EXHIBIT 1.1
DIGEX, INCORPORATED
__________ Shares of Common Stock
UNDERWRITING AGREEMENT
July ___, 1999
BEAR, XXXXXXX & CO. INC.
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
CIBC WORLD MARKETS CORP.
XXXX XXXXX XXXX XXXXXX, INCORPORATED
DLJDIRECT INC.
__________ Shares of Common Stock
DIGEX, INCORPORATED
UNDERWRITING AGREEMENT
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July ___, 1999
Bear, Xxxxxxx & Co. Inc.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
CIBC World Markets Corp.
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
DLJDirect Inc.
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Digex, Incorporated, a corporation organized and existing under the
laws of Delaware (the "Company"), proposes, subject to the terms and conditions
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stated herein, to issue and sell to the several underwriters named in Schedule 1
hereto (collectively, the "Underwriters") an aggregate of __________ shares (the
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"Firm Shares") of its Class A common stock, par value $0.01 per share (the
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"Common Stock") and, for the sole purpose of covering over-allotments in
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connection with the sale of the Firm Shares, at the option of the Underwriters,
up to an additional __________ shares (the "Additional Shares") of Common Stock.
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The Firm Shares and any Additional Shares purchased by the Underwriters are
referred to herein as the "Shares". The Shares are more fully described in the
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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:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-1 (No. 333-77105), and
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any amendments thereto, and related preliminary prospectuses for the
registration under the Securities Act of 1933 (the "Securities Act") of
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shares of common 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. The registration statement, as amended at the
time it became effective, including the exhibits and information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Act, is hereinafter referred to as the
"Registration Statement". If the Company has filed or is required pursuant
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to the terms hereof to file a registration statement pursuant to Rule 462(b)
under the Act registering additional shares of Common Stock (a "Rule 462(b)
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Registration Statement"), then, unless otherwise specified, any
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reference herein to the term "Registration Statement" shall be deemed to
include such Rule 462(b) Registration Statement. Other than a Rule 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 the
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") which differs from the Prospectus (whether or not such revised
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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; and, provided, further, that the term "Prospectus"
shall be deemed to include any wrapper or supplement thereto prepared in
connection with the distribution of any Reserved Shares (as defined in
Section 2(f), below). 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 references in this Agreement to the
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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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(b) 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 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. 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 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; provided, however,
that the representations and warranties in this Section (1)(b) 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
Regulation S-T
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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
(except as may be permitted by Regulation S-T under the Securities Act).
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 of its subsidiaries or any other person required to be
described in the Prospectus that have not been described therein as required.
(c) Each of the Company and its subsidiaries (i) has been duly
organized and is validly existing as a corporation in good standing under the
laws of its respective jurisdiction of incorporation, (ii) has all requisite
corporate power and authority to carry on its business as it is currently
being conducted and as described in the Prospectus and to own, lease and
operate its properties, and (iii) is duly qualified and in good standing as a
foreign corporation authorized to do business in each jurisdiction in which
the nature of its business or its ownership or leasing of property requires
such qualification except, with respect to clauses (i) (as it relates to good
standing) and (iii), where the failure to be so qualified or in good standing
does not and could not reasonably be expected to (x) 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, (y)
interfere with or adversely affect the issuance or marketability of the
Shares pursuant hereto or (z) in any manner draw into question the validity
of this Agreement or any other Operative Document or the transactions
described in the Prospectus under the caption "Use of Proceeds" (any of the
events set forth in clauses (x), (y) or (z), a "Material Adverse Effect").
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(d) All of the outstanding shares of capital stock of the Company
have been duly authorized, validly issued, and are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights. The Shares, when issued, delivered and sold in accordance with this
Agreement, will be duly authorized and validly issued, fully paid and
nonassessable, and will not have been issued in violation of or subject to
any preemptive or similar rights. At March 31, 1999, after giving effect to
the issuance and sale of the Shares pursuant hereto and the application of
the net proceeds from the sale thereof, the Company had the pro forma
consolidated capitalization as set forth in the Prospectus under the caption
"Capitalization".
(e) All of the outstanding capital stock of, or other ownership
interests in, the Company's subsidiaries is owned 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.
(f) 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 (other than options
issued pursuant to the Company's stock option plans).
(g) The Common Stock (including the Shares) is registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act") and
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is listed for quotation on the Nasdaq National Market System ("Nasdaq"), and
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the Company has taken no action designed to, or likely 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
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received any notification that the Commission or Nasdaq is contemplating
terminating such registration or listing.
