and International Underwriters of even
date herewith), and 1,780,000 Firm Shares (the "INTERNATIONAL SHARES") will be
sold to the several International Underwriters named in Schedule II hereto (the
"INTERNATIONAL UNDERWRITERS") in connection with the offering and sale of such
International Shares outside the United States and Canada to persons other than
United States and Canadian Persons. Xxxxxx Xxxxxxx & Co. Incorporated, Xxxxxxx
Xxxxx & Co, Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and Xxxxxxx Xxxxx
Barney Inc. shall act as representatives (the "U.S.
REPRESENTATIVES") of the several U.S. Underwriters, and Xxxxxx Xxxxxxx & Co.
International Limited, Xxxxxxx Xxxxx International and Xxxxxxx Xxxxx Barney
International Limited shall act as representatives (the "INTERNATIONAL
REPRESENTATIVES" of the several International Underwriters. The U.S.
Underwriters and the International Underwriters are hereinafter collectively
referred to as the "UNDERWRITERS".
The Company also proposes to issue and sell to the several
U.S. Underwriters not more than an additional 1,335,000 shares of its Common
Stock, par value $.01 per share (the "ADDITIONAL SHARES"), if and to the extent
that the U.S. Representatives shall have determined to exercise, on behalf of
the U.S. Underwriters, the right to purchase such shares of common stock granted
to the U.S. Underwriters in Section 2 hereof. The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the "SHARES". The shares of
Common Stock, par value $.01 per share, of the Company to be outstanding after
giving effect to the sales contemplated hereby are hereinafter referred to as
the "COMMON STOCK".
The Company has filed with the Securities and Exchange
Commission (the "COMMISSION") a registration statement relating to the Shares.
The registration statement contains two prospectuses to be used in connection
with the offering and sale of the Shares: the U.S. prospectus, to be used in
connection with the offering and sale of Shares in the United States and Canada
to United States and Canadian Persons, and the international prospectus, to be
used in connection with the offering and sale of Shares outside the United
States and Canada to persons other than United States and Canadian Persons. The
international prospectus is identical to the U.S. prospectus except for the
outside front cover page. The registration statement as amended at the time it
becomes effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the U.S. prospectus and the
international prospectus in the respective forms first used to confirm sales of
Shares are hereinafter collectively referred to as the "PROSPECTUS". If the
Company has filed an abbreviated registration statement to register additional
shares of Common Stock pursuant to Rule 462(b) under the Securities Act (the
"RULE 462 REGISTRATION STATEMENT"), then any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462 Registration
Statement.
Xxxxxx Xxxxxxx & Co. Incorporated ("Xxxxxx Xxxxxxx" has agreed
to reserve a portion of the Shares to be purchased by it under this Agreement
for sale to the Company's directors, officers, employees and business associates
and other parties related to the Company (collectively, "Participants"), as set
forth in the Prospectus under the heading "Underwriters" (the "Directed Share
Program"). The Shares to be sold by Xxxxxx Xxxxxxx pursuant to the Directed
Share Program are referred to hereinafter as the "Directed Shares". Any Directed
Shares not orally confirmed for purchase by any Participant by the end of the
business day on which this Agreement is executed will be offered to the public
by the Underwriters as set forth in the Prospectus.
1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective;
no stop order suspending the effectiveness of the Registration
Statement is in effect, and no proceedings for such purpose are pending
before or, to the Company's knowledge, threatened by the Commission.
(b) (i) The Registration Statement, when it became
effective, did not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) the
Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with
the Securities Act and the applicable rules and regulations of the
Commission thereunder and (iii) the Prospectus does not contain and, as
amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that the representations
and warranties set forth in this paragraph do not apply to statements
or omissions in the Registration Statement or the Prospectus based upon
information relating to any Underwriter furnished to the Company in
writing by such Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole; such jurisdictions are comprised of
the Commonwealths of Massachusetts, Pennsylvania and Virginia, the
States of Connecticut, Maine, Maryland, New Hampshire, New Jersey, New
York and Rhode Island and the District of Columbia.
(d) Each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification (which jurisdiction is comprised solely of
the Commonwealth of Virginia), except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries,
taken as a whole; the Company has only one subsidiary,
HarvardNet--Virginia, Inc. (the "Sole Subsidiary"), which is an
inactive subsidiary; all of the issued shares of capital stock of such
subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned directly by the
Company, free and clear of all liens, encumbrances, equities or claims.
(e) This Agreement has been duly authorized, executed
and delivered by the Company.
(f) The authorized capital stock of the Company
conforms as to legal matters to the description thereof contained in
the Prospectus.
(g) The shares of Common Stock outstanding prior to
the issuance of the Shares have been duly authorized and are validly
issued, fully paid and nonassessable.
(h) The Shares have been duly authorized and, when
issued and delivered in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable, and the issuance
of such Shares will not be subject to any preemptive or similar rights.
(i) The execution and delivery by the Company of, and
the performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the certificate
of incorporation or bylaws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, and no consent,
approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, except such as may be
required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares.
(j) There has not occurred any material adverse
change, or any development involving a prospective material adverse
change, in the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole, from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement).
(k) There are no legal or governmental proceedings
pending or, to the Company's knowledge, threatened to which the Company
or any of its subsidiaries is a party or to which any of the properties
of the Company or any of its subsidiaries is subject that are required
to be described in the Registration Statement or the Prospectus and are
not so described or any statutes, regulations, contracts or other
documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(l) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act
and the applicable rules and regulations of the Commission thereunder.
(m) The Company is not and, after giving effect to
the offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as such term is defined in the Investment Company Act of 1940,
as amended.
