Exhibit 1.1
3,500,000 SHARES
CTC COMMUNICATIONS CORP.
COMMON STOCK
UNDERWRITING AGREEMENT
----------------------
July ___, 1999
Xxxxxx Brothers Inc.
Credit Suisse First Boston Corporation
As Representatives of the several Underwriters named in Schedule B
c/x Xxxxxx Brothers Inc.
Three World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. Introductory. CTC Communications Corp., a Massachusetts corporation
("COMPANY"), proposes to issue and sell 3,200,000 shares of its Common Stock and
the selling stockholders named in Schedule A hereto ("SELLING STOCKHOLDERS")
propose severally to sell an aggregate of 300,000 outstanding shares of the
Company's Common Stock (such 3,500,000 shares of Common Stock being hereinafter
referred to as the "FIRM SECURITIES"). The Company also proposes to sell to
the Underwriters, at the option of the Underwriters, an aggregate of not more
than 525,000 additional shares of its Common Stock as set forth below (such
525,000 additional shares being hereafter referred to as the "OPTIONAL
SECURITIES"). The Firm Securities and the Optional Securities are herein
collectively called the "OFFERED SECURITIES". The Company and the Selling
Stockholders hereby severally agree with the several Underwriters named in
Schedule B hereto ("UNDERWRITERS") as follows:
2. Representations and Warranties of the Company and the Selling
Stockholders.
(a) The Company represents and warrants to the several Underwriters
that:
(i) A registration statement (No. 333-77709) relating to the
Offered Securities, including a form of prospectus, has been filed with
the Securities and Exchange Commission ("COMMISSION") and either (i) has
been declared effective under the Securities Act of 1933 ("ACT") and is
not proposed to be amended or (ii) is proposed to be amended by
amendment or post-effective amendment. If such registration statement
("INITIAL REGISTRATION STATEMENT") has been declared effective, either
(i) an additional registration statement ("ADDITIONAL REGISTRATION
STATEMENT") relating to the Offered Securities may have been filed with
the Commission pursuant to Rule 462(b) ("RULE 462(b)") under the Act
and, if so filed, has become effective upon filing pursuant to such Rule
and the Offered Securities all have been duly registered under the Act
pursuant to the initial registration statement and, if applicable, the
additional registration statement or (ii) such an additional
registration statement is proposed to be filed with the Commission
pursuant to Rule 462(b) and will become effective upon filing pursuant
to such Rule and
upon such filing the Offered Securities will all have been duly
registered under the Act pursuant to the initial registration statement
and such additional registration statement. If the Company does not
propose to amend the initial registration statement or if an additional
registration statement has been filed and the Company does not propose
to amend it, and if any post-effective amendment to either such
registration statement has been filed with the Commission prior to the
execution and delivery of this Agreement, the most recent amendment (if
any) to each such registration statement has been declared effective by
the Commission or has become effective upon filing pursuant to Rule
462(c) ("RULE 462(c)") under the Act or, in the case of the additional
registration statement, Rule 462(b). For purposes of this Agreement,
"EFFECTIVE TIME" with respect to the initial registration statement or,
if filed prior to the execution and delivery of this Agreement, the
additional registration statement means (i) if the Company has advised
the Representatives that it does not propose to amend such registration
statement, the date and time as of which such registration statement, or
the most recent post-effective amendment thereto (if any) filed prior to
the execution and delivery of this Agreement, was declared effective by
the Commission or has become effective upon filing pursuant to Rule
462(c), or (ii) if the Company has advised the Representatives that it
proposes to file an amendment or post-effective amendment to such
registration statement, the date and time as of which such registration
statement, as amended by such amendment or post-effective amendment, as
the case may be, is declared effective by the Commission. If an
additional registration statement has not been filed prior to the
execution and delivery of this Agreement but the Company has advised the
Representatives that it proposes to file one, "EFFECTIVE TIME" with
respect to such additional registration statement means the date and
time as of which such registration statement is filed and becomes
effective pursuant to Rule 462(b). "EFFECTIVE DATE" with respect to the
initial registration statement or the additional registration statement
(if any) means the date of the Effective Time thereof. The initial
registration statement, as amended at its Effective Time, including all
information contained in the additional registration statement (if any)
and deemed to be a part of the initial registration statement as of the
Effective Time of the additional registration statement pursuant to the
General Instructions of the Form on which it is filed and including all
information (if any) deemed to be a part of the initial registration
statement as of its Effective Time pursuant to Rule 430A(b) ("Rule
430A(b)") under the Act, is hereinafter referred to as the "INITIAL
REGISTRATION STATEMENT". The additional registration statement, as
amended at its Effective Time, including the contents of the initial
registration statement incorporated by reference therein and including
all information (if any) deemed to be a part of the additional
registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "ADDITIONAL REGISTRATION
STATEMENT". The Initial Registration Statement and the Additional
Registration Statement are herein referred to collectively as the
"REGISTRATION STATEMENTS" and individually as a "REGISTRATION
STATEMENT". The form of prospectus relating to the Offered Securities,
as first filed with the Commission pursuant to and in accordance with
Rule 424(b) ("RULE 424(b)") under the Act or (if no such filing is
required) as included in a Registration Statement, is hereinafter
referred to as the "PROSPECTUS". No document has been or will be
prepared or distributed in reliance on Rule 434 under the Act.
(ii) If the Effective Time of the Initial Registration Statement
is prior to the execution and delivery of this Agreement: (i) on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement conformed in all respects to the requirements of
the Act and the rules and regulations of the Commission ("RULES AND
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REGULATIONS") and did not include 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, (ii) on the
Effective Date of the Additional Registration Statement (if any), each
Registration Statement conformed, or will conform, in all respects to
the requirements of the Act and the Rules and Regulations and did not
include, or will not include, any untrue statement of a material fact
and did not omit, or will not omit, to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading and (iii) on the date of this Agreement, the Initial
Registration Statement and, if the Effective Time of the Additional
Registration Statement is prior to the execution and delivery of this
Agreement, the Additional Registration Statement each conforms, and at
the time of filing of the Prospectus pursuant to Rule 424(b) or (if no
such filing is required) at the Effective Date of the Additional
Registration Statement in which the Prospectus is included, each
Registration Statement and the Prospectus will conform, in all respects
to the requirements of the Act and the Rules and Regulations, and
neither of such documents includes, or will include, any untrue
statement of a material fact or omits, or will omit, to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. If the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of
this Agreement: on the Effective Date of the Initial Registration
Statement, the Initial Registration Statement and the Prospectus will
conform in all respects to the requirements of the Act and the Rules and
Regulations, neither of such documents will include any untrue statement
of a material fact or will omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and no Additional Registration Statement has been or will be
filed. The two preceding sentences do not apply to statements in or
omissions from a Registration Statement or the Prospectus based upon
written information furnished to the Company by any Selling Stockholder
for use therein or by any Underwriter through the Representatives
specifically for use therein, it being understood and agreed that the
only such information is that described as such in Section 7(b) and
Section 7(c) hereof, respectively.
