Exhibit 1.1
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RCN CORPORATION
[ ] Shares of Common Stock
UNDERWRITING AGREEMENT
Dated as of June [ ], 1998
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RCN Corporation
[ ] Shares of Common Stock
UNDERWRITING AGREEMENT
New York, New York
June [ ], 1998
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxxx Inc.
NationsBanc Xxxxxxxxxx Securities LLC
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Prudential Securities Incorporated
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
RCN Corporation, a Delaware corporation (the "Company") and the
persons listed on Schedule B hereto (the "Selling Stockholders") confirm their
respective agreements with Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
("Xxxxxxx Xxxxx") and each of the other Underwriters named in Schedule A hereto
(collectively, the "Underwriters", which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), for whom Xxxxxxx
Xxxxx, Xxxxx Xxxxxx Inc., NationsBanc Xxxxxxxxxx Securities LLC, Xxxxxxxxx,
Xxxxxx & Xxxxxxxx Securities Corporation and Prudential Securities Incorporated
are acting as representatives (in such capacity, the "Representatives"), with
respect to (i) the sale by the Company and the Selling Stockholders, acting
severally and not jointly, and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of shares of Common Stock,
par value $1.00 per share, of the Company ("Common Stock") set forth in Schedule
A and B hereto, and (ii) the grant by the Company to the Underwriters, acting
severally and not jointly, of the option described in Section 2(b) hereof to
purchase all or any part of [ ] additional shares of Common Stock
to cover over-allotments, if any. The aforesaid
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[ ] shares of Common Stock (the "Initial Securities") to be purchased by
the Underwriters and all or any part of the [ ] shares of Common Stock
subject to the option described in Section 2(b) hereof (the "Option Securities")
are hereinafter called, collectively, the "Securities".
The Company and the Selling Stockholders understand that the
Underwriters propose to make a public offering of the Securities as soon as the
Representatives deem advisable after this Agreement has been executed and
delivered.
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-1 (No. 333-53373) covering
the registration of the Securities under the Securities Act of 1933, as amended
(the "Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the Act (the
"1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of the
1933 Act Regulations. The information included in such prospectus that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A
Information." Each prospectus used before such registration statement became
effective, and any prospectus that omitted the Rule 430A Information that was
used after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus," and the preliminary
prospectus dated June 4, 1998, is herein called the "Preliminary Prospectus."
Such registration statement, including the exhibits thereto and schedules
thereto at the time it became effective and including the Rule 430A Information
is herein called the "Registration Statement." Any registration statement filed
pursuant to Rule 462(b) of the 1933 Act Regulations is herein referred to as the
"Rule 462(b) Registration Statement," and after such filing the term
"Registration Statement" shall include the Rule 462(b) Registration Statement.
The final prospectus in the form first furnished to the Underwriters for use in
connection with the offering of the Securities is herein called the
"Prospectus." For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus, the Prospectus or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("XXXXX").
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SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time (as defined in Section 2(c) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(b) hereof), and agrees with each Underwriter
as follows:
(i) Each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the Act and no stop
order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement has been issued under the Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the Act and the 1933 Act Regulations and did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. Neither the Prospectus nor any amendments or supplements
thereto, at the time the Prospectus or any such amendment or supplement
was issued and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), included or will include an untrue
statement of a material fact or omitted or will omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or Prospectus
made in reliance upon and in conformity with information furnished to the
Company in writing by any Underwriter through Xxxxxxx Xxxxx expressly for
use in the Registration Statement or Prospectus.
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The Prospectus, when filed pursuant to Rule 424(b) under the
Act, will comply in all material respects with the 1933 Act Regulations
and the Prospectus delivered to the Underwriters for use in connection
with this offering was substantially identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX,
except to the extent permitted by Regulation S-T.
(ii) The only Restricted Affiliates (as defined in the Indenture
dated October 17, 1997 between the Company and the Chase Manhattan Bank,
as Trustee) as of the date hereof are those listed on Schedule D hereto.
Each of the Company, each "significant subsidiary" (as defined in Section
210.1-02 of Regulation S-X) of the Company (each a "Subsidiary" and
collectively, the "Subsidiaries") and the Restricted Affiliates has been
duly organized and is validly existing and in good standing under the laws
of its jurisdiction of organization, with all requisite power and
authority under such laws, and all necessary authorizations, approvals,
orders, licenses, certificates and permits of and from regulatory or
governmental officials, bodies and tribunals, (a) to own, lease and
operate their respective properties and to conduct their respective
businesses as now conducted and as described in the Prospectus and (b), in
the case of the Company, to enter into, deliver and perform its
obligations under this Agreement, except, in the case of the foregoing
subclause (a) for authorizations, approvals, orders, leases, certificates
and permits, the failure of which to possess could not reasonably be
expected to have a Material Adverse Effect (as defined below); and are all
duly qualified to do business and in good standing in all other
jurisdictions where the ownership or leasing of their respective
properties or the conduct of their respective businesses requires such
qualification, except where the failure to be so qualified could not
reasonably be expected to have a material adverse effect (i) on the
business, condition (financial or otherwise), results of operations,
business affairs or business prospects of the Company, the Subsidiaries
and the Restricted Affiliates taken as a whole or (ii) on the ability of
the Company to perform any of its obligations under this Agreement or to
consummate any of the transactions contemplated hereby (a "Material
Adverse Effect").
(iii) This Agreement has been duly authorized, executed and
delivered by the Company.
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(iv) No consent, waiver, authorization, approval, license,
qualification or order of, or filing or registration with, any court or
governmental or regulatory agency or body, is required for the issue and
sale of the Securities by the Company, the performance by the Company of
its obligations under this Agreement, or for the consummation of any of
the transactions contemplated to be taken by the Company hereby,
including, without limitation, the issuance and sale of the Securities
hereunder, except, such as have been obtained under the Act and such as
may be required under the blue sky laws of any jurisdiction in connection
with the purchase and distribution of the Securities by the Underwriters
in the manner contemplated in this Agreement and in the Prospectus.
(v) The issuance, sale and delivery of the Securities, the
execution, delivery and performance by the Company of this Agreement and
the consummation by the Company of the transactions contemplated hereby
and in the Prospectus and the compliance by the Company with the terms of
the foregoing do not, and, at the Closing Time, will not conflict with or
constitute or result in a breach or violation by the Company or any of the
Subsidiaries or the Restricted Affiliates of (A) any of the terms or
provisions of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) by any of the Company,
the Subsidiaries or the Restricted Affiliates or give rise to any right to
accelerate the maturity or require the prepayment of any indebtedness
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company, the Subsidiaries
or the Restricted Affiliates under any contract, indenture, mortgage, deed
of trust, loan agreement, note, lease, license, franchise agreement,
authorization, permit, certificate or other agreement or document to which
any of the Company, the Subsidiaries or the Restricted Affiliates is a
party or by which any of them may be bound, or to which any of them or any
of their respective assets or businesses is subject (collectively,
"Contracts") (and the Company has no knowledge of any conflict, breach or
violation of such terms or provisions or of any such default, in any such
case, which has occurred or will so result), (B) the articles of
incorporation, by-laws or similar organizational documents (each, an
"Organizational Document") of each of the Company, the Subsidiaries and
the Restricted Affiliates or (C) any law, statute, rule or regulation, or
any judgment, decree or order, in any such case, of any domestic or
for-
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eign court or governmental or regulatory agency or other body having
jurisdiction over the Company or any of the Subsidiaries or the Restricted
Affiliates or any of their respective properties or assets.
(vi) The Securities have been duly authorized for issuance and sale
to the Underwriters pursuant to this Agreement and, when issued and
delivered by the Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued and fully paid and
non-assessable; the Common Stock conforms to all statements relating
thereto contained in the Prospectus and such description conforms to the
rights set forth in the instruments defining the same; no holder of the
Securities will be subject to personal liability by reason of being such a
holder; and the issuance of the Securities is not subject to the
preemptive or other similar rights of any securityholder of the Company.