(n) The Company and its subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received
all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses
and (iii) are in compliance with all terms and conditions of any such
permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of
such permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(o) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for cleanup, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(p) The Company is in the process of reviewing its
operations and that of its subsidiaries to evaluate the extent to which
the business or operations of the Company or any of its subsidiaries
will be affected by the Year 2000 Problem (that is, any significant
risk that computer hardware or software applications used by the
Company and its subsidiaries will not, in the case of dates or time
periods occurring after December 31, 1999, function at least as
effectively as in the case of dates or time periods occurring prior to
January 1, 2000); as a result of such review, (i) the Company has no
reason to believe, and does not believe, that (A) there are any issues
related to the Company's preparedness to address the Year 2000 Problem
that are of a character required to be described or referred to in the
Registration Statement or Prospectus which have not been accurately
described in the Registration Statement or Prospectus and (B), except
as disclosed in the Registration Statement and Prospectus, the Year
2000 Problem will have a material adverse effect on the
condition, financial or otherwise, or on the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, or
result in any material loss or interference with the business or
operations of the Company and its subsidiaries, taken as a whole.
(q) Except as disclosed in the Prospectus, there are
no contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company or to require the Company to include such
securities with the Shares registered pursuant to the Registration
Statement.
(r) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
(i) the Company and its subsidiaries have not incurred any material
liability or obligation, direct or contingent, nor entered into any
material transaction not in the ordinary course of business; (ii) the
Company has not purchased any of its outstanding capital stock, nor
declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock other than ordinary and customary dividends;
and (iii) there has not been any material change in the capital stock,
short-term debt or long-term debt of the Company and its subsidiaries,
except in each case as described in the Prospectus.
(s) The Company and its subsidiaries have good and
marketable title to all personal property owned by them which is
material to the business of the Company and its subsidiaries, in each
case free and clear of all liens, encumbrances and defects except such
as are described in the Prospectus or such as do not materially affect
the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries; neither the Company nor its subsidiaries owns any real
property; and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do
not materially interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries, in
each case except as described in the Prospectus.
(t) The Company and its subsidiaries own or possess,
or can acquire on reasonable terms, all material patents, patent
rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks and trade names currently employed by them in connection with the
business now operated by them, 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
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
(u) No material labor dispute with the employees of
the Company or any of its subsidiaries exists, except as described in
the Prospectus, or, to the knowledge of the
Company, is imminent; and the Company is not aware of any existing,
threatened or imminent labor disturbance by the employees of any of its
principal suppliers, manufacturers or contractors that could have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(v) The Company and its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; neither the Company nor any of
its subsidiaries has been refused any insurance coverage sought or
applied for; and neither the Company nor any of its subsidiaries knows
of any facts which give it a reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole, except as described in the Prospectus.
(w) The Company and its subsidiaries possess all
certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct
their respective businesses, other than those which, singly or in the
aggregate, if not so possessed, would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole; and
neither the Company nor any of its subsidiaries has received any notice
of proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would
have a material adverse effect on the Company and its subsidiaries,
taken as a whole, except as described the Prospectus.
(x) The Company and each of its subsidiaries maintain
a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii) transactions
are recorded as necessary to permit preparation of financial statements
in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
Furthermore, the Company represents and warrants to Xxxxxx
Xxxxxxx that (i) the Registration Statement, the Prospectus and any preliminary
prospectus comply, and any further amendments or supplements thereto will
comply, with any applicable laws or regulations of foreign jurisdictions in
which the Prospectus or any preliminary prospectus, as amended or supplemented,
if applicable, are distributed in connection with the Directed Share Program,
and that (ii) no authorization, approval, consent, license, order, registration
or qualification of or with any government, governmental instrumentality or
court, other than such as have been obtained, is
necessary under the securities laws and regulations of foreign jurisdictions in
which the Directed Shares are offered outside the United States.
The Company has not offered, or caused the Underwriters to
offer, Shares to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or supplier of the
Company to alter the customer's or supplier's level or type of business with the
Company, or (ii) a trade journalist or publication to write or publish favorable
information about the Company or its products.
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees
to sell to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective numbers of Firm Shares set forth in Schedules I and II
hereto opposite its names at U.S.$[_____] a share ("PURCHASE PRICE").
On the basis of the representations and warranties contained
in this Agreement, and subject to its terms and conditions, the Company agrees
to sell to the U.S. Underwriters the Additional Shares, and the U.S.
Underwriters shall have a one-time right to purchase, severally and not jointly,
up to 1,335,000 Additional Shares at the Purchase Price. If the U.S.
Representatives, on behalf of the U.S. Underwriters, elect to exercise such
option, the U.S. Representatives shall so notify the Company in writing not
later than 30 days after the date of this Agreement, which notice shall specify
the number of Additional Shares to be purchased by the U.S. Underwriters and the
date on which such shares are to be purchased. Such date may be the same as the
Closing Date (as defined below) but not earlier than the Closing Date nor later
than ten business days after the date of such notice. Additional Shares may be
purchased as provided in Section 4 hereof solely for the purpose of covering
overallotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each U.S. Underwriter agrees, severally
and not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as the U.S. Representatives may
determine) that bears the same proportion to the total number of Additional
Shares to be purchased as the number of U.S. Firm Shares set forth in Schedule I
hereto opposite the name of such U.S. Underwriter bears to the total number of
U.S. Firm Shares.
The Company hereby agrees that, without the prior written
consent of Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the Underwriters, it
will not, during the period ending 180 days after the date of the Prospectus,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Shares to be sold hereunder, (B) the
issuance by the Company of shares of Common Stock upon the exercise
of an option or warrant or the conversion of a security outstanding on the date
hereof of which the Underwriters have been advised in writing or (C) the
issuance by the Company of shares of Common Stock or options to purchase shares
of Common Stock issued pursuant to the Company's existing stock plans as
described in the Prospectus, PROVIDED that any such shares of Common Stock
described in this clause (C), whether to be issued directly or upon exercise of
any option, shall not be issued prior to the 181st day after the date of the
Prospectus unless the recipient of such shares executes and delivers to you on
or before the date of such issuance a "lock-up" agreement substantially in the
form of Exhibit B hereto.