(iii) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the Commonwealth of
Massachusetts, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus; and
the Company is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its ownership or lease
of property or the conduct of its business requires such qualification,
except to the extent such failure to be qualified would not have,
individually or in the aggregate, a material adverse effect on the
financial condition, business, properties or results of operations of
the Company and the Subsidiary taken as a whole ("MATERIAL ADVERSE
EFFECT").
(iv) CTC Communications of Virginia, Inc. is the only subsidiary
of the Company (the "SUBSIDIARY"). The Subsidiary has been duly
incorporated and is an existing corporation in good standing under the
laws of its state of incorporation, with power and authority (corporate
and other) to own its properties and conduct its business as described
in the Prospectus, and the Subsidiary is duly qualified to do business
as a foreign corporation in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its business
requires such qualification; all of the issued and outstanding capital
stock of the Subsidiary has been duly authorized and validly issued and
is fully paid and nonassessable; and all of the issued and outstanding
capital stock of the
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Subsidiary is owned by the Company free from liens, encumbrances and
defects, except as described in the Prospectus. As of the date hereof,
the fair market value of the Company's investment in the Subsidiary
(measured as of the time such investment or investments were made) is
less than $100,000.
(v) The Offered Securities and all other outstanding shares of
capital stock of the Company have been duly authorized; all outstanding
shares of capital stock of the Company are, and, when the Offered
Securities have been delivered and paid for in accordance with this
Agreement on each Closing Date (as defined below), such Offered
Securities will have been, validly issued, fully paid and nonassessable
and will conform, in all material respects, to the description thereof
contained in the Prospectus; the stockholders of the Company have no
preemptive rights with respect to the Offered Securities being offered
by the Company; and, to the best of the Company's knowledge no
preemptive rights have been granted with respect to the Offered
Securities being offered by the Selling Stockholders.
(vi) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finder's fee or other like
payment in connection with this offering.
(vii) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered pursuant
to a Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company under
the Act, and all rights arising under such contracts, agreements or
understandings have either been effectively satisfied or waived in
connection with the sale of the Offered Securities.
(viii) The Offered Securities have been approved for listing on
Nasdaq Stock Market's National Market, subject to notice of issuance.
(ix) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required to be
obtained or made by the Company for the consummation of the transactions
contemplated by this Agreement in connection with the sale of the
Offered Securities, except such as have been obtained and made under the
Act and such as may be required under state securities laws.
(x) The execution, delivery and performance of this Agreement by
the Company, and the consummation by the Company of the transactions
herein contemplated, will not result in (i) a breach or violation of any
of the terms and provisions of, or constitute a default under, any
statute, any rule, regulation (including, without limitation, the
Communications Act of 1934, as amended by the Telecommunications Act of
1996 and the rules and regulations of the Federal Communications
Commission (the "FCC")) or order of any governmental agency or body or
any court, domestic or foreign, having jurisdiction over the Company or
the Subsidiary or any of their properties, or any agreement or
instrument to which the Company or the Subsidiary is a party or by which
the
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Company or the Subsidiary is bound or to which any of the properties of
the Company or the Subsidiary is subject, except as would not,
individually or in the aggregate, have a Material Adverse Effect, or
(ii) a violation of the charter or by-laws of the Company or the
Subsidiary.
(xi) This Agreement has been duly authorized, executed and
delivered by the Company.
(xii) Except as disclosed in the Prospectus, the Company and the
Subsidiary have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances and defects that would materially affect the value thereof
or materially interfere with the use made or to be made thereof by them;
and except as disclosed in the Prospectus, the Company and the
Subsidiary hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere
with the use made or to be made thereof by them.
(xiii) The Company and the Subsidiary possesses adequate
certificates, authorities or permits issued by appropriate governmental
agencies or bodies (including, without limitation, the FCC and
applicable state regulatory authorities) necessary to conduct the
business now operated by them and have not received any notice of
proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the
Company or the Subsidiary, would individually or in the aggregate have a
Material Adverse Effect.
(xiv) Except as disclosed in the Prospectus, the business and
operations conducted and proposed to be conducted by the Company and the
Subsidiary as described in the Prospectus are not regulated by any
public service or public utility commissions in the states in which the
Company and the Subsidiary conduct or propose to conduct such business
and operations as described in the Prospectus.
(xv) The Company and the Subsidiary have filed, when due, all
reports required to be filed with the FCC and applicable state
regulatory authorities, except to the extent that failure to file such
reports would not have a Material Adverse Effect.
(xvi) No labor dispute with the employees of the Company or the
Subsidiary exists or, to the knowledge of the Company, is imminent that
could reasonably be expected to have a Material Adverse Effect.
(xvii) The Company and the Subsidiary own, possess or can acquire
on reasonable terms, adequate trademarks, trade names and other rights
to inventions, know-how, patents, copyrights, confidential information
and other intellectual property (collectively, "INTELLECTUAL PROPERTY
RIGHTS") necessary to conduct the business now operated by them, or
presently employed by them, and have not received any notice of
infringement of or conflict with asserted rights of others with respect
to any intellectual property rights that, if determined adversely to the
Company or the Subsidiary, would individually or in the aggregate have a
Material Adverse Effect.
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(xviii) Except as disclosed in the Prospectus, neither the
Company nor the Subsidiary is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or toxic
substances (collectively, "ENVIRONMENTAL LAWS"), owns or operates any
real property contaminated with any substance that is subject to any
environmental laws, is liable for any off-site disposal or contamination
pursuant to any environmental laws, or is subject to any claim relating
to any environmental laws, which violation, contamination, liability or
claim would individually or in the aggregate have a Material Adverse
Effect; and the Company is not aware of any pending investigation which
could reasonably be expected to lead to such a claim.