(vii) The audited and unaudited consolidated financial statements of
the Company included in the Prospectus, including the notes thereto,
present fairly in all material respects the financial position of the
Company and its consolidated subsidiaries at the dates indicated, and the
statement of operations, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries for the periods have been
prepared in conformity with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved. Coopers & Xxxxxxx L.L.P., which has examined certain of such
financial statements as set forth in its report included in the
Prospectus, is an independent public accounting firm with respect to the
Company and its Subsidiaries within the meaning of Regulation S-X under
the Act. The audited and unaudited consolidated financial statements
included in the Prospectus of Erols Internet, Inc. ("Erols"), including
the notes thereto, present fairly in all material respects the financial
position of Erols and its consolidated subsidiaries, at the dates
indicated, and the statement of operations, stockholders' equity and cash
flows of Erols and its consolidated subsidiaries for the periods have been
prepared in conformity with United States GAAP applied on a consistent
basis throughout the periods involved. The selected financial data and the
summary financial information included
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in the Prospectus present fairly in all material respects the information
shown therein and have been compiled on a basis consistent with that of
the financial statements included in the Prospectus. Ernst & Young LLP,
which has examined certain of such financial statements as set forth in
its report included in the Prospectus, is an independent public accounting
firm with respect to Erols and its subsidiaries within the meaning of
Regulation S-X under the Act. The pro forma financial information relating
to the Company and its Subsidiaries and the related notes thereto included
in the Prospectus present fairly in all material respects the information
shown therein, have been prepared in all material respects in accordance
with the Commission's rules and guidelines with respect to pro forma
financial adjustments and have been properly computed on the bases
described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect
to the transactions and circumstances referred to therein.
(viii) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as otherwise
specifically stated therein, there has been no (A) material adverse change
in the business, condition (financial or otherwise), results of
operations, business affairs or business prospects of the Company, the
Subsidiaries and the Restricted Affiliates taken as a whole, whether or
not arising in the ordinary course of business (a "Material Adverse
Change"), (B) transaction entered into by any of the Company, the
Subsidiaries or the Restricted Affiliates, other than in the ordinary
course of business, that is material to the Company, the Subsidiaries and
the Restricted Affiliates, taken as a whole or (C) dividend or
distribution of any kind declared, paid or made by the Company on its
capital stock.
(ix) The Company has the authorized, issued and outstanding
capitalization set forth in the Prospectus under the column entitled
"Actual" under the caption "Capitalization;" all of the outstanding
capital stock of the Company has been duly authorized and validly issued,
is fully paid and nonassessable and was not issued in violation of any
preemptive or similar rights (whether provided contractually or pursuant
to any Organizational Document). Except as set forth in the Prospectus,
the Company does not own, directly or indirectly, any material amount of
shares, or any other material amount of equity or long-term debt
securities or have any material equity interest in any firm, partnership,
joint venture or other entity. Except as set forth in the Prospectus, no
holder
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of any securities of the Company is entitled to have such securities under
the Registration Statement or otherwise registered by the Company under
the Act. All of the outstanding capital stock or other ownership interests
of each of the Subsidiaries and the Restricted Affiliates has been duly
authorized and validly issued, is fully paid and nonassessable and was not
issued in violation of any preemptive or similar rights (whether provided
contractually or pursuant to any Organizational Document).
(x) None of the Company, the Subsidiaries or the Restricted
Affiliates is (A) in violation of its respective Organizational Documents,
(B) in default (or, with notice or lapse of time or both, would be in
default) in the performance or observance of any obligation, agreement,
covenant or condition contained in any Contract or (C) in violation of any
law, statute, judgment, decree, order, rule or regulation of any domestic
or foreign court with jurisdiction over the Company, the Subsidiaries or
the Restricted Affiliates or any of their respective assets or properties,
or other governmental or regulatory authority, agency or other body, other
than, in the case of clause (B) or (C), such defaults or violations which
could not, individually or in the aggregate, reasonably be expected to
have or result in a Material Adverse Effect; and any real property and
buildings held under lease by the Company, the Subsidiaries or the
Restricted Affiliates are held by the Company or such Subsidiary or
Restricted Affiliate, as the case may be, under valid, subsisting and
enforceable leases with such exceptions which could not, individually or
in the aggregate, reasonably be expected to have or result in a Material
Adverse Effect.
(xi) Except as described in the Prospectus, each of the Company, the
Subsidiaries and the Restricted Affiliates has obtained all consents,
approvals, orders, certificates, licenses, permits, franchises and other
authorizations, in each case material to the operations of the Company
(collectively, the "Licenses") of and from, and has made all declarations
and filings with, all governmental and regulatory authorities, all
self-regulatory organizations and all courts and other tribunals necessary
to own, lease, license and use its properties and assets and to conduct
its businesses in the manner described in the Prospectus. None of the
Company, the Subsidiaries or the Restricted Affiliates has received any
notice of proceedings relating to the revocation or modification of, or
denial of any application for, any License which, if the
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subject of any unfavorable decision, ruling or finding, could, singly or
in the aggregate, reasonably be expected to have or result in a Material
Adverse Effect; the Company, each of the Subsidiaries and each of the
Restricted Affiliates have fulfilled and performed all of their
obligations with respect to all Licenses possessed by any of them, except
where the failure to so fulfill and perform could not, singly or in the
aggregate, reasonably be expected to have or result in a Material Adverse
Effect; and no event has occurred which allows, or after notice or lapse
of time, or both, would allow, revocation or termination thereof or result
in any other material impairment of the rights of the holder of any such
License, except where such revocation or termination could not, singly or
in the aggregate, reasonably be expected to have or result in a Material
Adverse Effect; and the Licenses referred to above place no restrictions
on the Company, any of the Subsidiaries or any of the Restricted
Affiliates that are not described in the Prospectus, except where such
restrictions could not, singly or in the aggregate, reasonably be expected
to have or result in a Material Adverse Effect.
(xii) Except as described in the Prospectus, there is no legal action,
suit, proceeding inquiry or investigation before or by any court or
governmental body or agency, domestic or foreign, now pending or, to the
best knowledge of the Company, threatened against the Company, any of the
Subsidiaries or any of the Restricted Affiliates or affecting the Company,
any of the Subsidiaries or any of the Restricted Affiliates or any of
their respective properties which would be required to be disclosed in a
registration statement filed under the Act which could, individually or in
the aggregate, reasonably be expected to have or result in a Material
Adverse Effect. Except as set forth in the Prospectus, none of the
Company, any of the Subsidiaries or any of the Restricted Affiliates has
received any notice or claim of any material default (or event, condition
or omission which with notice or lapse of time or both would result in a
default) under any of its respective Contracts or has knowledge of any
material breach of any of such Contracts by the other party or parties
thereto, in each case which would, individually or in the aggregate have a
Material Adverse Effect.
(xiii) Each of the Company, the Subsidiaries and the Restricted
Affiliates has filed all necessary federal, state and foreign income and
franchise tax returns, and
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has paid all taxes shown as due thereon; and there is no tax deficiency
that has been asserted against any of the Company, the Subsidiaries or any
Restricted Affiliate.
(xiv) Each of the Company, the Subsidiaries and the Restricted
Affiliates has good and marketable title to all real and personal property
described in the Prospectus as being owned by it and good and marketable
title to a leasehold estate in the real and personal property described in
the Prospectus as being leased by it, free and clear of all liens,
charges, encumbrances or restrictions, except to the extent the failure to
have such title or the existence of such liens, charges, encumbrances or
restrictions could not, individually or in the aggregate, reasonably be
expected to have or result in a Material Adverse Effect.
(xv) The Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds therefrom as
described in the Prospectus, will not be an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended.