3. TERMS OF PUBLIC OFFERING. The Company is advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable. The Company is
further advised by you that the Shares are to be offered to the public initially
at U.S.$[_____] a share (the "PUBLIC OFFERING PRICE") and to certain dealers
selected by you at a price that represents a concession not in excess of
U.S.$[____] a share under the Public Offering Price, and that any Underwriter
may allow, and such dealers may reallow, a concession, not in excess of
U.S.$[____] a share, to any Underwriter or to certain other dealers.
4. PAYMENT AND DELIVERY. Payment for the Firm Shares shall be
made to the Company in Federal or other funds immediately available in New York
City against delivery of such Firm Shares for the respective accounts of the
several Underwriters at 10:00 a.m., New York City time, on [____________], 1999,
or at such other time on the same or such other date, not later than
[_________], 1999, as shall be designated in writing by you. The time and date
of such payment are hereinafter referred to as the "CLOSING DATE". The closing
of the offering and sale of the Firm Shares will be held at the offices of Xxxx
and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx.
Payment for any Additional Shares shall be made to the Company
in Federal or other funds immediately available in New York City against
delivery of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
notice described in Section 2 or at such other time on the same or on such other
date, in any event not later than [_______], 1999, as shall be designated in
writing by the U.S. Representatives. The time and date of such payment are
hereinafter referred to as the "OPTION CLOSING DATE". The closing of the
offering and sale of Additional Shares will be held at the offices of Xxxx and
Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx.
Certificates for the Firm Shares and Additional Shares shall
be in definitive form and registered in such names and in such denominations as
you shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
5. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The
obligations of the Company to sell the Shares to the Underwriters and the
several obligations of the Underwriters to purchase and pay for the Shares on
the Closing Date are subject to the condition that the Registration Statement
shall have become effective not later than [_______] (New York City time) on the
date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date:
(i) there shall not have occurred any
downgrading, nor shall any notice have been given of any
intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any
change, or any development involving a prospective change, in
the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries,
taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement) that, in your judgment, is
material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the
Closing Date a certificate, dated the Closing Date and signed by an
executive officer of the Company, to the effect set forth in Section
5(a)(i) above and to the effect that the representations and warranties
of the Company contained in this Agreement are true and correct as of
the Closing Date and that the Company has complied with all of the
agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate
may rely upon the best of his or her knowledge as to proceedings
threatened.
(c) The Underwriters shall have received on the
Closing Date an opinion of Xxxx and Xxxx LLP, outside counsel for the
Company, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated,
is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing in
the Commonwealths of Massachusetts, Pennsylvania and Virginia,
the States of Connecticut, Maine, Maryland, New Hampshire, New
Jersey, New York and Rhode Island and the District of
Columbia, which are the only jurisdictions in the United
States in which the Company, to such counsel's knowledge,
maintains an office or owns or leases real property;
(ii) the Sole Subsidiary has been duly
incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is
in good standing in the Commonwealth of Virginia, which is the
only jurisdiction in the United States in which the Sole
Subsidiary, to such counsel's knowledge, maintains an office
or owns or leases real property;
(iii) the authorized capital stock of the
Company conforms as to legal matters to the description
thereof contained in the Prospectus;
(iv) the shares of Common Stock outstanding
prior to the issuance of the Shares have been duly authorized
and are validly issued, fully paid and nonassessable;
(v) all of the issued shares of capital
stock of the Sole Subsidiary have been duly and validly
authorized and issued, are fully paid and non-assessable and
are owned of record directly by the Company, to our knowledge,
free and clear of all liens, encumbrances, equities or claims;
(vi) the Shares have been duly authorized
and, when issued, delivered and paid for in accordance with
the terms of this Agreement, will be validly issued, fully
paid and nonassessable, and the issuance of such Shares will
not be subject to any preemptive or similar rights under the
Delaware General Corporation Law statute, contained in the
Company's Certificate of Incorporation or Bylaws of the
Company or, to such counsel's knowledge, under any agreement
or other instrument that has been filed as an exhibit to the
Registration Statement;
(vii) this Agreement has been duly
authorized, executed and delivered by the Company;
(viii) the execution and delivery by the
Company of, and the performance by the Company of its
obligations under, this Agreement will not
contravene any provision of applicable law or the certificate
of incorporation or bylaws of the Company or, to such
counsel's knowledge, any agreement or other instrument binding
upon the Company or any of its subsidiaries that has been
filed as an exhibit to the Registration Statement, or, to such
counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over
the Company or any subsidiary and specifically naming the
Company or any subsidiary, and no consent, approval,
authorization or order of, or qualification with, any
governmental body or agency is required for the performance by
the Company of its obligations under this Agreement, except
such as may be required by the securities or Blue Sky laws of
the various states in connection with the offer and sale of
the Shares by the U.S. Underwriters;
(ix) the statements (A) in the Prospectus
under the caption "Description of Capital Stock," the first
sentence under the caption "Business--Legal Proceedings" and
the first, second, tenth and fifteenth paragraphs under the
caption "Underwriters" and (B) in the Registration Statement
in Items 14 and 15, in each case insofar as such statements
constitute matters of law or legal conclusions, have been
reviewed by us, fairly present the information called for with
respect to such legal matters and are correct in all material
respects
(x) after due inquiry, such counsel does not
know of any legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is
a party or to which any of the properties of the Company or
any of its subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and
are not so described or of any statutes, regulations,
contracts or other documents that are required by the
Securities Act of the rules and regulations promulgated
thereunder to be filed as exhibits to the Registration
Statement that are not filed as required;
(xi) the Company is not and, after giving
effect to the offering and sale of the Shares and the
application of the proceeds thereof as described in the
Prospectus, will not be an "investment company" as such term
is defined in the Investment Company Act of 1940, as amended;
(xii) the statements in the Prospectus under
the caption "United States Federal Tax Consequences to
Non-U.S. Holders of Common Stock," insofar as such statements
constitute a summary of the United States federal tax law
referred to therein, are correct in all material respects and
fairly summarize in all material respects the United States
federal tax laws referred to therein; and
(xiii) in addition, such counsel shall state
(A) that the Registration Statement and Prospectus (except for
financial statements and
schedules and other financial and statistical data included
therein as to which such counsel need not express any opinion)
comply as to form in all material respects with the Securities
Act and the applicable rules and regulations of the Commission
thereunder and (B) that they have participated in conferences
with officers and other representatives of the Company,
representatives of the independent public or certified public
accountants for the Company and with representatives of and
counsel for the Underwriters, at which conferences such
counsel made inquiries of such persons and others and
discussed the contents of the Registration Statement and the
Prospectus and any supplements or amendments thereto. Such
counsel shall also state that while the limitations inherent
in the independent verification of factual matters and the
character of determinations involved in the registration
process are such that such counsel is not passing upon and
does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or Prospectus, or any supplements or
amendments thereto, except with respect to paragraphs (ix) and
(xii) above, subject to and on the basis of such
participation, inquiries and discussions, no facts have come
to the attention of such counsel which have caused such
counsel to believe that (A) the Registration Statement and the
prospectus included therein at the time the Registration
Statement became effective contained any untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading (except for financial statements and schedules
and other financial and statistical data included therein as
to which such counsel need not express any belief) and (B) the
Prospectus when issued contained, or as of the date such
opinion is delivered, contains, any untrue statement of a
material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading (except for financial statements and schedules and
other financial and statistical data included therein as to
which such counsel need not express any belief).