(xix) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company, the
Subsidiary or any of their respective properties that, if determined
adversely to the Company or the Subsidiary, would individually or in the
aggregate have a Material Adverse Effect, or would materially and
adversely affect the ability of the Company to perform its obligations
under this Agreement, or which are otherwise material in the context of
the sale of the Offered Securities; and, to the Company's knowledge, no
such actions, suits or proceedings are threatened or contemplated.
(xx) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial position of
the Company and the Subsidiary as of the dates shown and their results
of operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a consistent basis
and the schedules included in each Registration Statement present fairly
the information required to be stated therein.
(xxi) Except as disclosed in the Prospectus, since the date of
the latest audited financial statements included in the Prospectus there
has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the financial
condition, business, properties or results of operations of the Company
and the Subsidiary taken as a whole, and, except as disclosed in or
contemplated by the Prospectus, there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(xxii) The Company is not (A) and, after giving effect to the
offering and sale of the Offered Securities and the application of the
proceeds thereof as described in the Prospectus, will not be an
"investment company" as defined in the Investment Company Act of 1940,
or (B) 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.
(b) Each Selling Stockholder severally represents and warrants to, and
agrees with, the several Underwriters that:
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(i) Such Selling Stockholder on the First Closing Date hereinafter
mentioned will have valid and unencumbered title to the Firm Securities
to be delivered by such Selling Stockholder on the First Closing Date
and full right, power and authority to enter into this Agreement and to
sell, assign, transfer and deliver the Firm Securities to be delivered
by such Selling Stockholder on the First Closing Date hereunder; on or
prior to the date hereof such Selling Stockholder has irrevocably
exercised warrants to purchase such Firm Securities on a "net issuance"
basis, subject only to the closing of the offering of the Firm
Securities as described in Section 3 below; such Selling Stockholder
will surrender to the Company on the First Closing Date warrants to
purchase that number of shares of the Company's Common Stock as will
suffice to pay the conversion price in respect of the shares of Common
Stock being sold by the Selling Stockholder pursuant hereto; and upon
the payment of the conversion price by or on behalf of such Selling
Stockholder and the delivery of and payment for the Offered Securities
on the First Closing Date hereunder the several Underwriters will
acquire valid and unencumbered title to the Offered Securities to be
delivered by such Selling Stockholder on the First Closing Date.
(ii) The information pertaining to such Selling Stockholder under
the captions "Principal and Selling Stockholders" and "Certain
Relationships and Related Transactions" in the Prospectus is accurate
and complete in all respects.
(iii) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between such Selling Stockholder
and any person that would give rise to a valid claim against such
Selling Stockholder or any Underwriter for a brokerage commission,
finder's fee or other like payment in connection with this offering.
(iv) Each Selling Stockholder will deliver to Xxxxxx Brothers,
attention: Syndicate Department on or prior to the First Closing Date a
properly completed and executed United States Treasury Department Form
W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
(v) The "piggyback registration rights" obligations owed by the
Company to the Selling Stockholders arising due to the occurrence of
this offering have been satisfied or waived.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company and each Selling
Stockholder agree, severally and not jointly, to sell to each Underwriter, and
each Underwriter agrees, severally and not jointly, to purchase from the Company
and each Selling Stockholder, at a purchase price of $ _____ per share, that
number of shares of the Firm Securities (rounded up or down, as determined by
Xxxxxx Brothers Inc. ("XXXXXX BROTHERS") in its discretion, in order to avoid
fractions) obtained by multiplying 3,500,000 shares of the Firm Securities, in
the case of the Company, and the number of shares of the Firm Securities set
forth opposite the name of such Selling Stockholder in Schedule A hereto, in the
case of a Selling Stockholder, in each case by a fraction the numerator of which
is the number of shares of the Firm Securities set forth opposite the name of
such Underwriter in Schedule B hereto and the denominator of which is the total
number of shares of the Firm Securities.
The Company and each Selling Stockholder will deliver the Firm Securities
to the Representatives for the accounts of the Underwriters, against payment of
the purchase price in Federal
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(same day) funds by wire transfer to an account at a bank reasonably acceptable
to Xxxxxx Brothers drawn to the order of CTC Communications Corp. in the case of
3,200,000 shares of the Firm Securities, Fleet National Bank in the case of
100,000 shares of the Firm Securities and Xxxxxxx, Xxxxx & Co. in the case of
200,000 shares of the Firm Securities, at the office of Ropes & Xxxx, Boston,
Massachusetts, at 10:00 A.M., New York time, on _________, 1999, or at such
other time not later than seven full business days thereafter as Xxxxxx Brothers
and the Company determine, such time being herein referred to as the "FIRST
CLOSING DATE". For purposes of Rule 15c6-1 under the Securities Exchange Act of
1934, the First Closing Date (if later than the otherwise applicable settlement
date) shall be the settlement date for payment of funds and delivery of
securities for all the Offered Securities sold pursuant to the offering. The
certificates for the Firm Securities so to be delivered will be in definitive
form, in such denominations and registered in such names as Xxxxxx Brothers
requests at least 48 hours prior to the First Closing Date and will be made
available for checking and packaging at the above office of Ropes & Xxxx at
least 24 hours prior to the First Closing Date. Each Selling Stockholder hereby
acknowledges and agrees that unless it shall have paid on the First Closing Date
the conversion price of the warrants underlying its shares of the Firm
Securities on a "net issuance" basis as described in Section 2(b)(i) hereof,
such exercise price shall be deducted by Xxxxxx Brothers from the cash otherwise
owing to the Selling Stockholder under this paragraph and remitted to the
Company.
In addition, upon written notice from Xxxxxx Brothers given to the Company
from time to time not more than 30 days subsequent to the date of the
Prospectus, the Underwriters may purchase all or less than all of the Optional
Securities at the purchase price per share to be paid for the Firm Securities.