(xvi) No strike, labor problem, dispute, slowdown, work stoppage or
disturbance with the employees of the Company, any of the Subsidiaries or
any of the Restricted Affiliates exists or, to the best knowledge of the
Company, is threatened which could, individually or in the aggregate,
reasonably be expected to have or result in a Material Adverse Effect.
(xvii) There are no contracts or documents which are required to be
described in the Registration Statement or the Prospectus or to be filed
as exhibits thereto which have not been so described or filed as required.
(xviii) The Company has insurance in such amounts and covering such
risks and liabilities as are in accordance with normal industry practice.
(xix) Except as disclosed in the Prospectus, none of the Company,
any Subsidiary or any of the Restricted Affiliates has any material profit
sharing, deferred compensation, stock option, stock purchase, phantom
stock or similar plans, including agreements evidencing rights to purchase
securities or to share in the profits of the Company, any Subsidiary or
any Restricted Affiliate.
(xx) Except as described in the Prospectus or as would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect (A) each of the Company, the Subsidiaries and
the Restricted Affiliates is in compliance with and not subject to any
known liability under applicable Environmental Laws (as defined
below), (B) each of the Company, the Subsidiaries and the Restricted
Affiliates has made all filings and provided all notices required
under any applicable Environmental Law, and has, and is in compliance
with, all Permits required under any applicable Environmental Laws,
and each of them is in full force and effect, (C) there is no civil,
criminal or administrative action, suit, demand, claim, hearing,
notice of violation or, to the best knowledge of the Company,
investigation, proceeding, notice or demand letter or request for
information pending or threatened against the Company, any of the
Subsidiaries or any of the Restricted Affiliates under any
Environmental Law, (D) no lien, charge, encumbrance or restriction has
been recorded under any Environmental Law with respect to any assets,
facility or property owned, operated, leased or controlled by the
Company, any Subsidiary or any Restricted Affiliate, (E) none of the
Company, any Subsidiary or any Restricted Affiliate has received
notice that it has been identified as a potentially responsible party
under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), or any comparable state
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law, (F) no property or facility of the Company, any Subsidiary or any
Restricted Affiliate is (i) listed or, to the best knowledge of the
Company proposed for listing on the National Priorities List under
CERCLA or is (ii) listed in the Comprehensive Environmental Response,
Compensation, Liability Information System List promulgated pursuant
to CERCLA, or on any comparable list maintained by any state or local
governmental authority.
For purposes of this Agreement, "Environmental Laws" means the common law and
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all applicable federal, provincial, state and local laws or regulations, codes,
orders, decrees, judgments or injunctions issued, promulgated, approved or
entered thereunder, relating to pollution or protection of public or employee
health and safety or the environment, including, without limitation, laws
relating to (i) emissions, discharges, releases or threatened releases of
hazardous materials into the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata), (ii) the
manufacture, processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of hazardous materials, and (iii) underground
and above ground storage tanks and related piping, and emissions, discharges,
releases or threatened releases therefrom.
(xxi) Except as described in the Prospectus, none of the Company,
any of the Subsidiaries or any of the Restricted Affiliates has
incurred any liability for any prohibited transaction or funding
deficiency or any complete or partial withdrawal liability with
respect to any pension, profit sharing or other plan which is subject
to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), to which the Company, the Subsidiaries or the Material
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Subsidiaries makes or ever has made a contribution and in which any
employee of the Company, any such Subsidiary or any such Restricted
Affiliate is or has ever been a participant, which, individually in
the aggregate, could reasonably be expected to have or result in a
Material Adverse Effect. With respect to such plans, each of the
Company, the Subsidiaries and the Restricted Affiliates is in
compliance in all respects with all applicable provisions of ERISA,
except where the failure to so comply could not, individually or in
the aggregate, reasonably be expected to have or a result in a
Material Adverse Effect.
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(b) Each Selling Stockholder severally represents and warrants to
each Underwriter as of the date hereof and as of the Closing Time, and agrees
with each Underwriter, as follows:
(i) Such Selling Stockholder is not prompted to sell the Securities
to be sold by such Selling Stockholder hereunder by any information
concerning the Company or any subsidiary of the Company which is not set
forth in the Prospectus.
(ii) Such Selling Stockholder has the full right, power and
authority to enter into this Agreement and a Power of Attorney and Custody
Agreement (the "Power of Attorney and Custody Agreement") and to sell,
transfer and deliver the Securities to be sold by such Selling Stockholder
hereunder. The issuance, sale and delivery of the Securities, the
execution, delivery and performance by such Selling Stockholder of this
Agreement and the Power of Attorney and Custody Agreement and the
consummation by such Selling Stockholder of the transactions contemplated
hereby and thereby and the compliance by such Selling Stockholder with the
terms of the foregoing do not, and, at the Closing Time, will not,
conflict with or constitute or result in a breach or violation by such
Selling Stockholder of any of the terms or provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) by such Selling Stockholder, or give rise to any
right to accelerate the maturity or require the prepayment of any
indebtedness under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of such Selling
Stockholder under any material contract, indenture, mortgage, deed of
trust, loan agreement, note, lease, license, franchise agreement,
authorization, permit, certificate or other agreement or document to which
such Selling Stockholder is a party, nor will such action result in the
violation of any law, statute, rule, or regulation or any order, decree or
judgment applicable to such Selling Stockholder, of any court or
governmental or regulatory agency or body or arbitrator known to such
counsel to have jurisdiction over such Selling Stockholder or any of its
properties or assets.
(iii) Such Selling Stockholder has and will at the Closing Time have
good and marketable title to the Securities to be sold by such Selling
Stockholder hereunder, free and clear of any security interest, mortgage,
pledge,
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lien, charge, claim, equity or encumbrance of any kind, other than
pursuant to this Agreement; and upon delivery of such Securities and
payment of the purchase price therefor as herein contemplated, assuming
each such Underwriter has no notice of any adverse claim, each of the
Underwriters will receive good and marketable title to the Securities
purchased by it from such Selling Stockholder, free and clear of any
security interest, mortgage, pledge, lien, charge, claim, equity or
encumbrance of any kind.
(iv) Such Selling Stockholder has duly executed and delivered, in
the form heretofore furnished to the Representatives, the Power of
Attorney and Custody Agreement with Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx
and Xxxx Filopowicz, or any of them, as attorney(s)-in-fact (the
"Attorneys-in-Fact") and First Union National Bank, as custodian (the
"Custodian"); the Custodian is authorized to deliver the Securities to be
sold by such Selling Stockholder hereunder and to accept payment
therefore; and each Attorney-in-Fact is authorized to execute and deliver
this Agreement and the certificate referred to in Section 5(h), to sell,
assign and transfer to the Underwriters the Securities to be sold by such
Selling Stockholder hereunder, to determine the purchase price to be paid
by the Underwriters to such Selling Stockholder, as provided in Section
2(a) hereof, to authorize the delivery of the Securities to be sold by
such Selling Stockholder hereunder, to accept payment therefor, and
otherwise to act on behalf of such Selling Stockholder in connection with
this Agreement.
(v) Such Selling Stockholder has not taken, and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities.
(vi) No filing with, or consent, approval, authorization, order,
registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign, is necessary or required for the
performance by such Selling Stockholder of its obligations hereunder or in
the Power of Attorney and Custody Agreement, or in connection with the
sale and delivery of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement, except such as may have
previously been
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made or obtained or as may be required under the Act or the 1933 Act
Regulations or state securities laws.
(vii) During a period of 90 days from the date of the Prospectus,
such Selling Stockholder will not, without the prior written consent of
Xxxxxxx Xxxxx, (i) offer, pledge, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or dispose
of, directly or indirectly, any share of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or file
any registration statement under the Act with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly,
the economic consequence of ownership of the Common Stock, whether any
such swap or transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to the Securities to be
sold hereunder.