(h) 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, including, without
limitation, the corporate power and authority to issue, sell and deliver the
Shares as provided herein and the power to effect the Use of Proceeds as
described in the Prospectus.
(i) This Agreement has been duly and validly authorized, executed and
delivered by the Company and is the legal, valid and binding agreement of the
Company, enforceable against the Company 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.
(j) Neither the Company nor any of its subsidiaries is, nor after
giving effect to the Offering will be, (i) in violation of its charter or
bylaws, (ii) 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 (iii) in violation of any local, state or federal law, statute,
ordinance, rule, regulation, requirement, judgment or court decree applicable
to the Company or any of its subsidiaries or any of their assets or
properties (whether owned or leased) other than, in the case of clauses (ii)
and (iii), any default or violation that (A) could not reasonably be expected
to have a Material Adverse Effect or (B) which is disclosed in the
Prospectus. There exists no condition that, with notice, the passage of time
or otherwise, would constitute a default under any such document or
instrument, except as disclosed in the Prospectus.
(k) None of (i) the execution, delivery or performance by the Company
of this Agreement, (ii) the issuance and sale of the Shares and (iii)
consummation by the Company of the transactions contemplated hereby and in
the Prospectus 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
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, (A) the charter or bylaws of
the Company or any of its subsidiaries, (B) any bond, debenture, note,
indenture, mortgage, deed of trust, contract 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, (C) any
statute, rule or regulation applicable to the Company or any of its
subsidiaries or any of their assets or properties or (D) 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 (B), (C) and (D) 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, (i) any
court or governmental agency, body or administrative agency or (ii) any other
person is required for (A) the execution, delivery and performance by the
Company of this Agreement, (B) the issuance and sale of the Shares and the
transactions contemplated hereby and thereby, except (x) such as have been
obtained and made
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under the Securities Act and state securities or Blue Sky laws and
regulations or such as may be required by the National Association of
Securities Dealers, Inc. (the "NASD") or (y) where the failure to obtain any
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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.
(l) None of (i) the execution, delivery or performance by the Company
of this Agreement, (ii) the issuance and sale of the Shares and (iii)
consummation by the Company and Intermedia Communications, Inc.
("Intermedia") of the transactions contemplated hereby and in the Prospectus
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 under, or
result in the imposition of a lien on any properties of Intermedia or any of
its subsidiaries, or an acceleration of any indebtedness of Intermedia or any
of its subsidiaries pursuant to, (A) the charter or bylaws of Intermedia or
any of its subsidiaries, (B) any bond, debenture, note, indenture, mortgage,
deed of trust, contract or other agreement or instrument to which Intermedia
or any of its subsidiaries is a party or by which Intermedia or its
subsidiaries or their properties is or may be bound, (C) any statute, rule or
regulation applicable to Intermedia or any of its subsidiaries or any of
their assets or properties or (D) any judgment, order or decree of any court
or governmental agency or authority having jurisdiction over Intermedia or
any of its subsidiaries or any of their assets or properties, except in the
case of clauses (B), (C) and (D) 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.
(m) There is (i) no action, suit or proceeding before or by any
court, arbitrator or governmental agency, body or official, domestic or
foreign, now pending or, to the best knowledge of the Company or any of its
subsidiaries, threatened or contemplated to which the Company or any of its
subsidiaries is a party or to which the business or property of the Company
or any of its subsidiaries is subject, (ii) no statute, rule, regulation or
order that has been enacted, adopted or issued by any governmental agency or
that has been proposed by any governmental body or (iii) no injunction,
restraining order or order of any nature by a federal or state court or
foreign court of competent jurisdiction to which the Company or any of its
subsidiaries is or may be subject or to which the business, assets, or
property of the Company or any of its subsidiaries are or may be subject,
that, in the case of clauses (i), (ii) and (iii) above, (w) is required to be
disclosed in the Prospectus and that is not so disclosed, or (x) could
reasonably be expected to, individually or in the aggregate, result in a
Material Adverse Effect.
(n) 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 kind 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 1(c) 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.