The Company agrees to sell to the Underwriters the number of shares of Optional
Securities specified in such notice and the Underwriters agree, severally and
not jointly, to purchase such Optional Securities. Such Optional Securities
shall be purchased from the Company for the account of each Underwriter in the
same proportion as the number of shares of Firm Securities set forth opposite
such Underwriter's name bears to the total number of shares of Firm Securities
(subject to adjustment by Xxxxxx Brothers to eliminate fractions) and may be
purchased by the Underwriters only for the purpose of covering over-allotments
made in connection with the sale of the Firm Securities. No Optional Securities
shall be sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by Xxxxxx Brothers to the Company.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "OPTIONAL CLOSING DATE", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "CLOSING DATE"), shall be determined by Xxxxxx
Brothers but shall be not later than five full business days after written
notice of election to purchase Optional Securities is given. The Company will
deliver the Optional Securities being purchased on each Optional Closing Date to
the Representatives for the accounts of the several Underwriters, against
payment of the purchase price therefor in Federal (same day) funds by wire
transfer to an account at a bank reasonably acceptable to Xxxxxx Brothers drawn
to the order of CTC Communications Corp., at the above office of Ropes & Xxxx.
The certificates for the Optional Securities being purchased on each Optional
Closing Date will be in definitive form, in such denominations and registered in
such names as Xxxxxx Brothers requests upon reasonable notice prior to such
Optional Closing Date and will be made available for checking and packaging at
the above office of Ropes & Xxxx at a reasonable time in advance of such
Optional Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
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5. Certain Agreements of the Company and the Selling Stockholders. The
Company agrees with the several Underwriters and the Selling Stockholders that:
(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will file the
Prospectus with the Commission pursuant to and in accordance with subparagraph
(1) (or, if applicable and if reasonably consented to by Xxxxxx Brothers,
subparagraph (4)) of Rule 424(b) not later than the earlier of (A) the second
business day following the execution and delivery of this Agreement or (B) the
fifteenth business day after the Effective Date of the Initial Registration
Statement.
The Company will advise Xxxxxx Brothers promptly of any such filing
pursuant to Rule 424(b). If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement and an
additional registration statement is necessary to register a portion of the
Offered Securities under the Act but the Effective Time thereof has not occurred
as of such execution and delivery, the Company will file the additional
registration statement or, if filed, will file a post-effective amendment
thereto with the Commission pursuant to and in accordance with Rule 462(b) on or
prior to 10:00 P.M., New York time, on the date of this Agreement or, if
earlier, on or prior to the time the Prospectus is printed and distributed to
any Underwriter, or will make such filing at such later date as shall have been
reasonably consented to by Xxxxxx Brothers.
(b) The Company will advise Xxxxxx Brothers promptly of any proposal
to amend or supplement the initial or any additional registration statement as
filed or the related prospectus or the Initial Registration Statement, the
Additional Registration Statement (if any) or the Prospectus and will not effect
such amendment or supplementation without Xxxxxx Brothers' consent, not to be
unreasonably withheld; and the Company will also advise Xxxxxx Brothers promptly
of the effectiveness of each Registration Statement (if its Effective Time is
subsequent to the execution and delivery of this Agreement) and of any amendment
or supplementation of a Registration Statement or the Prospectus and of the
institution by the Commission of any stop order proceedings in respect of a
Registration Statement and will use its best efforts to prevent the issuance of
any such stop order and to obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with sales by
any Underwriter or dealer, any event occurs as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Prospectus to comply
with the Act, the Company will promptly notify Xxxxxx Brothers of such event and
will promptly prepare and file with the Commission, at its own expense, an
amendment or supplement which will correct such statement or omission or an
amendment which will effect such compliance. Neither Xxxxxx Brothers' consent
to, nor the Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
securityholders an earnings statement covering a period of at least 12 months
beginning after the Effective Date of the Initial Registration Statement (or, if
later, the Effective Date of the Additional Registration Statement) which will
satisfy the provisions of Section 11(a) of the Act. For the purpose of the
preceding sentence, "AVAILABILITY DATE" means the 45th day after the end of the
fourth fiscal quarter following the fiscal quarter that includes such Effective
Date, except that, if such fourth fiscal quarter is the last quarter of the
Company's fiscal year, "AVAILABILITY DATE" means the 90th day after the end of
such fourth fiscal quarter.
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(e) The Company will furnish to the Representatives copies of each
Registration Statement (one of which will be signed and will include all
exhibits), each related preliminary prospectus, and, so long as a prospectus
relating to the Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, the Prospectus and all
amendments and supplements to such documents, in each case in such quantities as
Xxxxxx Brothers reasonably requests. The Prospectus shall be so furnished on or
prior to 3:00 P.M., New York time, on the business day following the later of
the execution and delivery of this Agreement or the Effective Time of the
Initial Registration Statement. All other such documents shall be so furnished
as soon as available. The Company will pay the expenses of printing and
distributing to the Underwriters all such documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as Xxxxxx Brothers
designates and will continue such qualifications in effect so long as required
for the distribution; provided, however, that the Company shall not be obliged
to file any general consent to service of process or to qualify as a foreign
corporation or as a securities dealer in any jurisdiction or to subject itself
to taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject.
(g) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a copy
of its annual report to stockholders for such year; and the Company will furnish
to the Representatives (i) as soon as available, a copy of each report and any
definitive proxy statement of the Company filed with the Commission under the
Securities Exchange Act of 1934 or mailed to stockholders, and (ii) from time to
time, such other publicly available information concerning the Company as Xxxxxx
Brothers may reasonably request.
(h) The Company and each Selling Stockholder severally agree with the
several Underwriters that, as between the Company and the Selling Stockholders,
on the one hand, and the Underwriters, on the other hand, the Company and such
Selling Stockholder will pay all expenses incident to the performance of the
obligations of the Company and such Selling Stockholder, as the case may be,
under this Agreement, for any filing fees and other expenses (including fees and
disbursements of their counsel) incurred in connection with qualification of the
Offered Securities for sale under the laws of such jurisdictions as Xxxxxx
Brothers designates and the printing of memoranda relating thereto, for the
filing fee incident to, and the reasonable fees and disbursements of counsel to
the Underwriters in connection with, the review by the National Association of
Securities Dealers, Inc. of the Offered Securities, for any travel expenses of
the Company's officers and employees and any other expenses of the Company in
connection with attending or hosting meetings with prospective purchasers of the
Offered Securities, for any transfer taxes on the sale by the Selling
Stockholders of the Offered Securities to the Underwriters and for expenses
incurred in distributing preliminary prospectuses and the Prospectus (including
any amendments and supplements thereto) to the Underwriters. The purpose of
this paragraph (h) is to allocate responsibility for expenses of the offering as
between the Company and the Selling Stockholders, on the one hand, and the
Underwriters, on the other hand, and nothing in this paragraph (h) shall be
deemed to limit the Company's obligations to pay certain expenses of the Selling
Stockholders as provided in Section 9.4 of the Warrant dated September 1, 1998
issued to Xxxxxxx Xxxxx Co. (the "GOLDMAN WARRANT") and of the Warrant dated
September 1, 1998 issued to Fleet National Bank (the "FLEET WARRANT" and
together with the Goldman Warrant, the "WARRANTS").