(viii) Certificates for all of the Securities to be sold by such
Selling Stockholder pursuant to this Agreement, in suitable form for
transfer by delivery or accompanied by duly executed instruments of
transfer or assignment in blank with signatures guaranteed, have been
placed in custody with the Custodian with irrevocable conditional
instructions to deliver such Securities to the Underwriters pursuant to
this Agreement.
(ix) Neither such Selling Stockholder nor any of his/her/its
affiliates directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, or has any
other association with (within the meaning of Article I, Section 1(m) of
the By-laws of the National Association of Securities Dealers, Inc), any
member firm of the National Association of Securities Dealers, Inc.
(c) Any certificate signed by any officer of the Company and
delivered to the Representatives or to counsel for the Underwriters pursuant to
the terms of this Agreement shall be deemed a representation and warranty by the
Company to the Underwriters as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing. (a) Initial
Securities. On the basis of the representa-
-14-
tions and warranties herein contained and subject to the terms and conditions
herein set forth, the Company and each Selling Stockholder, severally and not
jointly, agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company or
such Selling Stockholder, as the case may be, at the price per share set forth
in Schedule C, that proportion of the number of Initial Securities set forth in
Schedule B opposite the name of the Company or such Selling Stockholder, as the
case may be, which the number of Initial Securities set forth in Schedule A
opposite the name of such Underwriter, plus any additional number of Initial
Securities which such Underwriter may become obligated to purchase pursuant to
the provisions of Section 10 hereof, bears to the total number of Initial
Securities, subject, in each case, to such adjustments among the Underwriters as
the Representatives in their sole discretion shall make to eliminate any sales
or purchases of fractional shares.
(b) Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase up to an additional
1,648,351 shares of Common Stock at the price per share set forth in Schedule C,
less an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial Securities but not payable on the Option
Securities. The option hereby granted will expire 30 days after the date hereof
and may be exercised in whole or in part from time to time only for the purpose
of covering over-allotments which may be made in connection with the offering
and distribution of the Initial Securities upon notice by the Representatives to
the Company setting forth the number of Option Securities as to which the
several Underwriters are then exercising the option and the time and date of
payment and delivery for such Option Securities. Any such time and date of
delivery (a "Date of Delivery") shall be determined by the Representatives, but
shall not be later than seven full business days after the exercise of said
option, nor in any event prior to the Closing Time, as hereinafter defined. If
the option is exercised as to all or any portion of the Option Securities, each
of the Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Securities then being purchased which
the number of Initial Securities set forth in Schedule A opposite the name of
such Underwriter bears to the total number of Initial Securities, subject in
each case to such adjustments
-15-
as the Representatives in their discretion shall make to eliminate any sales or
purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Xxxxxx
Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other
place as shall be agreed upon by the Representatives and the Company, at 9:00
A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M.
(Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after such date as shall be agreed upon by the
Representatives and the Company (such time and date of payment and delivery
being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities
are purchased by the Underwriters, payment of the purchase price for, and
delivery of certificates for, such Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Representatives and the Company, on each Date of Delivery as specified in the
notice from the Representatives to the Company.
Payment shall be made to the Company and the Selling Stockholders by
wire transfer of immediately available funds to a bank account designated by the
Company and the Custodian pursuant to each Selling Stockholder's Power of
Attorney and Custody Agreement, as the case may be, against delivery to the
Representatives for the respective accounts of the Underwriters of certificates
for the Securities to be purchased by them. It is understood that each
Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. Xxxxxxx Xxxxx, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.
(d). Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Representatives may request in writing at least
one full busi-
-16-
ness day before the Closing Time or the relevant Date of Delivery, as the case
may be. The certificates for the Initial Securities and the Option Securities,
if any, will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
SECTION 3. Covenants of the Company. The Company covenants
with each Underwriter as follows:
(a) Compliance with Securities Regulations and Commission
Requests. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A and, prior to the completion of the distribution
of the Securities by the Underwriters, will notify the Representatives
immediately, (i) when any post-effective amendment to the Registration
Statement shall become effective, or any supplement to the Prospectus or
any amended Prospectus shall have been filed, (ii) of the receipt of any
comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement
to the Prospectus or for additional information, and (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus, or of the suspension of the qualification of
the Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to Rule 424(b)
and will take such steps as it deems necessary to ascertain promptly
whether the form of prospectus transmitted for filing under Rule 424(b)
was received for filing by the Commission and, in the event that it was
not, it will promptly file such prospectus. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) Filing of Amendments. Prior to the completion of the
distribution of the Securities by the Underwriters, the Company will give
the Representatives notice of its intention to file or prepare any
amendment to the Registration Statement (including any filing under Rule
462(b)) or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at
-17-
the time it became effective or to the Prospectus, will furnish the
Representatives with copies of any such documents a reasonable amount of
time prior to such proposed filing or use, as the case may be, and will
not file or use any such document to which the Representatives or counsel
for the Underwriters shall reasonably object.
(c) Delivery of Registration Statements. The Company has
furnished or will deliver to the Representatives and counsel for the
Underwriters, without charge, signed copies (or duplicates thereof) of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein)
and signed copies (or duplicates thereof) of all consents and certificates
of experts, and will also deliver to the Representatives, without charge,
a conformed copy of the Registration Statement as originally filed and of
each amendment thereto (without exhibits) for each of the Underwriters.
The copies of the Registration Statement and each amendment thereto
furnished to the Underwriters will be substantially identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to
each Underwriter, without charge, as many copies of each preliminary
prospectus as such Underwriter reasonably requested, and the Company
hereby consents to the use of such copies for purposes permitted by the
Act. The Company will furnish to each Underwriter, without charge, during
the period when the Prospectus is required to be delivered under the Act
or the Securities Exchange Act of 1934 (the "Exchange Act"), such number
of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company
will comply with the Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time after the first date of
the public offering of the Common Stock and prior to the expiration of
nine months after the date of the Prospectus, a prospectus is required by
the Act to be delivered in connection with sales of the Securities, and
any event shall occur or condi-
-18-
tion shall exist as a result of which it is necessary, in the opinion of
counsel for the Underwriters or for the Company, to amend the Registration
Statement or amend or supplement the Prospectus in order that the
Prospectus will not include any untrue statements of a material fact or
omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the
time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration
Statement or amend or supplement the Prospectus in order to comply with
the requirements of the Act or the 1933 Act Regulations, the Company will
promptly prepare and file with the Commission, subject to Section 3(b),
such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectus comply
with such requirements, and the Company will furnish to the Underwriters
such number of copies of such amendment or supplement as the Underwriters
may reasonably request, and in case any Underwriter is required to deliver
a prospectus in connection with sales of any of the Common Stock at any
time after nine months or more after the date of the Prospectus, upon the
request of such Underwriter but at the expense of such Underwriter, to
prepare and deliver to such Underwriter as many copies as such Underwriter
may request of an amended or supplemented Prospectus complying with
Section 10(a)(3) of the Act.
.
(f) Blue Sky Qualifications. The Company will use its best
efforts, in cooperation with the Underwriters, to qualify the Securities
for offering and sale under the applicable securities laws of such states
and other jurisdictions (domestic or foreign) as the Representatives may
designate and to maintain such qualifications in effect for a period of
not less than one year from the later of the effective date of the
Registration Statement and any Rule 462(b) Registration Statement;
provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In
each jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by the
laws of such jurisdiction to continue such qualification in effect for a
period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports
pursuant to the Exchange Act as are necessary in order to make generally
available to its securityholders as soon as practicable an earnings
statement for the
-19-
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the Act.
(h) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified in
the Prospectus under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect
and maintain the quotation of the Securities on the Nasdaq National Market
and will file with the Nasdaq National Market all documents and notices
required by the Nasdaq National Market of companies that have securities
that are traded in the over-the-counter market and quotations for which
are reported by the Nasdaq National Market.