(o) Except as set forth in the Prospectus, there is (i) no
significant unfair labor practice complaint pending against the Company or
any of its subsidiaries nor, to the best
5
knowledge of the Company, threatened against any of them, before the National
Labor Relations Board, any state or local labor relations board or any
foreign labor relations board, and no significant grievance or significant
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against the Company or any of its subsidiaries nor,
to the best knowledge of the Company, threatened against any of them, (ii) no
significant strike, labor dispute, slowdown or stoppage pending against the
Company or any of its subsidiaries nor, to the best knowledge of the Company,
threatened against the Company or any of its subsidiaries and (iii) to the
best knowledge of the Company, no union representation question existing with
respect to the employees of the Company or any of its subsidiaries that, in
the case of clauses (i), (ii) or (iii) above, could reasonably be expected to
result in a Material Adverse Effect. To the best knowledge of the Company, no
collective bargaining organizing activities are taking place with respect to
the Company or any of its subsidiaries. None of the Company or any of its
subsidiaries has violated (A) any federal, state or local law or foreign law
relating to discrimination in hiring, promotion or pay of employees, (B) any
applicable wage or hour laws or (C) any provision of the Employee Retirement
Income Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, "ERISA"), which in the case of
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clause (A), (B) or (C) above could reasonably be expected to result in a
Material Adverse Effect.
(p) None of the Company or any of its subsidiaries has violated any
environmental, safety or similar law or regulation applicable to it or its
business or property relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), lacks any permit, license or other
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approval required of it under applicable Environmental Laws or is violating
any term or condition of such permit, license or approval, which could
reasonably be expected to, either individually or in the aggregate, have a
Material Adverse Effect.
(q) Each of the Company and its subsidiaries has (i) good and
marketable title to all of the properties and assets described 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, (ii) peaceful and undisturbed possession
of its properties under all material leases to which it is a party as lessee,
(iii) 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, all self-regulatory
authorities and all courts and other tribunals (each an "Authorization")
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necessary to engage in the business conducted by it in the manner described
in the Prospectus, except as described in the Prospectus or where failure to
hold such Authorizations would not, individually or in the aggregate, have a
Material Adverse Effect and (iv) no reason to believe 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 each of the Company and 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 or any of its subsidiaries is a party are valid and
binding, and no default by the Company or any subsidiary has occurred and is
continuing thereunder and, to the best knowledge of the Company and its
subsidiaries, no material defaults by the landlord are existing under any
such lease that could reasonably be expected to result in a Material Adverse
Effect.
(r) Each of the Company and its subsidiaries owns, possesses or has
the right to employ all patents, patent rights, licenses, inventions,
copyrights, know-how (including
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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") presently
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employed by it in connection with the businesses now operated by it or which
are proposed to be operated by it or its subsidiaries 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
none of the Company or 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 could 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.
(s) None of the Company or any of its subsidiaries or, to the best
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 (i) might subject the Company
or any of its subsidiaries, or any other individual or entity, to any damage
or penalty in any civil, criminal or governmental litigation or proceeding
(domestic or foreign), (ii) if not given in the past, might have had a
material adverse effect on the assets, business or operations of the Company
or any of its subsidiaries or (iii) if not continued in the future, might
have a Material Adverse Effect.
(t) All material tax returns required to be filed by the Company and
each of 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
material proposed additional tax assessments against the Company, 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.
(u) None of the Company or any of its subsidiaries is (i) 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"), or (ii) a "holding company" or a "subsidiary
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company" or an "affiliate" of a holding company within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(v) 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
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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.
(w) Each of the Company and its subsidiaries maintains 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 accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences thereto.
(x) Each of the Company and its subsidiaries maintains insurance
covering its properties, operations, personnel and businesses. Such
insurance insures against such losses and risks as are adequate in accordance
with customary industry practice to protect the Company and its subsidiaries
and their respective businesses. None of the Company or any of its
subsidiaries has received notice from any insurer or agent of such insurer
that substantial capital improvements or other expenditures will have to be
made in order to continue such insurance. All such insurance is outstanding
and duly in force on the date hereof, subject only to changes made in the
ordinary course of business, consistent with past practice, which do not,
singly or in the aggregate, materially alter the coverage thereunder or the
risks covered thereby. 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 or as presently contemplated and at a cost that
would not result in a Material Adverse Effect.
(y) 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 agreed to
pay to any person any compensation for soliciting another to purchase any
other securities of the Company.
(z) The Company and its subsidiaries and any "employee benefit plan"
(as defined under 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
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to 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.
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No "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
8
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 (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "employee benefit plan" or (ii) 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.