10
(i) For a period of 90 days after the date of the first public
offering of the Offered Securities, the Company will not, directly or
indirectly, (1) offer for sale, sell, pledge or otherwise dispose of (or enter
into any transaction or device which is designed to, or could be expected to,
result in the disposition by any person at any time in the future of) any shares
of Common Stock or securities convertible into or exchangeable for Common Stock,
or sell or grant options, rights or warrants with respect to any shares of
Securities or securities convertible into or exchangeable for Common Stock, or
(2) enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks of ownership
of such shares of Common Stock, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, in each case without the prior written consent
of Xxxxxx Brothers, except: issuances of Common Stock pursuant to the conversion
or exchange of convertible or exchangeable securities or the exercise of
warrants or options, in each case outstanding on the date hereof, issuances of
preferred stock and common stock pursuant to the holding company reorganization
of the Company whereby preferred stock and common stock of the Company will be
exchanged for the same number of preferred stock and common stock of the holding
company, issuances of warrants in connection with any offering of debt
securities by the Company or any holding company formed to hold the Company
(provided that such warrants are not exercisable within the 90 day period
referenced above), grants of employee stock options pursuant to the terms of a
plan in effect on the date hereof and issuances of Common Stock pursuant to the
exercise of such options or the exercise of any other employee stock options
outstanding on the date hereof. For purposes of paragraph (i) and paragraph (j)
of this Section 5, the term "Common Stock" shall include common equity
securities issued by any holding company formed to hold the Company pursuant to
the holding company reorganization described in the Prospectus.
(j) Each Selling Stockholder acknowledges and agrees that, during the
90 day period referred to in paragraph (i), without the prior written consent of
Xxxxxx Brothers the Company (or any holding company formed to hold the Company)
will not file a registration statement covering Common Stock or securities
convertible into or exchangeable for Common Stock owned by such Selling
Stockholder, notwithstanding the demand registration rights provided for in
Section 9.1 of the Warrants.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein, to
the accuracy of the statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of their obligations hereunder and to the following additional
conditions precedent:
(a) The Representatives shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, shall be on
or prior to the date of this Agreement or, if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, shall be prior to the filing of the amendment or post-effective
amendment to the registration statement to be filed shortly prior to such
Effective Time), of Ernst & Young LLP confirming that they are independent
public accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder and stating to the effect that:
(i) in their opinion the financial statements and schedules
examined by them and included in the Registration Statements comply as
to form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and Regulations;
11
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards
No. 71, Interim Financial Information, on the unaudited financial
statements included in the Registration Statements, or from which
interim financial information appearing in the Registration Statements
is derived;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements of
the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other specified
procedures, nothing came to their attention that caused them to believe
that:
(A) the telecommunications revenues, loss from operations and
net loss for the three-month periods ended March 31, 1998, June 30,
1998, September 30, 1998, December 31, 1998 and March 31, 1999
included in the Prospectus do not agree with the amounts set forth
in the unaudited financial statements for those same periods or were
not determined on a basis substantially consistent with that of the
corresponding amounts in the audited statements of income;
(B) at the date of the latest available balance sheet read by
such accountants, or at a subsequent specified date not more than
three business days prior to the date of such letter, there was any
change in the capital stock or any increase in short-term
indebtedness or long-term debt of the Company and its consolidated
Subsidiary or, at the date of the latest available balance sheet
read by such accountants, there was any decrease in consolidated net
current assets or net assets, as compared with amounts shown on the
latest balance sheet included in the Prospectus; or
(C) for the period from the closing date of the latest income
statement included in the Prospectus to the closing date of the
latest available income statement read by such accountants there
were any decreases, as compared with the corresponding period of the
previous year, in total revenues, income from operations, EBITDA or
in the total or per share amounts of net income.
except in all cases set forth in clauses (B) and (C) above for changes,
increases or decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Registration Statements (in each case to the extent
that such dollar amounts, percentages and other financial information
are derived from the general accounting records of the Company and the
Subsidiary subject to the internal controls of the Company's accounting
system or are derived directly from such records by analysis or
computation) with the results obtained from inquiries, a reading of such
general accounting records and other procedures specified in such letter
and have found such dollar amounts, percentages and other financial
information to be in agreement with such results, except as otherwise
specified in such letter.
12
For purposes of this subsection, (i) if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, "REGISTRATION STATEMENTS" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective
amendment to be filed shortly prior to its Effective Time, (ii) if the
Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement but the Effective Time of the
Additional Registration is subsequent to such execution and delivery,
"REGISTRATION STATEMENTS" shall mean the Initial Registration Statement and
the additional registration statement as proposed to be filed or as
proposed to be amended by the post-effective amendment to be filed shortly
prior to its Effective Time, and (iii) "Prospectus" shall mean the
prospectus included in the Registration Statements.
(b) If the Effective Time of the Initial Registration Statement is not
prior to the execution and delivery of this Agreement, such Effective Time shall
have occurred not later than 10:00 P.M., New York time, on the date of this
Agreement or such later date as shall have been consented to by Xxxxxx Brothers.