(j) Restriction on Sale of Securities. During a period of 90
days from the date of the Prospectus, the Company will not, without the
prior written consent of Xxxxxxx Xxxxx, (i) directly or indirectly, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of any share of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under the
Act with respect to any of the foregoing or (ii) enter into any swap or
any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i)
or (ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the Securities to be sold hereunder, (B) any shares of Common Stock
issued by the Company upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof and referred to in
the Prospectus, (C) any shares of Common Stock issued or options to
purchase Common Stock granted pursuant to existing employee benefit plans
of the Company referred to in the Prospectus or (D) any shares of Common
Stock issued pursuant to any non-employee director stock plan or dividend
reinvestment plan.
(k) Reporting Requirements. The Company, during the period
when the Prospectus is required to be de-
-20-
livered under the Act or the Exchange Act, will file all documents
required to be filed with the Commission pursuant to the Exchange Act
within the time periods required by the Exchange Act and the rules and
regulations of the Commission thereunder.
SECTION 4. Payment of Expenses. (a) Whether or not any sale of the
Securities is consummated, the Company agrees to pay and bear all costs and
expenses incident to the performance of all of its obligations under this
Agreement, including (i) the preparation and printing of the Registration
Statement and any amendments or supplements thereto and the cost of furnishing
copies thereof to the Underwriters, (ii) the preparation, issuance, printing and
delivery of certificates for the Securities, including any stock or other
transfer taxes and any stamp or other duties payable upon the sale, issuance or
delivery of the Securities to the Underwriters, (iii) the fees and disbursements
of the Company's counsel and accountants, (iv) the qualification of the
Securities under the applicable state securities or "blue sky" laws in
accordance with the provisions of Section 3(f) hereof, including filing fees and
up to $10,000 in respect of fees and disbursements of counsel to the
Representatives in connection therewith and in connection with the preparation
of any survey of state securities or "blue sky" laws or legal investment
memoranda, (v) the printing and delivery to the Underwriters of copies of each
preliminary prospectus and of the Prospectus and any amendments or supplements
thereto, (vi) the fees and expenses of any transfer agent or registrar for the
Securities, (vii) the filing fees 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. (the "NASD") of the terms
of the sale of the Securities, (viii) the fees and expenses incurred in
connection with the inclusion of the Securities in the Nasdaq National Market,
and (ix) all expenses (including travel expenses) of the Company in connection
with any meetings with prospective investors in the Securities.
(b) Each Selling Stockholder agrees to pay and bear all costs and
expenses incident to the performance of all of their respective obligations
under, and the consummation of the transactions contemplated by, this Agreement,
including (i) any stamp duties, capital duties and stock transfer tax, if any,
payable upon the sale of the Securities to the Underwriters, and their transfer
between the Underwriters pursuant to an agreement between such Underwriters, and
(ii) the fees and disbursements of their respective counsel.
-21-
(c) If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 5 hereof is not satisfied, because this Agreement is terminated
pursuant to Section 9(a)(i) or Section 11 hereof or because of any failure,
refusal or inability on the part of the Company to perform all obligations and
satisfy all conditions on its part to be performed or satisfied hereunder other
than by reason of a default by an Underwriter in payment for the Securities at
the Closing Time, the Company agrees to reimburse the Underwriters promptly upon
demand for all reasonable out-of-pocket expenses (including reasonable fees and
disbursements of their counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
SECTION 5. Conditions of the Underwriters' Obligations. The
obligations of the several Underwriters to purchase and pay for the Securities
are subject to the continued accuracy, as of the Closing Time and at each Date
of Delivery, of the representations and warranties of the Company herein
contained, to the accuracy of the statements of the Company and officers of the
Company made in any certificate pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder, and to the following
further conditions:
(a) The Registration Statement, including any Rule 462(b)
Registration Statement, has become effective and at the Closing Time no
stop order suspending the effectiveness of the Registration Statement
shall have been issued under the Act or proceedings therefor initiated or
threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. A prospectus
containing the Rule 430A Information shall have been filed with the
Commission in accordance with Rule 424(b) (or a post-effective amendment
providing such information shall have been filed and declared effective in
accordance with the requirements of Rule 430A).
(b) At the Closing Time, the Representatives shall have received the
opinion of Xxxxx Xxxx & Xxxxxxxx, counsel to the Company, dated as of the
Closing Time, in substantially the form set forth below and otherwise
reasonably satisfactory to the Representatives and counsel for the
Representatives, to the effect that:
-22-
(1) The Company has the requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement; and this Agreement has been duly authorized, executed and
delivered by the Company;
(2) No consent, waiver, approval, authorization, license,
qualification or order of or filing or registration with any court
or governmental or regulatory agency or body is required for the
execution and delivery by the Company of this Agreement or for the
issue and sale of the Securities, or the performance by the Company
of its obligations under this Agreement, or for the consummation of
any of the transactions contemplated hereby, except such as have
been obtained under the Act and such as may be required under the
blue sky laws of any jurisdiction in connection with the purchase
and distribution of the Securities by the Underwriters in the manner
contemplated in this Agreement and in the Prospectus;
(3) The issuance, sale and delivery of the Securities and
performance by the Company of this Agreement and the consummation by
the Company of the transactions contemplated hereby and the
compliance by the Company with the terms of the foregoing do not,
and, at the Closing Time, will not, conflict with or constitute or
result in a breach or violation by the Company, any of the
"significant subsidiaries" (as defined in Section 210.1-02 of
Regulation S-X) of the Company (each a "Significant Subsidiary") or
any of the Restricted Affiliates of (A) any provision of the
Certificate of Incorporation or By-laws of the Company, or (B) any
law, statute, rule, or regulation or any order, decree or judgment
known to such counsel to be applicable to the Company, any
Significant Subsidiary or any Restricted Affiliate, of any court or
governmental or regulatory agency or body or arbitrator known to
such counsel to have jurisdiction over the Company, any of the
Subsidiaries or any of the Restricted Affiliates or any of their
respective properties or assets;
(4) The statements in the Prospectus under the headings
"Description of Capital Stock" insofar as such statements purport to
summarize certain provisions of the Certificate of Incorporation and
By-laws
-23-
of the Company provide a fair summary of such provisions of such
documents and instruments;
(5) The Securities have been duly authorized for issuance and
sale to the Underwriters pursuant to the Underwriting Agreement and,
when issued and delivered by the Company pursuant to the
Underwriting Agreement against payment of the consideration set
forth in the Underwriting Agreement, will be validly issued and
fully paid and non-assessable and no holder of the Securities is or
will not be subject to any statutory preemptive rights of any
securityholder of the Company;
(6) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the
proceeds therefrom as described in the Prospectus, will not be an
"investment company" as such term is defined in the Investment
Company Act of 1940, as amended;
(7) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the Act;
any required filing of the Prospectus pursuant to Rule 424(b) has
been made in the manner and within the time period required by Rule
424(b); and, to the best of our knowledge, no stop order suspending
the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the Act and no
proceedings for that purpose have been instituted or are pending or
threatened by the Commission;
(8) The Registration Statement, including any Rule 462(b)
Registration Statement and the Rule 430A Information, the Prospectus
and each amendment or supplement to the Registration Statement and
Prospectus as of their respective effective or issue dates (other
than the financial statements and supporting schedules included
therein or omitted therefrom, as to which such counsel need express
no opinion) complied as to form in all material respects with the
requirements of the Act and the 1933 Act Regulations; and
(9) The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory
requirements under the
-24-
Delaware General Corporation Law, with any applicable requirements
of the charter and by-laws of the Company and the requirements of
the Nasdaq National Market.