(aa) Subsequent to the respective dates as of which information is
given in the Prospectus and up to the Closing Date, except as set forth in
the Prospectus, (i) none of the Company or any of its subsidiaries has
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, nor entered into any transaction not in the
ordinary course of business, (ii) none of the Company or any of its
subsidiaries has incurred any liabilities or obligations, direct or
contingent, that will be material to the Company and its subsidiaries taken
as a whole, (iii) there has not been, singly or in the aggregate, any change
or development that could reasonably be expected to result in a Material
Adverse Effect; (iv) there has been no dividend or distribution of any kind
declared, paid or made by the Company or any of its subsidiaries on any class
of its capital stock; (v) 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; (vi) there has been no
revaluation by the Company or any of its subsidiaries of any of their assets;
(vii) 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 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; (viii) 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; (ix) 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 (x) there has been
no material 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.
(bb) 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.
(cc) 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.
(dd) 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 any of the
Underwriters for a brokerage commission, finder's fee or like payment in
connection with the issuance, purchase and sale of the Shares.
9
(ee) The statements (including the assumptions described therein)
included in the Prospectus (i) 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 (ii) were made by the Company with a
reasonable basis and reflect the Company's good faith estimate of the matters
described therein.
(ff) Each of the Company and its subsidiaries has implemented Year
2000 compliance programs designed to ensure that its computer systems and
applications will function properly beyond 1999. The Company believes that
adequate resources have been allocated for this purpose and expects the
Company's and its subsidiaries' Year 2000 date conversion programs to be
completed on a timely basis.
(gg) 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.
The Company acknowledges that each of the Underwriters and, for
purposes of the opinions to be delivered to the Underwriters pursuant to Section
6 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. 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, the Company agrees to sell to the Underwriters and the
Underwriters, severally and not jointly, agree to purchase from the Company,
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 9 hereof.
(b) Payment of the purchase price for, and delivery of certificates
for, the Firm Shares shall be made at the office of Xxxxxx & Xxxxxxx, 000
Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx, 00000, or at such other place
as shall be agreed upon by the Underwriters and the Company, at 10:00 A.M. on
July ___, 1999 (unless postponed in accordance with the provisions of Section
9 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 payment and delivery being herein called the "Closing Date").
------------
Payment shall be made to the Company by wire transfer in same day funds,
against delivery to the Underwriters of certificates for the Shares to be
purchased by them. 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 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, the Company hereby grants to the Underwriters the
option to purchase up to __________ Additional Shares at the same purchase
price per share to be paid
10
by the Underwriters to the Company for the Firm Shares as set forth in this
Section 2, 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. 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 9 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 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 9 hereof) bears to the total number of Firm
Shares being purchased from the Company, 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 each payable to the order of the Company at the
office of Xxxxxx & Xxxxxxx, 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx,
00000, or such other location as may be mutually acceptable, upon delivery of
the certificates for the Additional Shares to the Underwriters.
(f) The Company and the Underwriters agree that up to _______ of
the Firm Shares to be purchased by the Underwriters (the "Reserved Shares")
---------------
shall be reserved for sale by the Underwriters to certain individuals and
entities having business relationships with the Company, as part of the
distribution of the Shares by the Underwriters, subject to the terms of this
Agreement, the NASD and all other applicable laws, rules and regulations. To
the extent that such Reserved Shares are not orally confirmed for purchase by
such individuals and entities having business relationships with the Company
by the end of the first business day after the date of this Agreement, such
Reserved Shares may be offered to the public as part of the public offering
contemplated hereby.
3. 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.
4. 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 post-effective
11
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 the 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 or the
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.
12
(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 180 days from the date of the Prospectus,
the Company will not, directly or indirectly, without the prior written
consent of Bear, Xxxxxxx & Co. Inc. ("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 1999 Stock Option Plan (as
such term is defined in the Prospectus)], (ii) shares of Common Stock in
connection with strategic relationships and acquisitions of businesses,
technologies and products complementary to those of the Company, so long as
the recipients of such shares agree to be bound by a lock-up agreement
substantially in the form of Exhibit B hereto (which shall provide that any
---------
transferees and assigns of such recipients shall be bound by the lock-up
agreement) for the remainder of the 180-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., New York
City 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.
5. 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 (a) 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,
13
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), (b) the issuance, transfer and delivery of the Shares to
the Underwriters, including any transfer or other taxes payable thereon, (c) 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, (d) listing of the Shares for quotation on
the Nasdaq, (e) filing fees of the Commission and the NASD, (f) the cost of
printing certificates representing the Shares, (g) the cost and charges of any
transfer agent or registrar and (h) all costs and expenses of the Underwriters,
including the fees and disbursements of counsel for the Underwriters, in
connection with matters related to the Reserved Shares.