In rendering such opinion such counsel may (i) state
that they render no opinion as to matters of law other than the General
Corporation Law statute of the State of Delaware, the law of the
Commonwealth of Massachusetts and federal law of the United States and
(ii) rely as to matters of fact, to the extent such counsel deems
reasonable, upon certificates of officers of the Company and its
subsidiaries.
The opinion of Xxxx and Xxxx LLP described in Section
5(c) above shall be rendered to the Underwriters at the request of the
Company and shall so state therein.
(d) The Underwriters shall have received on the
Closing Date an opinion of Levine, Blaszak, Block and Xxxxxxx, LLP,
regulatory counsel for the Company, dated the Closing Date, in the form
of Exhibit A hereto.
The opinion of Levine, Blaszak, Block and Xxxxxxx, LLP
described in Section 5(d) above shall be rendered to the Underwriters
at the request of the Company and shall so state therein.
(e) The Underwriters shall have received on the
Closing Date an opinion of Preti, Flaherty, Beliveau, Pachios & Xxxxx
LLC, Maine regulatory counsel for the Company, dated the Closing Date,
in the form of Exhibit B hereto.
The opinion of Preti, Flaherty, Beliveau, Pachios &
Xxxxx LLC described in Section 5(e) above shall be rendered to the
Underwriters at the request of the Company and shall so state therein.
(f) The Underwriters shall have received on the
Closing Date an opinion of Sulloway & Xxxxxx, P.L.L.C., New Hampshire
regulatory counsel for the Company, dated the Closing Date, in the form
of Exhibit B hereto.
The opinion of Sulloway & Xxxxxx, P.L.L.C. described
in Section 5(f) above shall be rendered to the Underwriters at the
request of the Company and shall so state therein.
(g) The Underwriters shall have received on the
Closing Date an opinion of and Xxxxx, Xxxx & Xxxxx, Massachusetts
regulatory counsel for the Company, dated the Closing Date, in the form
of Exhibit B hereto.
The opinion of Xxxxx, Xxxx & Xxxxx described in
Section 5(g) above shall be rendered to the Underwriters at the request
of the Company and shall so state therein.
(h) The Underwriters shall have received on the
Closing Date an opinion of Shearman & Sterling, counsel for the
Underwriters, dated the Closing Date, in form and substance
satisfactory to you.
(i) The Underwriters shall have received, on each of
the date hereof and the Closing Date, a letter dated the date hereof or
the Closing Date, as the case may be, in form and substance
satisfactory to the Underwriters, from PriceWaterhouseCoopers LLP,
independent public accountants, containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain
financial information contained in the Registration Statement and the
Prospectus; PROVIDED that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(j) The "lockup" agreements, each substantially in
the form of Exhibit Cg1 hereto, between you and certain officers and
directors of the Company relating to sales and certain other
dispositions of shares of Common Stock or certain other securities,
delivered to you on or before the date hereof, shall be in full force
and effect on the Closing Date.
(k) The Common Stock shall have been approved for
quotation on the Nasdaq National Market, subject only to official
notice of issuance.
(l) The Registration Rights Agreement between the
Company and the purchasers named therein dated September 1, 1998 as
amended on May 31, 1999 (the "Registration Rights Agreement"), shall
have been amended in a form satisfactory to you to provide that the
purchasers party thereto shall be subject to "lockup agreements,
substantially in the form of Exhibit B hereto under the circumstances
described in the Registration Rights Agreement.
(m) You shall have received such other documents and
certificates as are reasonably requested by you or your counsel.
The several obligations of the U.S. Underwriters to purchase
Additional Shares hereunder are subject to the delivery to the U.S.
Representatives on the Option Closing Date of such documents as they may
reasonably request with respect to the good standing of the Company, the due
authorization and issuance of the Additional Shares and other matters related to
the issuance of the Additional Shares.
6. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, four signed
copies of the Registration Statement (including exhibits thereto) and
for delivery to each other Underwriter a conformed copy of the
Registration Statement (without exhibits thereto) and to furnish to you
in New York City, without charge, prior to 10:00 a.m. New York City
time on the business day next succeeding the date of this Agreement and
during the period mentioned in Section 6(c) below, as many copies of
the Prospectus and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object, and to file
with the Commission within the applicable period specified in Rule
424(b) under the Securities Act any prospectus required to be filed
pursuant to such Rule.