If the Effective Time of the Additional Registration Statement (if any) is not
prior to the execution and delivery of this Agreement, such Effective Time shall
have occurred not later than 10:00 P.M., New York time, on the date of this
Agreement or, if earlier, the time the Prospectus is printed and distributed to
any Underwriter, or shall have occurred at such later date as shall have been
consented to by Xxxxxx Brothers. If the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this Agreement,
the Prospectus shall have been filed with the Commission in accordance with the
Rules and Regulations and Section 5(a) of this Agreement. Prior to such Closing
Date, no stop order suspending the effectiveness of a Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of any Selling Stockholder, the Company or the
Representatives, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event involving a
prospective change, in the financial condition, business, properties or results
of operations of the Company and the Subsidiary taken as one enterprise which,
in the judgment of a majority in interest of the Underwriters including the
Representatives, is material and adverse to the Company and makes it impractical
or inadvisable to proceed with completion of the public offering or the sale of
and payment for the Offered Securities; (ii) any downgrading in the rating of
any debt securities of the Company by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the Act), or
any public announcement that any such organization has under surveillance or
review its rating of debt securities of the Company other than an announcement
with positive implications of a possible upgrading, and no implication of a
possible downgrading, of such rating); (iii) any material suspension or material
limitation of trading in securities generally on the New York Stock Exchange, or
any setting of minimum prices for trading on such exchange, or any suspension of
trading of any securities of the Company on any exchange or in the over-the-
counter market; (iv) any banking moratorium declared by U.S. Federal or New York
authorities; or (v) any outbreak or escalation of major hostilities in which the
United States is involved, any declaration of war by Congress or any other
substantial national or international calamity or emergency if, in the judgment
of a majority in interest of the Underwriters including the Representatives, the
effect of any such outbreak, escalation, declaration, calamity or emergency
makes it impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities.
13
(d) The Representatives shall have received an opinion, dated such
Closing Date, of Ropes & Xxxx, counsel for the Company substantially in the form
attached hereto as Exhibit A.
(e) The Representatives shall have received an opinion, dated such
Closing Date, of Xxxxxxx Berlin Shereff Xxxxxxxx, LLP, regulatory counsel for
the Company, to the effect that:
(i) The Company and the Subsidiary have all of the licenses,
permits and authorizations (collectively, the "PERMITS"), if any,
required by the FCC and, to the knowledge of such counsel, the Permits
required by any state regulatory authorities for the provision of
telecommunications services except where the failure to obtain or hold
such Permit would not have a Material Adverse Effect on the Company.
(ii) The Company and the Subsidiary are not subject to any pending
complaint or, to the knowledge of such counsel, any pending
investigation before the FCC or, to the best knowledge of counsel, to
any threatened complaint or investigation before the FCC, or any pending
or threatened complaint or investigation before any state regulatory
authority based on any alleged violation by the Company in connection
with their provision of or failure to provide telecommunications and
services of a character required to be disclosed in the Prospectus.
(iii) The statements in the Prospectus under the heading of "Risk
Factors - Changes to the regulations applicable to our business could
increase our costs and limit our operations" and "Business - Government
Regulation" fairly summarize the matters therein described and the
descriptions of federal and state telecommunications statutes in the
Registration Statements and Prospectus fairly present the information
required to be shown.
(iv) The Company and the Subsidiary have the consents, approvals,
authorizations, licenses, certificates, permits or orders of the FCC or
any state regulatory authority, if any, for the consummation of the
transactions contemplated in this Agreement except where the failure to
obtain the consents, approvals, authorizations, licenses, certificates,
permits or orders would not have a Material Adverse Effect on the
Company and the Subsidiary.
(v) Neither the execution and delivery of this Agreement nor the
sale of the Offered Securities contemplated hereby will conflict with or
result in a violation of any order or regulation of the FCC or any state
regulatory authority applicable to the Company and the Subsidiary except
where the conflict with or the violation of which would not have a
Material Adverse Effect on the Company and the Subsidiary.
(f) The Representatives shall have received an opinion, dated such
Closing Date, of Xxxxxx & Dodge LLP, counsel for Fleet National Bank and
Xxxxxxx, Xxxxx & Co., to the effect that:
(i) Each Selling Stockholder had valid and unencumbered title to
the Offered Securities delivered by such Selling Stockholder on the
First Closing Date and had full right, power and authority to sell,
assign, transfer and deliver the Offered Securities delivered by such
Selling Stockholder on the First Closing Date hereunder; and the several
Underwriters have acquired valid and unencumbered title to the Offered
Securities purchased by them from the Selling Stockholders on the First
Closing Date hereunder;
14
(ii) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required to be
obtained or made by any Selling Stockholder for the consummation of the
transactions contemplated by this Agreement in connection with the sale
of the Offered Securities sold by the Selling Stockholders, except such
as have been obtained and made under the Act and such as may be required
under state securities laws or clearance of the offering or sale with
the NASD, as to which counsel need express no opinion;
(iii) The execution, delivery and performance of this Agreement
and the consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any statute, any rule, regulation or
order of any governmental agency or body or any court having
jurisdiction over any Selling Stockholder or any of their properties or
any agreement or instrument of which such counsel has knowledge and to
which any Selling Stockholder is a party or by which any Selling
Stockholder is bound or to which any of the properties of any Selling
Stockholder is subject, or the charter or by-laws of any Selling
Stockholder which is a corporation in any case, which breach, violation
or default could reasonably be expected to have a material adverse
effect on the ability of such Selling Stockholder to perform its
obligations under this Agreement; and
(iv) This Agreement has been duly authorized, executed and
delivered by each Selling Stockholder.
(g) The Representatives shall have received from Xxxxxx & Xxxxxxx,
counsel for the Underwriters, such opinion or opinions, dated such Closing Date,
with respect to the Registration Statements, the Prospectus and other related
matters as the Representatives may require, and the Selling Stockholders and the
Company shall have furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters.
(h) The Representatives shall have received a certificate, dated such
Closing Date, of the President or any Vice President and a principal financial
or accounting officer of the Company in which such officers, to the best of
their knowledge after reasonable investigation, shall state that: the
representations and warranties of the Company in this Agreement are true and
correct; the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to
such Closing Date; no stop order suspending the effectiveness of any
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are contemplated by the Commission; the Additional
Registration Statement (if any) satisfying the requirements of subparagraphs (1)
and (3) of Rule 462(b) was filed pursuant to Rule 462(b), including payment of
the applicable filing fee in accordance with Rule 111(a) or (b) under the Act,
prior to the time the Prospectus was printed and distributed to any Underwriter;
and, subsequent to the date of the most recent financial statements in the
Prospectus, there has been no material adverse change, nor any development or
event involving a prospective material adverse change, in the financial
condition, business, properties or results of operations of the Company and the
Subsidiary taken as a whole except as set forth in or contemplated by the
Prospectus or as described in such certificate.
(i) The Representatives shall have received a letter, dated such
Closing Date, of Ernst & Young LLP, which meets the requirements of subsection
(a) of this Section, except that the specified date referred to in such
subsection will be a date not more than three days prior to such Closing Date
for the purposes of this subsection.