6. 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 herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6, "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 Xxxxxx &
Xxxxxxx ("Underwriters' Counsel") pursuant to this Section 6 of any material
---------------------
misstatement or omission, to the performance by the Company of its obligations
hereunder, and to the following additional conditions:
(a) Prior to the Closing Date the Registration Statement shall have
become effective, and 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 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 shall have performed
or complied with all of the agreements herein contained and required to be
performed or complied with by it 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 4(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 or any of its subsidiaries before any court or arbitrator or any
14
governmental body, agency or official that (i) could reasonably be expected
to result in a Material Adverse Effect or (ii) has not been disclosed in the
Prospectus.
(e) Since the dates as of which information is given in the Prospectus
and except as contemplated by 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, (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 a balance sheet or notes
thereto in accordance with generally accepted accounting principles and are
not disclosed on the latest balance sheet or notes thereto included in the
Prospectus. Since 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) through (e) of this Section 6
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 Kronish, Lieb, Weiner &
Xxxxxxx LLP, counsel for the Company, to the effect set forth in Exhibit A
---------
hereto.
(h) The Underwriters shall have received an opinion, dated the Closing
Date, in form and substance reasonably satisfactory to the Underwriters, of
Xxxxxx & Xxxxxxx, counsel to the Underwriters, covering such matters as are
customarily covered in such opinions.
(i) Xxxxxx & Xxxxxxx shall have been furnished with such documents, in
addition to those set forth above, as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
this Section 6 and in order to evidence the accuracy, completeness or
satisfaction in all material respects of any of the representations,
warranties or conditions herein contained.
(j) At the time this Agreement is executed and at the Closing Date the
Underwriters shall have received from Ernst & Young LLP, independent public
accountants for the Company and its subsidiaries, dated as of the date of
this Agreement and as of the Closing Date, customary comfort letters
addressed to the Underwriters and in form and substance satisfactory to the
Underwriters and counsel to the Underwriters with respect to the financial
statements and certain financial information of the Company and its
subsidiaries contained in the Prospectus.
(k) At the time this Agreement is executed, the Underwriters shall
have received a "lock-up" agreement, substantially in the form attached as
Exhibit B hereto, from each of the officers, directors and stockholders of
---------
the Company identified on Exhibit C hereto.
---------
15
(l) At the Closing Date, the Shares shall have been approved for
quotation on the Nasdaq.
(m) 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.
(n) Each of the General Administrative and Services Agreement, Master
Network Services Agreement, Public Internet Access Services Agreement, and
Customer Network and Application Services Agreement 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, and no event shall have occurred which would prevent either party from
substantially performing its obligations under such agreements.
(o) All opinions, certificates, letters and other documents required
by this Section 6 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 6 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 6 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 in writing, or
by telephone, telecopy, telex or telegraph, confirmed in writing.
7. 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 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 supplement thereto or amendment thereof, or arise out of or are
based upon the omission or alleged omission to state therein
16
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 Underwriter severally, and not jointly, agrees to
indemnify and hold harmless the Company 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
the 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 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.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) 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 it from any
liability which it may have under this Section 7 except to the extent that it
has been prejudiced in any material respect by
17
such failure or from any liability which it may otherwise have). 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 reasonably 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 the indemnifying parties in connection with the
defense of such action, (ii) the indemnifying parties shall not have employed
counsel to take 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 party or 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 of counsel shall be borne by the
indemnifying parties; provided, however, that the indemnifying party under
subsection (a) or (b) above, shall only be liable for the legal expenses of
one counsel (in addition to any local counsel) for all indemnified parties in
each jurisdiction in which any claim or action is brought. 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
prior written consent; provided, however, that such consent was not
unreasonably withheld.
8. Contribution. In order to provide for contribution in
------------
circumstances in which the indemnification provided for in Section 7 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 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 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 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 7
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 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
Company 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 Company 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 or the Underwriters and the parties' relative
18
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the 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 8, (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 8 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 8, 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 8. 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 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 8 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.
9. 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
five 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 9, 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 Company to sell the
Additional Shares, shall
19
thereupon terminate, without liability on the part of the Company with
respect thereto (except in each case as provided in Section 5, 7(a) and 8
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 Underwriters and the Company 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 or the Company 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 advisable. The term "Underwriter" as used in this Agreement shall include
any party substituted under this Section 9 with like effect as if it had
originally been a party to this Agreement with respect to such Firm Shares or
Additional Shares.