(c) If, during such period after the first date of
the public offering of the
Shares as in the opinion of counsel for the Underwriters the Prospectus
is required by law to be delivered in connection with sales by an
Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus
in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the Underwriters, it
is necessary to amend or supplement the Prospectus to comply with
applicable law, forthwith to prepare, file with the Commission and
furnish, at its own expense, to the Underwriters and to the dealers
(whose names and addresses you will furnish to the Company) to which
Shares may have been sold by you on behalf of the Underwriters and to
any other dealers upon request, either amendments or supplements to the
Prospectus so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and
sale under the securities or Blue Sky laws of such jurisdictions as you
shall reasonably request.
(e) To make generally available to the Company's
security holders and to you as soon as practicable an earning statement
covering the twelve-month period ending [________], 2000 that satisfies
the provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder.
(f) Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, to pay
or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel and the Company's
accountants in connection with the registration and delivery of the
Shares under the Securities Act and all other fees or expenses in
connection with the preparation and filing of the Registration
Statement, any preliminary prospectus, the Prospectus and amendments
and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof
to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and
delivery of the Shares to the Underwriters, including any transfer or
other taxes payable thereon, (iii) the cost of printing or producing
any Blue Sky or Legal Investment memorandum in connection with the
offer and sale of the Shares under state securities laws and all
expenses in connection with the qualification of the Shares for offer
and sale under state securities laws as provided in Section 6(d)
hereof, including filing fees and the reasonable fees and disbursements
of counsel for the Underwriters in connection with such qualification
and in connection with the Blue Sky or Legal Investment memorandum,
(iv) all filing fees and the reasonable fees and disbursements of
counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Shares by the National Association
of Securities Dealers, Inc. (the "NASD"), including the fees and
disbursements incurred on behalf of Xxxxxxx Xxxxx Xxxxxx Inc. in its
capacity as "qualified independent underwriter," (v) all
fees and expenses in connection with the preparation and filing of the
registration statement on Form 8-A relating to the Common Stock and all
costs and expenses incident to quotation of the Shares on the Nasdaq
National Market, (vi) the cost of printing certificates representing
the Shares, (vii) the costs and charges of any transfer agent,
registrar or depositary, (viii) the costs and expenses of the Company
relating to investor presentations on any "road show" undertaken in
connection with the marketing of the offering of the Shares, including,
without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants engaged
in connection with the road show presentations with the prior approval
of the Company, travel and lodging expenses of the representatives and
officers of the Company and any such consultants, and the cost of any
aircraft chartered in connection with the road show, (ix) all other
costs and expenses incident to the performance of the obligations of
the Company hereunder for which provision is not otherwise made in this
Section. It is understood, however, that except as provided in this
Section, Section 7 entitled "Indemnity and Contribution", and the last
paragraph of Section 9 below, the Underwriters will pay all of their
costs and expenses, including fees and disbursements of their counsel,
stock transfer taxes payable on resale of any of the Shares by them and
any advertising expenses connected with any offers they may make.
(g) That in connection with the Directed Share
Program, the Company will ensure that the Directed Shares will be
restricted to the extent required by the NASD or the NASD rules from
sale, transfer, assignment, pledge or hypothecation for a period of
three months following the date of the effectiveness of the
Registration Statement. Xxxxxx Xxxxxxx will notify the Company as to
which Participants will need to be so restricted. The Company will
direct the transfer agent to place stop transfer restrictions upon such
securities for such period of time.
(h) To pay all fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Share
Program and stamp duties, similar taxes or duties or other taxes, if
any, incurred by the Underwriters in connection with the Directed Share
Program.
Furthermore, the Company covenants with Xxxxxx Xxxxxxx that
the Company will comply with all applicable securities and other applicable
laws, rules and regulations in each foreign jurisdiction in which the Directed
Shares are offered in connection with the Directed Share Program.
7. INDEMNITY AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any preliminary prospectus or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnities from the
Company to such Underwriter, but only with reference to information relating to
such Underwriter furnished to the Company in writing by such Underwriter through
you expressly for use in the Registration Statement, any preliminary prospectus,
the Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 7(a) or 7(b), such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Xxxxxx Xxxxxxx, in the case of parties indemnified
pursuant to Section 7(a) and by the Company, in the case of parties indemnified
pursuant to Section 7(b). The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding. Notwithstanding anything
contained herein to the contrary, if indemnity may be sought pursuant to Section
7(g) hereof in respect of such action or proceeding, then in addition to such
separate firm for the indemnified parties, the indemnifying party shall be
liable for the reasonable fees and expenses of not more than one separate firm
(in addition to any local counsel) for Xxxxxx Xxxxxxx for the defense of any
losses, claims, damages and liabilities arising out of the Directed Share
Program, and all persons, if any, who control Xxxxxx Xxxxxxx within the meaning
of either Section 15 of the Act or Section 20 of the Exchange Act.
(d) To the extent the indemnification provided for in Section
7(a), 7(b) or 7(e) is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation provided by
clause 7(d)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
7(d)(i) above but also the relative fault of the Company on the one hand and of
the Underwriters on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other hand in
connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. Benefits received by Xxxxxxx Xxxxx Xxxxxx Inc.
(the "Independent Underwriter") in its capacity as "qualified independent
underwriter" (within the meaning of National Association of Securities Dealers,
Inc. Conduct Rule 2720) shall be deemed to be equal to the compensation received
by the Independent Underwriter for acting in such capacity. The relative fault
of the Company on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
(e) Without limitation of and in addition to its obligations
under the other paragraphs of this Section 7, the Company agrees to indemnify
and hold harmless the Independent Underwriter, its directors, officers,
employees and agents and each person who controls Independent Underwriter within
the meaning of either the Act or the Exchange Act against any and all losses,
claims, damages or liabilities (or action in respect thereof) that arise out of
or are based upon Independent Underwriter's acting as a "qualified independent
underwriter" (within the meaning of the National Association of Securities
Dealers, Inc. Conduct Rule 2720) in connection with the offering contemplated by
this Agreement, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
results from the gross negligence or willful misconduct of the Independent
Underwriter.