In addition such counsel shall state that such counsel has
participated in conferences with representatives of the Underwriters,
officers and other representatives of the Company and representatives of
the independent certified accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectus and the
business and affairs of the Company and the Subsidiaries were discussed,
and although such counsel has not verified and does not pass upon or
assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement (except and only to
the extent set forth in clause (4) above), on the basis of the foregoing,
no facts have come to the attention of such counsel which lead such
counsel to believe that the Registration Statement or any amendment
thereto, at the time such Registration Statement or any such amendment
became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto at the time the
Prospectus was issued, at the time any such amended or supplemented
prospectus was issued or at the Closing Time, included or includes an
untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading (it
being understood that such counsel need not express any comment with
respect to the financial statements, including the notes thereto and
supporting schedules, or any other financial data set forth or referred to
in the Registration Statement or Prospectus).
In rendering such opinions, such counsel (A) need not express any
opinion with regard to the application of laws of any jurisdiction other
than the Federal law of the United States, the General Corporation Law of
the State of Delaware and the laws of the State of New York and (B) may
rely, as to matters of fact, to the extent they deem proper on
representations or certificates of responsible officers of the Company and
certificates of public officials.
-25-
(c) At the Closing Time, the Representatives shall have
received the opinion of Xxxx Xxxxxxxxxx, assistant general counsel for the
Company, dated as of the Closing Time, in the form set forth below and
otherwise reasonably satisfactory to the Representatives and counsel for
the Representatives, to the effect that:
(1) The Company has been duly incorporated and is validly
existing under the laws of the State of Delaware, with corporate
power and authority to own, lease and operate its assets and
properties and conduct its business as described in the Prospectus
and to enter into and perform its obligations under this Agreement;
the Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in
a Material Adverse Effect;
(2) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus under the column
"Actual" under the caption "Capitalization"; the shares of issued
and outstanding capital stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable;
and none of the outstanding shares of capital stock of the Company
was issued in violation of the preemptive or other similar rights of
any securityholder of the Company.
(3) Each of the Subsidiaries and each of the Restricted
Affiliates has been duly organized and is validly existing in good
standing under the laws of the jurisdiction of its organization, has
the requisite power and authority to own, lease and operate its
properties and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property
or the conduct of business, except where the failure so to qualify
or to be in good standing individually or in the aggregate would not
result in a Material Adverse Effect; all of the issued and
outstanding capital stock or other ownership interests
-26-
of each of the Subsidiaries and each of the Restricted Affiliates
has been duly authorized and validly issued, is fully paid and
non-assessable and, to such counsel's knowledge and information,
except as set forth in the Prospectus, is owned by the Company
directly, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity;
(4) The issuance, sale and delivery of the Securities, the
execution, delivery and performance by the Company of this Agreement
and the consummation by the Company of the transactions contemplated
hereby and the compliance by the Company with the terms of the
foregoing do not, and, at the Closing Time, will not, conflict with
or constitute or result in a breach or violation by the Company, any
of the Subsidiaries or any of the Restricted Affiliates of (A) any
provision of the Certificate of Incorporation or By-laws of the
Company, or (B) any of the terms or provisions of, or constitute a
default (or an event which, with notice or lapse of time or both,
would constitute a default) by the Company, or give rise to any
right to accelerate the maturity or require the prepayment of any
indebtedness under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the
Company, any Subsidiary or any Restricted Affiliate under any
material Contract known to such counsel, except where any such
conflict, breach, violation or default would not result in a
Material Adverse Effect;
(5) To the knowledge of such counsel, other than as described
in the Prospectus, no legal, regulatory or governmental proceedings
are pending to which the Company, any of the Subsidiaries or any of
the Restricted Affiliates is a party or to which the property or
assets of the Company, any of the Subsidiaries or any of the
Restricted Affiliates are subject which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect or which, individually or in the aggregate, could have a
material adverse effect on the power or ability of the Company to
perform its obligations under this Agreement or to consummate the
transactions contemplated hereby or by the Prospectus and to the
knowledge of such counsel, no such material proceedings have been
threatened against the Company, any of the Subsidiaries or any of
the Re-
-27-
stricted Affiliates or with respect to any of their respective
assets or properties;
(6) None of the Company, the Subsidiaries or the Restricted
Affiliates is in violation of its respective Organizational
Documents; to the knowledge of such counsel, no default by the
Company, any of the Subsidiaries or any of the Restricted Affiliates
exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any
Contract; and to the knowledge of such counsel, none of the Company,
the Subsidiaries or any of the Restricted Affiliates is in breach or
violation of any law, statute, rule or regulation, or any judgment,
decree or order or governmental or regulatory agency or other body
having jurisdiction over the Company, any of the Subsidiaries or any
of the Restricted Affiliates or any of their respective properties
or assets except, in each case, violations, defaults or breaches
that individually or in the aggregate would not have a Material
Adverse Effect.
In addition such counsel shall state that such counsel has
participated in conferences with representatives of the Underwriters,
officers and other representatives of the Company and representatives of
the independent certified accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectus and the
business and affairs of the Company and the Subsidiaries were discussed,
and although such counsel has not verified and does not pass upon or
assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement (except and only to
the extent set forth in clause (5) above), on the basis of the foregoing,
no facts have come to the attention of such counsel which lead such
counsel to believe that the Registration Statement or any amendment
thereto (except for financial statements and schedules and other financial
data included therein or omitted therefrom, as to which such counsel need
not express any statement), at the time such Registration Statement or any
such amendment became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that
the Prospectus or any amendment or supplement thereto at the time the
Prospectus was issued, at the time any such amended or supplemented
-28-
prospectus was issued or at the Closing Time, included or includes an
untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading (it
being understood that such counsel need not express any comment with
respect to the financial statements, including the notes thereto and
supporting schedules, or any other financial data set forth or referred to
in the Registration Statement or Prospectus).
In rendering such opinions, such counsel (A) need not express any
opinion with regard to the application of laws of any jurisdiction other
than the Federal law of the United States, the General Corporation Law of
the State of Delaware and the laws of the State of New York and (B) may
rely, as to matters of fact, to the extent they deem proper on
representations or certificates of responsible officers of the Company and
certificates of public officials.
(d) At the Closing Time, the Representatives shall have received the
opinion of Xxxxxxx & Berlin, regulatory counsel to the Company, dated as
of the Closing Time, in the form set forth below and otherwise reasonably
satisfactory to the Representatives and counsel for the Underwriters, to
the effect that:
(i) the issuance, sale and delivery of the Securities, the
execution, delivery and performance by the Company of this Agreement
and the consummation by the Company of the transactions contemplated
hereby and the compliance by the Company with the terms of the
foregoing do not, and, at the Closing Time, will not, conflict with
or constitute or result in a breach or violation by the Company, any
of the Subsidiaries or any of the Restricted Affiliates of the
Communications Act of 1934, as amended, (the "Communications Act"),
the Telecommunications Act of 1996 (the "1996 Act"), the Cable
Communications Policy Act of 1984 (the "1984 Act") or the Cable
Television Consumer Protection Act of 1992 (the "1992 Act" and,
together with the Communications Act, the 1996 Act and the 1984 Act
and rules and regulations promulgated thereunder, the
"Communications Laws") or any order, decree or judgment known to
such counsel to be applicable to the Company, any Subsidiary or any
Restricted Affiliate, of any court or governmental or
-29-
regulatory agency or body or arbitrator dealing with
telecommunications carriers (the "Communications Authorities") known
to such counsel to have jurisdiction over the Company, any of the
Subsidiaries or any of the Restricted Affiliates or any of their
respective properties or assets;
(ii) no consent, waiver, approval, authorization, license,
qualification or order of or filing or registration with any
Communications Authority is required for the execution and delivery
by the Company of this Agreement or for the issue and sale of the
Securities, or the performance by the Company of its obligations
under this Agreement, or for the consummation of any of the
transactions contemplated hereby;
(iii) the Company, the Subsidiaries and the Restricted
Affiliates are the holders of the Licenses listed on a schedule to
such opinion (the "Regulatory Licenses") issued by the
Communications Authorities, all of which are validly issued and in
full force and effect, with no material restrictions or
qualifications other than as described in the Prospectus, and such
Regulatory Licenses constitute the only Licenses necessary for the
Company, the Subsidiaries and the Restricted Affiliates to own their
properties and to conduct their businesses in the manner and to the
extent now operated or proposed to be operated in the Prospectus;
(iv) other than matters described in the Prospectus, such
counsel does not know of any proceedings threatened, pending or
contemplated before any Communications Authority against or
involving the properties, businesses or franchises of the Company,
the Subsidiaries and the Restricted Affiliates which could
reasonably be expected to have a Material Adverse Effect; and
(v) the statements in the Prospectus under the captions "Risk
Factors -- Regulation" and "Business -- Regulation" insofar as such
statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly summarize the matters
referred to therein and such counsel does not believe that such
statements, as of the date of the Prospectus and at the Closing
Time, contained an un-
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true statement of a material fact or omitted to state a material
fact necessary to make the statements therein not misleading.