15
(j) The Representatives shall have received lock-up agreements, dated
such Closing Date, from each officer and director of the Company, Spectrum
Equity Investors II, L.P. and Toronto Dominion (Texas), Inc. substantially in
the form attached hereto as Exhibit B.
(k) The Representatives shall have received from each Selling
Stockholder documentation satisfactory to the Representatives that the warrants
have been duly exercised by the Selling Stockholders, such that each Selling
Stockholder has valid and unencumbered title to the Firm Securities required to
be delivered by such Selling Stockholder on the First Closing Date.
(l) Each Selling Stockholder shall have furnished to the
Representatives on the First Closing Date a certificate, dated the First Closing
Date, signed by, or on behalf of, the Selling Stockholder stating that the
representations, warranties and agreements of the Selling Stockholder contained
herein are true and correct as of the First Closing Date and that the Selling
Stockholder has complied with all agreements contained herein to be performed by
the Selling Stockholder at or prior to the First Closing Date.
The Selling Stockholders and the Company will furnish the Representatives
with such conformed copies of such opinions, certificates, letters and documents
as the Representatives reasonably request. Xxxxxx Brothers may in its sole
discretion waive on behalf of the Underwriters compliance with any conditions to
the obligations of the Underwriters hereunder, whether in respect of an Optional
Closing Date or otherwise.
7. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each Underwriter, its
partners, directors and officers and each person, if any, who controls such
Underwriter within the meaning of Section 15 of the Act, against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, the Prospectus or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by (i) any
Underwriter through the Representatives specifically for use therein, it being
understood and agreed that the only such information furnished by any
Underwriter consists of the information described as such in subsection (c)
below and (ii) any Selling Stockholder specifically for use therein, it being
understood and agreed that only such information furnished by any Selling
Stockholder consists of the information described as such in subsection (b)
below, and provided, further, that with respect to any untrue statement or
alleged untrue statement in or omission or alleged omission from any preliminary
prospectus the indemnity agreement set forth in this Section 7(a) shall not
inure to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased the Offered Securities
concerned, to the extent that a prospectus relating to such Offered Securities
was required to be delivered by such Underwriter under the Act in connection
with such purchase and any such loss, claim, damage or liability
16
of such Underwriter results from the fact that there was not sent or given to
such person, at or prior to the written confirmation of the sale of such Offered
Securities to such person, a copy of the Prospectus if the Company had
previously furnished copies thereof to such Underwriter.
Insofar as the foregoing indemnity agreement, or the representations and
warranties contained in Section 2(a)(ii), may permit indemnification for
liabilities under the Act of any person who is an Underwriter or a partner or
controlling person of an Underwriter within the meaning of Section 15 of the Act
and who, at the date of this Agreement, is a director, officer or controlling
person of the Company, the Company has been advised that in the opinion of the
Commission such provisions may contravene Federal public policy as expressed in
the Act and may therefore be unenforceable. In the event that a claim for
indemnification under such agreement or such representations and warranties for
any such liabilities (except insofar as such agreement provides for the payment
by the Company of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding)
is asserted by such a person, the Company will submit to a court of appropriate
jurisdiction (unless in the opinion of counsel for the Company the matter has
already been settled by controlling precedent) the question of whether or not
indemnification by it for such liabilities is against public policy as expressed
in the Act and therefore unenforceable, and the Company will be governed by the
final adjudication of such issue.
(b) Each Selling Stockholder, severally and not jointly, will
indemnify and hold harmless each Underwriter, its partners, directors and
officers and each person who controls such Underwriter within the meaning
of Section 15 of the Act, against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that
each Selling Stockholder will only be liable to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with written
information furnished to the Company by such Selling Stockholder;
specifically for use in the preparation of such Registration Statement,
Prospectus or amendment or supplement thereto; it being understood and
agreed that the only such information being provided by or on behalf of
each Selling Stockholder consists of the information pertaining
specifically to such Selling Stockholder under the caption "Principal and
Selling Stockholders" and "Certain Relationships and Related Transactions"
in the Prospectus; and, provided further, that in no event shall the
aggregate liability of any Selling Stockholder hereunder be greater in
amount than the dollar amount of the net proceeds received by such Selling
Stockholder upon the sale of the Firm Securities giving rise to such
indemnification obligation.
(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company, its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Act, and each
Selling Stockholder against any losses, claims, damages or liabilities to which
the Company or such Selling Stockholder may become subject, under the Act or
17
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement,
the Prospectus or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives specifically for use therein, and will reimburse any
legal or other expenses reasonably incurred by the Company and each Selling
Stockholder in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being understood
and agreed that the only such information furnished by any Underwriter consists
of the following information in the Prospectus furnished on behalf of each
Underwriter: the information contained under the caption "Underwriting".
(d) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement (i) includes
an unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action for which indemnity could have
been sought hereunder and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act by or on behalf of an
indemnified party.
(e) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company or a
Selling Stockholder, as the case may be, on the one hand and the Underwriters on
the other from the offering of the Securities or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company or a Selling Stockholder, as
the case may be, on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities as well as any other relevant equitable considerations. The
relative benefits received by the Company or a Selling Stockholder, as the case
may be, on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company or a Selling Stockholder, as the
case may be, bear to the
18
total underwriting discounts and commissions received by the Underwriters. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or a Selling Stockholder, as the case may be, or the Underwriters and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the subject of this subsection (e). Notwithstanding the provisions of this
subsection (e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (e) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under
this Section shall be in addition to any liability which the Company or the
Selling Stockholders may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
Selling Stockholder, to each director of the Company, to each officer of the
Company who has signed a Registration Statement and to each person, if any, who
controls the Company within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase Offered Securities hereunder on either the
First or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, Xxxxxx
Brothers may make arrangements satisfactory to the Company and the Selling
Shareholders for the purchase of such Offered Securities by other persons,
including any of the Underwriters, but if no such arrangements are made by such
Closing Date, the non-defaulting Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Offered
Securities that such defaulting Underwriters agreed but failed to purchase on
such Closing Date. If any Underwriter or Underwriters so default and the
aggregate number of shares of Offered Securities with respect to which such
default or defaults occur exceeds 10% of the total number of shares of Offered
Securities that the Underwriters are obligated to purchase on such Closing Date
and arrangements satisfactory to Xxxxxx Brothers, the Company and the Selling
Shareholders for the purchase of such Offered Securities by other persons are
not made within 36 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter or the Company
or the Selling Shareholders, except as provided in Section 9 (provided that if
such default occurs with respect to Optional Securities after the First Closing
Date, this Agreement will not terminate as to the Firm Securities or any
Optional Securities purchased prior to such termination). As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
19
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Stockholders, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, any Selling
Stockholder the Company or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If this Agreement is terminated pursuant to Section
8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by them pursuant to Section 5 and the
respective obligations of the Company, the Selling Stockholders and the
Underwriters pursuant to Section 7 shall remain in effect, and if any Offered
Securities have been purchased hereunder the representations and warranties in
Section 2 and all obligations under Section 5 shall also remain in effect. If
the purchase of the Offered Securities by the Underwriters is not consummated
for any reason other than solely because of the termination of this Agreement
pursuant to Section 8 or the occurrence of any event specified in Section 6(c),
the Company will reimburse the Underwriters for all out-of-pocket expenses
(including fees and disbursements of counsel) reasonably incurred by them in
connection with the offering of the Offered Securities.
10. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to the Representatives, c/x Xxxxxx Brothers Inc., Three World Financial Center,
New York, New York 10285, Attention: Syndicate Department (Fax: 000-000-0000),
with a copy, in the case of any notice pursuant to Section 7(d), to the Director
of Litigation, Office of the General Counsel, Xxxxxx Brothers Inc., Three World
Financial Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000; or, if sent to the
Company, will be mailed, delivered or telegraphed and confirmed to it at 000
Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxxxxxxx,
with a copy to Ropes & Xxxx, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, Attention: Xxxx X. Xxxxx, Esq. and the Law Offices of Xxxxxxx X. Xxxxx,
P.A., 00 Xxxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxxxx 00000, Attention: Xxxxxxx X. Xxxxx,
Esq.; or, if sent to the Selling Stockholders, will be mailed, delivered or
telegraphed and confirmed to Xxxxxxx, Sachs & Co., 00 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxxxx Xxxx, Esq., Assistant General Counsel, and to
Fleet National Bank, Xxx Xxxxxxx Xxxxxx, Xxxxxx, XX 00000, Attention: Xxxxx X.
Xxxx, Media and Communications Group, with a copy to Fleet National Bank's
Office of the General Counsel (at the Fleet National Bank address provided) and
Xxxxxx & Dodge, Xxx Xxxxxx Xxxxxx, Xxxxxx, XX 00000, Attention: Xxxxxx Xxxxxxx;
provided, however, that any notice to an Underwriter pursuant to Section 7 will
be mailed, delivered or telegraphed and confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder.
12. Representation. The Representatives will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the Representatives jointly or by
Xxxxxx Brothers will be binding upon all the Underwriters.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
20
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
21
If the foregoing is in accordance with the Representatives' understanding
of our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement among the Selling
Stockholders, Company and the several Underwriters in accordance with its terms.
Very truly yours,
CTC COMMUNICATIONS CORP.
By
--------------------------------------
FLEET NATIONAL BANK
By
---------------------------------------
XXXXXXX, SACHS & CO.
By
---------------------------------------
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.
XXXXXX BROTHERS INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
Acting on behalf of themselves and as the
Representatives of the several
Underwriters
By XXXXXX BROTHERS INC.
By
------------------------
Authorized Representative
22
SCHEDULE A
NUMBER OF SHARES OF THE
---------------------------------------
SELLING STOCKHOLDER FIRM SECURITIES TO BE SOLD
------------------------------------- ---------------------------------------
Fleet National Bank 100,000
Xxxxxxx, Xxxxx & Co. 200,000
Total................................
-------
300,000
=======
SCHEDULE B
NUMBER OF
---------
SHARES OF THE
-------------
FIRM SECURITIES
---------------
UNDERWRITER TO BE PURCHASED
----------- ---------------
Xxxxxx Brothers Inc...............................
Credit Suisse First Boston Corporation............
Total........................................
---------
3,500,000
=========
EXHIBIT A
OPINION OF ROPES & XXXX
EXHIBIT B
LOCK-UP LETTER AGREEMENT
XXXXXX BROTHERS INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
As Representatives of the
several underwriters
c/x XXXXXX BROTHERS INC.
Three World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned understands that you and certain other firms propose to
enter into an Underwriting Agreement (the "Underwriting Agreement") providing
for the purchase by you and such other firms (the "Underwriters") of shares (the
"Securities") of Common Stock, par value $.01 per share (the "Common Stock"), of
CTC Communications Corp. (the "Company", which term shall include CTC
Communications Group, Inc. or other entity formed in connection with the
Company's proposed holding company reorganization) and that the Underwriters
propose to reoffer the Securities to the public (the "Offering").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of Xxxxxx
Brothers Inc., the undersigned will not, directly or indirectly, (1) offer for
sale, sell, pledge, or otherwise dispose of (or enter into any transaction or
device that is designed to, or could be expected to, result in the disposition
by any person at any time in the future of) any shares of Common Stock
(including, without limitation, shares of Common Stock that may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and shares of Common Stock
that may be issued upon exercise of any option or warrant) or securities
convertible into or exchangeable for Common Stock (other than the Securities)
owned by the undersigned on the date of the final Prospectus relating to the
Offering, or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, for a period of 90 days after
the date of the final Prospectus relating to the Offering.
The foregoing shall not be deemed to preclude option exercises or exchanges
or surrender of equity securities to the Company but any securities
received upon exercise or in exchange therefor shall be subject to this
Agreement.
In furtherance of the foregoing, the Company and its Transfer Agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
It is understood that, if the Company notifies you that it does not intend
to proceed with the Offering, if the Underwriting Agreement does not become
effective, or if the Underwriting Agreement (other than the provisions thereof
which survive termination) shall terminate or be terminated prior to payment for
and delivery of the Securities, we will be released from our obligations under
this Lock-Up Letter Agreement.
The undersigned understands that the Company, the Underwriters and the
stockholders selling shares in the Offering will proceed with the Offering in
reliance on this Lock-Up Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned
shall be binding upon the heirs, personal representatives, successors and
assigns of the undersigned.
Very truly yours,
[NAME OF NON-SELLING STOCKHOLDER]
By:
----------------------------------
Name:
Dated: _______________