(f) The Company and the Underwriters agree that it would not
be just or equitable if contribution pursuant to this Section 7 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 that does not take account of
the equitable considerations referred to in Section 7(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, (i) 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 and (ii) the Independent Underwriter in its capacity as
"qualified independent underwriter" (within the meaning of National Association
of Securities Dealers, Inc. Conduct Rule 2720) shall not be responsible for any
amount in excess of the compensation received by the Independent Underwriter for
acting in such capacity. 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. The remedies provided for in this Section 7 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(g) The Company agrees to indemnify and hold harmless Xxxxxx
Xxxxxxx and each person, if any, who controls Xxxxxx Xxxxxxx within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act
("XXXXXX XXXXXXX ENTITIES"), from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) (i) caused by any untrue statement or alleged untrue
statement of a material fact contained in material prepared by or with the
consent of the Company for distribution to Participants in connection with the
Directed Share Program or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; (ii) caused by the failure of any Participant
to pay for and accept delivery of the Directed Shares that the Participant
agreed to purchase; or (iii) related to, arising out of, or in connection with
the Directed Share Program other than losses, claims, damages or liabilities (or
expenses relating thereto) that are finally judicially determined to have
resulted from the bad faith or gross negligence of the Xxxxxx Xxxxxxx Entities.
(h) In case any proceeding (including any governmental
investigation) shall be instituted involving any Xxxxxx Xxxxxxx Entity in
respect of which indemnity may be sought pursuant to Section 7(g), the Xxxxxx
Xxxxxxx Entity seeking indemnity shall promptly notify the Company in writing
and the Company, upon request of the Xxxxxx Xxxxxxx Entity, shall retain counsel
reasonably satisfactory to the Company to represent the Xxxxxx Xxxxxxx Entity
and any others the Company may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any Xxxxxx Xxxxxxx Entity shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Xxxxxx Xxxxxxx Entity unless (i) the Company and the Xxxxxx Xxxxxxx Entity
shall have agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the Company
and the Xxxxxx Xxxxxxx Entity and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. The Company shall not, in respect of the legal expenses of the
Xxxxxx Xxxxxxx Entities in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all Xxxxxx Xxxxxxx
Entities. Any such separate firm for the Xxxxxx Xxxxxxx Entities shall be
designated in writing by Xxxxxx Xxxxxxx. The Company shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
Company agrees to indemnify the Xxxxxx Xxxxxxx Entities from and against any
loss or liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time a Xxxxxx Xxxxxxx Entity shall have requested
the Company to reimburse it for fees and expenses of counsel as contemplated by
the second and third sentences of this paragraph, the Company agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by the Company of the aforesaid request and (ii) the Company shall not
have reimbursed the Xxxxxx Xxxxxxx Entity in accordance with such request prior
to the date of such settlement. The
Company shall not, without the prior written consent of Xxxxxx Xxxxxxx, effect
any settlement of any pending or threatened proceeding in respect of which any
Xxxxxx Xxxxxxx Entity is or could have been a party and indemnity could have
been sought hereunder by such Xxxxxx Xxxxxxx Entity, unless such settlement
includes an unconditional release of the Xxxxxx Xxxxxxx Entities from all
liability on claims that are the subject matter of such proceeding.
(i) To the extent the indemnification provided for in Section
7(g) is unavailable to a Xxxxxx Xxxxxxx Entity or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then the Company, in
lieu of indemnifying the Xxxxxx Xxxxxxx Entity thereunder, shall contribute to
the amount paid or payable by such Xxxxxx Xxxxxxx Entity as a result of such
losses, claims, damages or liabilities (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Directed Shares or (ii)
if the allocation provided by clause 7(i)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 7(i)(i) above but also the relative
fault of the Company on the one hand and of the Xxxxxx Xxxxxxx Entity on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Xxxxxx Xxxxxxx Entity on the other hand in connection with the offering
of the Directed Shares shall be deemed to be in the same respective proportions
as the net proceeds from the offering of the Directed Shares (before deducting
expenses) and the total underwriting discounts and commissions received by the
Xxxxxx Xxxxxxx Entities for the Directed Shares, bear to the aggregate Public
Offering Price of the Directed Shares. If the loss, claim, damage or liability
is caused by an untrue or alleged untrue statement of a material fact, the
relative fault of the Company on the one hand and the Xxxxxx Xxxxxxx Entities on
the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement or the omission or alleged omission
relates to information supplied by the Company or by the Xxxxxx Xxxxxxx Entities
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(j) The Company and the Xxxxxx Xxxxxxx Entities agree that it
would not be just or equitable if contribution pursuant to this Section 7 were
determined by PRO RATA allocation (even if the Xxxxxx Xxxxxxx Entities were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in
Section 7(i). The amount paid or payable by the Xxxxxx Xxxxxxx Entities as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, no Xxxxxx
Xxxxxxx Entity shall be required to contribute any amount in excess of the
amount by which the total price at which the Directed Shares distributed to the
public were offered to the public exceeds the amount of any damages that such
Xxxxxx Xxxxxxx Entity has otherwise been required to pay. The remedies provided
for in this Section 7 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law or in
equity.
(k) The indemnity and contribution provisions contained in
this Section 7 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, any Xxxxxx Xxxxxxx Entity or by or on behalf of the Company,
its officers or directors or any person controlling the Company and (iii)
acceptance of and payment for any of the Shares or any of the Directed Shares.
8. TERMINATION. This Agreement shall be subject to termination
by notice given by you to the Company, if (a) after the execution and delivery
of this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 8(a)(i) through 8(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.
9. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement
shall become effective upon the execution and delivery hereof by the parties
hereto.