In rendering such opinions, such counsel (A) need not express any
opinion with regard to the application of any laws other than the
Communications Laws and (B) may rely, as to matters of fact, to the extent
they deem proper on representations or certificates of responsible
officers of the Company and certificates of public officials.
(e) At the Closing Time, the Representatives shall have received the
opinion of [ ], counsel to the Selling Stockholders, dated as of the
Closing Time, in the form set forth below and otherwise reasonably
satisfactory to the Representatives and counsel for the Underwriters, to
the effect that:
(i) No consent, waiver, approval, authorization, license,
qualification or order of or filing or registration with any court
or governmental or regulatory agency or body is required for the
execution and delivery by the Selling Stockholders of this Agreement
or the Power of Attorney and Custody Agreements or for the issue and
sale of the Securities, or the performance by the Selling
Stockholders of their respective obligations under this Agreement
and the Power of Attorney and Custody Agreements, or for the
consummation of any of the transactions contemplated hereby and
thereby, except such as have been obtained under the Act and such as
may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Securities by
the Underwriters in the manner contemplated in this Agreement and in
the Prospectus.
(ii) Each Power of Attorney and Custody Agreement has been duly
authorized, executed and delivered by the respective Selling
Stockholder named therein and constitutes the legal, valid and
binding agreement of such Selling Stockholder.
(iii) This Agreement has been duly authorized, executed and
delivered by the Each Selling Stockholder.
(iv) Each Attorney-in-Fact has been duly authorized by the
Selling Stockholders to deliver the Secu-
-31-
rities on behalf of the Selling Stockholders in accordance with the
terms of this Agreement.
(v) The issuance, sale and delivery of the Securities, the
execution, delivery and performance by the Selling Stockholders of
this Agreement and the Power of Attorney and Custody Agreement and
the consummation by the Selling Stockholders of the transactions
contemplated hereby and thereby and the compliance by the Selling
Stockholders with the terms of the foregoing do not, and, at the
Closing Time, will not, conflict with or constitute or result in a
breach or violation by the Selling Stockholders of any of the terms
or provisions of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) by such
Selling Stockholder, or give rise to any right to accelerate the
maturity or require the prepayment of any indebtedness under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of such Selling Stockholder
under any material contract, indenture, mortgage, deed of trust,
loan agreement, note, lease, license, franchise agreement,
authorization, permit, certificate or other agreement or document
known to such counsel to which such Selling Stockholder is a party,
nor will such action result in the violation of any law, statute,
rule, or regulation or any order, decree or judgment known to such
counsel to be applicable to such Selling Stockholder, of any court
or governmental or regulatory agency or body or arbitrator known to
such counsel to have jurisdiction over such Selling Stockholder or
any of its properties or assets.
(vi) To the best knowledge of such counsel, each Selling
Stockholder has valid and marketable title to the Securities to be
sold by such Selling Stockholder pursuant to this Agreement, free
and clear of any pledge, lien, security interest, charge, claim or
encumbrance of any kind, and has full right, power and authority to
sell, transfer and deliver such Securities pursuant to this
Agreement. By delivery of a certificate of certificates therefor,
such Selling Stockholder will transfer to the Underwriters who have
purchased such Securities pursuant to this Agreement (without notice
of any defect in the title of such Selling Stockholder and who are
otherwise
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bona fide purchasers for purposes of the Uniform Commercial Code)
valid and marketable title to such Securities, free and clear of any
pledge, lien, security interest, charge, claim or encumbrance of any
kind.
(f) The Representatives shall have received the opinion, dated as of
the Closing Time, of Xxxxxx Xxxxxx & Xxxxxxx, counsel for the
Underwriters, with respect to certain matters set forth in clauses 4, 5, 8
and 9 of subsection (b) of this Section 5.
In rendering such opinions, such counsel (A) need not express any
opinion with regard to the application of laws of any jurisdiction other
than the Federal laws of the United States, the General Corporation Law of
the State of Delaware and the laws of the State of New York and (B) may
rely, as to matters of fact, to the extent they deem proper on
representations or certificates of responsible officers of the Company and
certificates of public officials.
In addition, such counsel shall additionally state that such counsel
has participated in conferences with officers and other representatives of
the Company and representatives of the independent accountants for the
Company at which conferences the contents of the Prospectus and the
Registration Statement and related matters were discussed and, although
given the limitations inherent in the role of outside counsel and the
character of determinations involved in the preparation of the
Registration Statement, such counsel is not passing upon and does not
assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement (except and only to
the extent set forth in clause (4) of subsection (b) of this Section 5)
and has made no independent check or verification thereof, on the basis of
the foregoing, no facts have come to the attention of such counsel which
would lead such counsel to believe that the Registration Statement or any
amendment thereto, at the time such Registration Statement or any such
amendment became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto at the time the
Prospectus was issued, at the time any such amended or supplemented
prospectus was issued or at the
-33-
Closing Time, included or includes an untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading (it being understood that such counsel need
express no belief with respect to the financial statements, including the
notes thereto, or any other financial or statistical data found in or
derived from the internal accounting and other records of the Company and
its subsidiaries set forth or referred to in the Registration Statement or
Prospectus).
(g) The following conditions contained in clauses (i) and (ii) of
this subsection (g) shall have been satisfied at and as of the Closing
Time and the Company shall have furnished to the Representatives a
certificate, signed by the Chairman of the Board or the President and the
principal financial or accounting officer of the Company, dated as of the
Closing Time, to the effect that the signers of such certificate have
carefully examined the Registration Statement and Prospectus, any
amendment or supplement thereto, and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Time with the same effect as if made at the Closing
Time;
(ii) since the date of the most recent financial statements
included in the Prospectus (exclusive of any amendment or supplement
thereto), there has been no Material Adverse Change, whether or not
arising in the ordinary course of business. As used in this
subparagraph, the term "Prospectus" means the Prospectus in the form
first used to confirm sales of the Securities;
(iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at
or prior to the Closing Time; and
(iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or are contemplated by
the Commission.
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(h) On the date hereof and at the Closing Time, Coopers & Xxxxxxx
L.L.P. shall have furnished to the Representatives a letter or letters,
dated respectively as of the date of this Agreement and as of the Closing
Time, in form and substance satisfactory to the Representatives,
confirming that they are independent certified public accountants within
the meaning of the Act and the applicable published rules and regulations
thereunder and containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to financial statements of the Company and certain financial
information contained in the Registration Statement, in form and substance
satisfactory to counsel for the Underwriters.