10. Survival of Representations and Agreements. All representations
------------------------------------------
and warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 7 and the contribution agreements
contained in Section 8, 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, 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
5, 7, 8, 11(d) and 12 hereof shall survive the termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. 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 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 6 is not fulfilled when and as required in any material
respect, (iii) in the judgment of the Underwriters any changes of
circumstance shall have occurred since the respective dates as of which
information is given in the Prospectus which could have a Material Adverse
Effect, other than as set forth in the Prospectus, or (iv) (A) any domestic
or international event or act or occurrence has materially adversely
effected, or in the opinion of the Underwriters will in the immediate future
materially adversely effect, 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
20
moratorium shall have been declared by federal or state authorities, or a
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, as
the case may be, 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 11 shall be
by telephone, telecopy, telex, or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (other than pursuant to Section 9(b) or 11(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 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 reasonable fees
and expenses of their counsel), incurred by the Underwriters in connection
herewith.
12. Underwriters' Information. The Company and the Underwriters
-------------------------
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 under the caption "Underwriting" in
the Prospectus concerning the proposed public offering price, discount and
concession; and (iii) the __________ and __________ 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.
13. 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, telegraphed or telecopied and confirmed
in writing to the Underwriters, c/o Bear, Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate Finance Department, 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 Digex,
Incorporated, Xxx Xxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Chief
Financial Officer, telecopy number: (301) _______, with a copy to Kronish, Lieb,
Weiner & Xxxxxxx LLP, 1114 Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxxx X. Xxxxxxxxx; provided, however, that any notice
pursuant to Sections 7 or 8 shall be mailed, delivered, telegraphed or
telecopied and confirmed in writing
21
14. Parties. This Agreement shall inure solely to the benefit of,
-------
and shall be binding upon, the Underwriters, the Company and the controlling
persons, directors, officers, employees and agents referred to in Section 7 and
8, 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.
15. 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 New York, without giving any effect to any provisions
thereof relating to conflicts of law. TIME IS OF THE ESSENCE IN THIS AGREEMENT.
16. 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.
17. Counterparts. This Agreement may be executed in various
------------
counterparts which together shall constitute one and the same instrument.
22
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,
DIGEX, INCORPORATED
By: ________________________________
Name: _____________________________
Title: ____________________________
Accepted as of the date first above written
BEAR, XXXXXXX & CO. INC.
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
CIBC WORLD MARKETS CORP.
XXXX XXXXX XXXX XXXXXX, INCORPORATED
Acting severally on behalf of themselves and the
several Underwriters named in Schedule I hereto
BEAR, XXXXXXX & CO. INC.
By:
-----------------------
Name:
Title:
XXXXXXXXX, XXXXXX & XXXXXXXX SECURITIES CORPORATION
By:
-----------------------
Name:
Title:
SCHEDULE I
Number of Firm
Name of Underwriter Shares to be Purchased
------------------- ----------------------
Bear, Xxxxxxx & Co. Inc.......................................................
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation...........................
CIBC World Markets Corp.......................................................
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated..........................................
DLJDirect Inc.................................................................
..............................................................................
[others]......................................................................
..............................................................................
..............................................................................
Total.........................................................................
Exhibit A
Form of Opinion of Kronish, Lieb, Weiner & Xxxxxxx LLP
1. Each of the Company and its subsidiaries is duly organized and
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, and has all requisite corporate power and
authority to carry on its business as it is being conducted and as described in
the Prospectus and to own, lease and operate its properties, and is duly
qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified or in good standing would not, singly or in the
aggregate, have a Material Adverse Effect.
2. All of the outstanding shares of capital stock of the Company
have been duly authorized, validly issued, and are fully paid and nonassessable
and were not issued in violation of any preemptive or similar rights under the
Delaware General Corporation Law. The authorized, issued and outstanding
capital stock of the Company conforms in all respects to the description thereof
set forth in the Prospectus.
3. All of the issued and outstanding capital stock of, or other
ownership interests in, the Company's subsidiaries have been duly authorized and
validly issued, are fully paid and non-assessable and were not issued in
violation of or subject to any preemptive or similar rights under the Delaware
General Corporation Law or known to us, after reasonable inquiry, and, are owned
by the Company of record and, to our knowledge, after reasonable inquiry, free
and clear of any security interest, claim, lien, limitation on voting rights or
encumbrance. There are not, to our knowledge, currently, and will not be
following 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 (other than options issued pursuant to the Company's
stock option plan).