If, on the Closing Date or the Option Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse to
purchase Shares that it has or they have agreed to purchase hereunder on such
date, and the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule I or Schedule
II bears to the aggregate number of Firm Shares set forth opposite the names of
all such non-defaulting Underwriters, or in such other proportions as you may
specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; PROVIDED
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 9 by
an amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares and the aggregate
number of Firm Shares with respect to which such default occurs is more than
one-tenth of the aggregate number
of Firm Shares to be purchased, and arrangements satisfactory to you and the
Company for the purchase of such Firm Shares are not made within 36 hours after
such default, this Agreement shall terminate without liability on the part of
any non-defaulting Underwriter or the Company. In any such case either you or
the Company shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. If, on the Option Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Additional Shares and the
aggregate number of Additional Shares with respect to which such default occurs
is more than one-tenth of the aggregate number of Additional Shares to be
purchased, the non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase Additional Shares or (ii)
purchase not less than the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase in the absence of such
default. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
If this Agreement shall be terminated by the Underwriters, or
any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement, the Company will reimburse the Underwriters or such Underwriters
as have so terminated this Agreement with respect to themselves, severally, for
all out-of-pocket expenses (including the fees and disbursements of their
counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering contemplated hereunder.
10. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
11. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
12. HEADINGS. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
Very truly yours,
HARVARDNET INC.
By:_______________________
Name:
Title:
Accepted as of the date hereof
XXXXXX XXXXXXX & CO. INCORPORATED
XXXXXXX XXXXX & CO., XXXXXXX XXXXX, XXXXXX
XXXXXX & XXXXX INCORPORATED
XXXXXXX XXXXX BARNEY INC.
Acting severally on behalf of themselves and
the several U.S. Underwriters named in
Schedule I hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By:___________________________
Name:
Title:
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
XXXXXXX XXXXX INTERNATIONAL
XXXXXXX XXXXX BARNEY INTERNATIONAL LIMITED
Acting severally on behalf of themselves
and the several International Underwriters
named in Schedule II hereto.
By: Xxxxxx Xxxxxxx & Co. International Limited
By: ____________________________
Name:
Title:
SCHEDULE I
U.S. UNDERWRITERS
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
---------------
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Xxxxx & Co., Xxxxxxx Xxxxx, Xxxxxx
Xxxxxx & Xxxxx Incorporated
Xxxxxxx Xxxxx Barney Inc.
[NAMES OF OTHER U.S. UNDERWRITERS]
---------------
Total U.S. Firm Shares .............. 7,120,000
---------------
---------------
SCHEDULE II
INTERNATIONAL UNDERWRITERS
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
---------------
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxx Xxxxx International
Xxxxxxx Xxxxx Barney International Limited
[NAMES OF OTHER INTERNATIONAL UNDERWRITERS]
---------------
Total International Firm Shares ...... 1,780,000
---------------
---------------
EXHIBIT A
[FORM OF REGULATORY OPINION OF XXXXXX, XXXXXXX]
Attach opinion of Levine, Blaszak, Block and Xxxxxxx, LLP, regulatory
counsel for the Company, to be delivered pursuant to the Underwriting Agreement
to the effect that:
(i) (A) the execution and delivery by the Company of, and performance
of its obligations under, the Underwriting Agreement and the consummation of
the transactions contemplated thereby (collectively, the "Transactions"),
will not materially violate (1) the Communications Act, any rules or
regulations of the FCC applicable to the Company, (2) any Maryland or New
York State Law relating to telecommunications and applicable to the Company,
or (3) to the best of our knowledge, any decree from any federal, Maryland,
or New York court or tribunal relating to telecommunications regulatory
matters and issued in a proceeding to which the Company was a party; and
(B) except for the approval of the New York PSC (which has
been applied for and is likely to be obtrained) no authorization from the
FCC or the PSC of Maryland or New York is necessary for the execution and
delivery by the Company of, or the performance of its obligations under, the
Underwriting Agreement or the consummation of the Transactions;
(ii) (A) the Company is authorized (1) to provide facilities-based and
resold local exchange telecommunications services as a CLEC in Maryland, and
(2) to operate as a facilities- based common carrier and reseller of
telephone services in New York, not including the provision of local
exchange services (I.E., local dial-tone) and emergency operator services in
accordance with Section 649.6 of the New York PSC's rules (the services
described in (1) and (2) to be referred to collectively as the "Service");
and
(B) the Company has applied for authorization to provide
services as a CLEC in Washington, D.C., and the Company's subsidiary has
applied for authorization to provide services as a CLEC in Virginia;
(iii) (A) to the best of our knowledge, the Company (1) has paid all
fees required by the FCC and by the PSCs of Maryland and New York, (2) has
(or has applied for and is likely to obtain) all telecommunications
certificates, permits, licenses, authorizations, consents and approvals with
respect to its status in Maryland and New York that are required by the PSCs
in such states and from the FCC; and (3) has made all reports, filings, and
registrations which the Company is or has been required to make with the FCC
or the PSCs of Maryland or New York, in each case that are material to the
Company's business and that are necessary to own, lease, license and use its
properties and assets to conduct its business in the manner described in the
Prospectus; and
(B) to the best of our knowledge, (1) no proceedings relating
to the revocation, modification or non-renewal of any of the certificates,
orders, permits, licenses, authorizations, consents, or approvals described
in the preceding paragraph have been issued by the FCC or the PSC of
Maryland or New York, and (2) the Company has not received any notice, from
the FCC or from the PSC of Maryland or New York of the qualification or
rejection of any report, filing or registration by the Company with the FCC
or the Maryland or New York PSC, the effect of which, in the aggregate,
would have a material adverse effect on the Company;
(iv) to the best of our knowledge, the Company is not in violation of
the Communications Act, the rules, regulations, or orders of the FCC or, to
the extent applicable to the Company, Maryland or New York State Law to a
degree which, in the aggregate, would have a material adverse effect on the
Company;
(v) to the best of our knowledge,
(A) no judgment, decree, notice of violation, order to show
cause, or other order has been issued by the FCC, the Maryland or New York
PSC, or any federal or state court in Maryland or New York in a proceeding
or action relating to telecommunications regulatory issues and to which the
Company was a party, except such as would not have a material adverse effect
on the Company; and
(B) no litigation, proceeding, inquiry or investigation
relating to telecommunications regulatory issues has been commenced or
threatened against the Company before or by the FCC, the Maryland or New
York PSC, or any federal or state court in Maryland or New York;
(C) other than as generally discussed in the Prospectus, there
are no rulemakings or other administrative proceedings pending before the
FCC or the New York or Maryland PSC's which (x) are generally applicable to
telecommunications services and (y) if decided adversely to the interests of
the Company, would have a material adverse effect on the Company, taken as a
whole; and
(vi) the statements in the Prospectus under the captions "Risk
Factors--We are dependent on Xxxx Atlantic for copper telephone lines,
central office space and transmission facilities, and Xxxx Atlantic's
reluctance to cooperate with us or inability to provide the services or
facilities we need could adversely affect our business," "Risk Factors--Our
access to Xxxx Atlantic's central offices and transmission facilities is
dependent on third parties," "Risk Factors--Our services are subject to
uncertain government regulation regulations and changes in laws or
regulations could restrict the way we operate our business," "Risk
Factors--The adoption or modification of laws or regulations relating to the
Internet could adversely affect our business;" "Risk Factors--Our services
and interconnection agreements are subject to uncertain government
regulations that may be interpreted in ways that would
harm our business" "Business--Market Opportunity--Emergence of Digital
Subscriber Line Technology," "Business--Interconnection Agreements with
Xxxx Atlantic" and "Business--Government Regulation," insofar as such
statements constitute a summary of the legal matters, documents or
proceedings referred to therein, fairly summarize the matters referred
to therein.