4. The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Underwriting Agreement
and to consummate the transactions contemplated thereby and in the Prospectus,
including, without limitation, the corporate power and authority to issue, sell
and deliver the Shares as provided herein and therein.
5. The Underwriting Agreement has been duly and validly authorized,
executed and delivered by the Company and, assuming due execution by the other
parties hereto, is the legally valid and binding agreement of the Company.
6. The Registration Statement, Preliminary Prospectus and Prospectus
comply as to form in all material respects with the requirements for
registration statements on Form S-1 under the Securities Act and the Securities
Act Regulations; it being understood, however, that such counsel need not
express an opinion with respect to the financial statements, schedules and other
financial data included in the Registration Statement, Preliminary Prospectus or
Prospectus. To such counsel's knowledge, there are no contracts, indentures,
mortgages, loan agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to therein, and, to such
counsel's knowledge, the descriptions thereof or references thereto are correct
in all material respects.
7. None of (A) the execution, delivery or performance by the Company
of the Underwriting Agreement, (B) the issuance and sale of the Shares or (C)
the consummation by the Company of the transactions described in the Prospectus
under the caption "Use of Proceeds" violates, conflicts with or constitutes 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
requires consent under, or will result in the imposition of a lien or
encumbrance 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, (i) the charter or bylaws of the Company or any of its
subsidiaries, (ii) any bond, debenture, note, indenture, mortgage, deed of
trust, contract or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which any of them or their property is or may
be bound identified to such counsel as material (assuming all of such agreements
are governed by New York law), (iii) 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 known to such counsel,
and except in the case of clauses (ii) and (iii) 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) are
disclosed in the Prospectus. No consent, approval, authorization or order of,
or filing, registration, qualification, license or permit of or with, any court
or governmental agency, body or administrative agency is required for (1) the
execution, delivery and performance by the Company of the Underwriting
Agreement, (2) the issuance and sale of the Shares or (3) consummation by the
Company of the transactions described in the Prospectus except (i) such as have
been obtained and made or have been disclosed in the Prospectus or (ii) where
the failure to obtain such consents or waivers would not, singly or in the
aggregate, have a Material Adverse Effect. To the best of such counsel's
knowledge, after reasonable inquiry, no consents or waivers from any other
person are required for the execution, delivery and performance by the Company
of the Underwriting Agreement, the issuance and sale of the Shares , other than
such consents and waivers as have been obtained or are being applied for.
8. None of (A) the execution, delivery or performance by the Company
of the Underwriting Agreement and the transactions contemplated thereby, (B) the
issuance and sale of the Shares or (C) the consummation by the Company and
Intermedia Communications, Inc. ("Intermedia") of the transactions described in
----------
the Prospectus under the caption "Use of Proceeds" violates, conflicts with or
constitutes 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 requires consent under, or will result in the imposition of a lien
or encumbrance on any properties of Intermedia or any of its subsidiaries, or an
acceleration of any indebtedness of Intermedia or any of its subsidiaries
pursuant to, (i) the charter or bylaws of Intermedia or any of its subsidiaries,
(ii) any bond, debenture, note, indenture, mortgage, deed of trust, contract or
other agreement or instrument to which Intermedia or any of its subsidiaries is
a party or by which any of them or their property is or may be bound identified
to such counsel as material (assuming all of such agreements are governed by New
York law), (iii) any judgment, order or decree of any court or governmental
agency or authority having jurisdiction over Intermedia or any of its
subsidiaries or any of their assets or properties known to such counsel, and
except in the case of clauses (ii) and (iii) 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) are
disclosed in the Prospectus.
9. None of the Company or any of its subsidiaries is (i) an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, or (ii) a
"holding company" or a "subsidiary company" or an "affiliate" of a holding
company within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
ii
10. Except as set forth in the Underwriting Agreement or in the
Prospectus, to such counsel's knowledge, after reasonable inquiry there are no
holders of any securities of the Company who, by reason of the execution by the
Company of the Underwriting Agreement or the consummation by the Company of the
transactions contemplated thereby, have the right to request or demand that the
Company register under the Act securities held by them.