EXHIBIT B
[FORM OF REGULATORY OPINION FOR LOCAL COUNSEL]
Attach opinion of local regulatory counsel for the Company, to be
delivered pursuant to the Underwriting Agreement to the effect that:
(i) (A) the execution and delivery by the Company of, and performance
of its obligations under, the Underwriting Agreement and the consummation of
the transactions contemplated thereby do not violate (1) any state or local
law, rule or regulation relating to telecommunications applicable to the
Company or its subsidiary ("State Law") or (2) to the best of such counsel's
knowledge, any decree from any court or tribunal, and (B) no authorization
of or filing with any state authority regulating telecommunications services
provided by the Company or its subsidiary, including state public utility
commissions ("State Authorities"), is necessary for the execution and
delivery by the Company of, or the performance of its obligations under, the
Underwriting Agreement or the consummation of the transactions contemplated
thereby;
(ii) the Company and its subsidiary are certified and/or registered to
provide DSL based local exchange and local exchange access services in [ ],
and the Company has a tariff on file in [ ]. No further authority is
required from any of the State Authorities by the Company or any of its
subsidiaries to conduct its business as described in the Prospectus;
(iii) (A) each of the Company and its subsidiary (1) has paid all fees
required by the State Authorities; and (2) has all certificates, orders,
permits, licenses, authorizations, consents and approvals of and from, and
has made all reports, filings and registrations, with the State Authorities,
all self regulatory organizations and all courts and tribunals necessary to
own, lease, license and use its properties and assets and to conduct its
business in the manner described in the Prospectus and is conducting its
business in accordance therewith; and (B) to the best of such counsel's
knowledge, neither the Company nor its subsidiary has received any notice of
proceedings relating to the revocation, modification or non-renewal of any
such certificates, orders, permits, licenses, authorizations, consents or
approvals, or the qualification or rejection of any such report, filing or
registration, the effect of which, singly or in the aggregate, would have a
material adverse effect on the Company and its subsidiary, taken as a whole;
(iv) neither the Company nor its subsidiary is in violation of, or in
default under the telecommunications rules or regulations of State Law the
effect of which, singly or in the aggregate, would have a material adverse
effect on the Company and its subsidiary, taken as a whole; and
(v) to the best of such counsel's knowledge, (A) no judgment, decree or
order of any State Authority has been issued against the Company or its
subsidiary and (B) no litigation, proceeding, inquiry or investigation has
been commenced or threatened, and no notice of violation or order to show
cause has been issued, against the Company or its subsidiary before or by
any State Authority. To the best of such counsel's knowledge, there are no
rulemakings or other administrative proceedings pending before any State
Authority which (x) are generally applicable to telecommunications services
and (y) if decided adversely to the interests of the Company or its
subsidiary, would have a material adverse effect on the Company and its
subsidiary, taken as a whole.
EXHIBIT C
[FORM OF LOCK-UP LETTER]
____________, 1999
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Xxxxx & Co., Xxxxxxx Xxxxx, Xxxxxx
Xxxxxx & Xxxxx Incorporated
Xxxxxxx Xxxxx Barney Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxx Xxxxx International
Xxxxxxx Xxxxx Barney International Limited
c/o Morgan Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated
("XXXXXX XXXXXXX") and Xxxxxx Xxxxxxx & Co. International Limited ("MSIL")
propose to enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT")
with HarvardNet Inc., a Delaware corporation (the "COMPANY") providing for the
public offering (the "PUBLIC OFFERING") by the several Underwriters, including
Xxxxxx Xxxxxxx and MSIL (the "UNDERWRITERS"), of shares (the "SHARES") of the
Common Stock, par value $.01 per share of the Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Xxxxxx
Xxxxxxx on behalf of the Underwriters, it will not, during the period commencing
on the date hereof and ending 180 days after the date of the final prospectus
relating to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
Common Stock, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Common Stock or such other securities, in cash
or otherwise. The foregoing sentence shall not apply to (a) the sale of any
Shares to the Underwriters pursuant to the Underwriting Agreement or (b)
transactions relating to shares of Common Stock or other securities acquired in
open market transactions after the completion of the Public Offering. In
addition, the undersigned agrees that, without the prior written consent of
Xxxxxx Xxxxxxx on behalf of the Underwriters, it will not, during the period
commencing on the date hereof and ending 180 days after the date of the
Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into
or exercisable or exchangeable for Common Stock.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
-----------------------
(Name)
-----------------------
(Address)