11. To the knowledge of such counsel, after reasonable inquiry, no
search of courts having been made, there is (i) no action, suit, investigation
or proceeding before or by any court, arbitrator or governmental agency, body or
official, domestic or foreign, now pending, or threatened or contemplated to
which any of the Company or any of its subsidiaries is or may be a party or to
which the business or property of any of the Company or any of its subsidiaries
is or may be subject, (ii) no statute, rule, regulation or order that has been
enacted, adopted or issued by any governmental agency or that has been proposed
by any governmental body, or (iii) no injunction, restraining order or order of
any nature by a federal or state court of competent jurisdiction to which any of
the Company or any of its subsidiaries is or may be subject has been issued
that, in the case of clauses (i), (ii) and (iii) above, (w) is required to be
disclosed in the Prospectus and that is not so disclosed or, (x) could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect, except as disclosed in the Prospectus; or (y) might
interfere with, adversely affect or in any manner question the validity of the
issuance and sale of the Shares or any of the other transactions contemplated by
the Underwriting Agreement.
12. The statements contained in the Prospectus under the captions
"Management--Indemnification of Directors and Executive Officers and Limitation
of Liability", "Management--[stock option plan]", "Certain Relationships and
Related Transactions", "Principal Stockholders", "Description of Capital Stock"
and "Shares Eligible for Future Sale", in each case, insofar as such statements
constitute summaries of the legal matters, documents or proceedings referred to
therein, fairly present the information required with respect to such legal
matters, documents and proceedings and fairly summarize the matters referred to
therein in all material respects.
We have participated in conferences with officers and other
representatives of the Company, representatives of the independent certified
public accountants of the Company and the Underwriters and their representatives
at which the contents of the Registration Statement, Preliminary Prospectus and
Prospectus and related matters were discussed and, although we have not
undertaken to investigate or verify independently, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement, Preliminary Prospectus or Prospectus
(except as indicated above), on the basis of the foregoing, no facts have come
to our attention which led us to believe that the Registration Statement,
Preliminary Prospectus and Prospectus, as of its date or the Closing Date,
contained an untrue statement of a material fact or omitted to state any 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
(except as to financial statements and related notes, the financial statement
schedules and other financial and statistical data included therein).
iii
Exhibit B
Lock-Up Agreement
Digex Corporation
One Digex Plaza
Beltsville, Maryland
Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned understands that Bear, Xxxxxxx & Co. Inc., as
representative of the several underwriters (the "Underwriters"), proposes to
------------
enter into an Underwriting Agreement with Digex Incorporated, a Delaware
corporation (the "Company"), providing for the initial public offering of the
-------
Company's common stock, par value $.01 per share (the "Common Stock"), pursuant
------------
to a Registration Statement on Form S-1 (File No. 333-77105). The undersigned
wishes to facilitate the Offering and recognizes that the Offering will be of
benefit to the undersigned.
In consideration of the foregoing and in order to induce you to act as
Underwriter in connection with the Offering, the undersigned hereby agrees, for
the benefit of the Company and the Underwriters, that during the period
beginning from the date hereof and continuing to and including the date 180 days
after the date of the final prospectus relating to the Offering, the undersigned
will not, directly or indirectly, without the prior written consent of Bear,
Xxxxxxx & Co. Inc., offer, sell, contract to sell, swap, make any short sale,
pledge, establish an open "put equivalent position" within the meaning of Rule
16a-1(h) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), grant any option to purchase or otherwise dispose (or publicly announce
---
the undersigned's intention to do any of the foregoing) of, directly or
indirectly, any shares of Common Stock or other capital stock of the Company, or
any securities convertible into, or exerciseable or exchangeable for, any shares
of Common Stock or other capital stock of the Company that the undersigned
currently beneficially owns (within the meaning of Rule 13d-3 under the Exchange
Act), directly or indirectly, or may beneficially own, directly or indirectly,
in the future.
The undersigned confirms that the undersigned understands that the
Underwriters and the Company will rely upon the representations set forth in
this Agreement in proceeding with the Offering. The undersigned further
confirms that the agreements of the undersigned are irrevocable and shall be
binding upon the undersigned's heirs, legal representatives, successors and
assigns. The undersigned agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent against the transfer of
securities of the Company held by the undersigned except in compliance with this
Agreement.
Very truly yours,
By:
------------------------
Name:
Title:
Dated: July ___, 1999
Exhibit C
Individuals Delivering a Lock-Up Agreement Pursuant to Section 6(k)
Xxxx X. Xxxxx
Xxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxxxxx-Xxxx
Xxxxxx X. London
Xxxxxx X. Xxxxxxx
Xxxx X. Xxxxxx
Xxxxxx X. Xxxxxxx, Xx.
Xxxxx X. Xxxxxx
Xxxx X. Xxxxx
[others]