(i) On the date hereof and at the Closing Time, Ernst & Young L.L.P.
shall have furnished to the Representatives a letter or letters, dated
respectively as of the date of this Agreement and as of the Closing Time,
in form and substance satisfactory to the Representatives, confirming that
they are independent certified public accountants within the meaning of
the Act and the applicable published rules and regulations thereunder and
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to financial
statements of Erols and certain financial information contained in the
Registration Statements, in form and substance satisfactory to counsel for
the Underwriters.
(j) Subsequent to the date hereof or, if earlier, the dates as of
which information is given in the Prospectus (exclusive of any amendment
or supplement thereto), there shall not have been any change, or any
development involving a prospective change, in or affecting the business
or properties of the Company, its Subsidiaries and the Restricted
Affiliates the effect of which is, in the sole judgment of the
Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the purchase and the delivery of the
Securities as contemplated by the Prospectus (exclusive of any amendment
or supplement thereto).
(k) At the Closing Time, the Securities shall have been approved for
inclusion in the Nasdaq National Market, subject only to official notice
of issuance.
-35-
(l) At the date of this Agreement, the Representatives shall have
received an agreement substantially in the form of Exhibit A hereto signed
by the persons listed on Schedule E hereto.
(m) In the event that the Underwriters exercise their option
provided in Section 2(b) hereof to purchase all or any portion of the
Option Securities, the representations and warranties of the Company
contained herein and the statements in any certificates furnished by the
Company or any subsidiary of the Company hereunder shall be true and
correct as of each Date of Delivery and, at the relevant Date of Delivery,
the Representatives shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the Chairman of the Board or the President and the
principal financial or accounting officer of the Company confirming
that the certificate delivered at the Closing Time pursuant to
Section 5(g) hereof remains true and correct as of such Date of
Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion of
Xxxxx Xxxx & Xxxxxxxx LLP, counsel for the Company, together with
the favorable opinion of Xxxx Xxxxxxxxxx, assistant general counsel
for the Company and Xxxxxxx & Berlin, regulatory counsel for the
Company, each in form and substance satisfactory to counsel for the
Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinions required by Sections 5(b), (c) and
(d) hereof.
(iii) Opinion of Counsel for Underwriters. The favorable
opinion of Xxxxxx Xxxxxx & Xxxxxxx, counsel for the Underwriters,
dated such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect
as the opinion required by Section 5(f) hereof.
(iv) Bring-down Comfort Letter. A letter from Coopers &
Xxxxxxx L.L.P., in form and substance satisfactory to the
Representatives and dated such Date of Delivery, substantially in
the same form and substance as the letter furnished to the
Representatives pursuant to Section 5(h) hereof, except that the
-36-
"specified date" in the letter furnished pursuant to this paragraph
shall be a date not more than five days prior to such Date of
Delivery.
(n) At the Closing Time and at each Date of Delivery, counsel for
the Underwriters shall have been furnished with such information,
certificates and documents as they may reasonably require for the purpose
of enabling them to pass upon the issuance and sale of the Securities as
contemplated herein and related proceedings, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment
of any of the conditions, herein contained; and all opinions and
certificates mentioned above or elsewhere in this Agreement shall be
reasonably satisfactory in form and substance to the Representatives and
counsel for the Underwriters.
If any condition specified in this Section 7 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Representatives by notice to the Company, and such termination shall be
without liability of any party to any other party except as provided in Section
6. Notwithstanding any such termination, the provisions of Sections 8, 9, 13 and
16 shall remain in effect. Notice of such cancellation shall be given to the
Company in writing or by telephone, facsimile transmission or telegraph
confirmed in writing. The Company shall furnish to the Representatives such
conformed copies of such opinions, certificates, letters and documents in such
quantities as the Representatives and counsel for the Underwriters shall
reasonably request.
SECTION 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless the
Underwriters, their respective affiliates, and each person, if any, who controls
any Underwriter or their respective affiliates within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, and their respective directors,
officers, employees and agents, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, joint or several, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
Registration Statement (or any amendment thereto) including the Rule 430A
Information, or the omission or alleged omission therefrom of a material
fact required to be stated therein
-37-
or necessary to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectus (or any amendment
or supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, joint or several, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or
of any claim whatsoever based upon any such untrue statement or omission,
or any such alleged untrue statement or omission; provided that (subject
to Sections 6(e) below) any such settlement is effected with the written
consent of the Company; and
(iii) against any and all expenses whatsoever, as incurred
(including reasonable fees and disbursements of one counsel chosen by
Xxxxxxx Xxxxx (in addition to any local counsel)), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Xxxxxxx Xxxxx expressly for use in the Registration
Statement (or any amendment), including the Rule 430A Information or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(b) Each Selling Stockholder, severally and not jointly, agrees to
indemnify and hold the Underwriters, their respective affiliates, and each
person, if any, who controls any Underwriter or their respective affiliates
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and their respective directors, officers, employees and agents, against any and
all loss, liability, claim, damage and expense
-38-
whatsoever, joint or several, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in Registration
Statement (or any amendment thereto) including the Rule 430A Information, or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or arising
out of any untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this indemnity agreement shall not apply to any loss, liability, claim,
damage or expense to the extent arising out of any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by any Underwriter through
Xxxxxxx Xxxxx expressly for use in the Registration Statement (or any
amendment), including the Rule 430A Information or any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto); provided, further,
however, that each Selling Stockholder shall be liable only with reference to
information relating to such Selling Stockholder furnished to the Company in
writing by or on behalf of such Selling Stockholder expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendment or supplement thereto. Notwithstanding the foregoing, the aggregate
liability of any Selling Stockholder pursuant to the provisions of this
paragraph shall be limited to an amount equal to the total net proceeds (before
deducting expenses but after deducting underwriting discounts and commissions)
received by such Selling Stockholder from the sale of such Selling Stockholder's
Securities hereunder.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, each of its officers who signed
the Registration Statement and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and each Selling Stockholder against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section 6, as incurred, but only with respect untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement (or
any amendment thereto), including the Rule 430A Information or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance
-39-
upon and in conformity with written information furnished to the Company by such
Underwriter through Xxxxxxx Xxxxx expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(d) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, enclosing a
copy of all papers properly served on such indemnified party, but failure to so
notify an indemnifying party shall not relieve such indemnifying party from any
liability hereunder to the extent it is not materially prejudiced as a result
thereof and in any event shall not relieve it from any liability which it may
have otherwise than on account of this indemnity agreement. In the case of
parties indemnified pursuant to Section 6(a) or (b) above, one counsel to the
indemnified parties shall be selected by Xxxxxxx Xxxxx, and, in the case of
parties indemnified pursuant to Section 6(c) above, counsel to the indemnified
parties shall be selected by the Company. An indemnifying party may participate
at its own expense in the defense of any such action; provided, that counsel to
the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. Notwithstanding the foregoing,
if it so elects within a reasonable time after receipt of such notice, an
indemnifying party, jointly with any other indemnifying parties receiving such
notice, may assume the defense of such action with counsel chosen by it and
approved by the indemnified parties defendant in such action (which approval
shall not be unreasonably withheld), unless such indemnified parties reasonably
object to such assumption on the ground that there may be legal defenses
available to them which are different from or in addition to those available to
such indemnifying party. If an indemnifying party assumes the defense of such
action, the indemnifying parties shall not be liable for any fees and expenses
of counsel for the indemnified parties incurred thereafter in connection with
such action. In no event shall the indemnifying parties be liable for the fees
and expenses of more than one counsel (in addition to local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. No indemnifying
party shall, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, com-
-40-
menced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and the offer and sale of
any Securities 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 any indemnified party.
(e) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as to which such indemnified party is liable pursuant to Section 6(a),
(b) or (c), as the case may be, such indemnifying party agrees that it shall be
liable for any settlement of the nature contemplated by Section 6(a)(ii)
effected without its written consent if (i) such settlement is entered into more
than 45 days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
(f) The provisions of this Section shall not affect any agreement
among the Company and the Selling Stockholders with respect to indemnification.
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other hand from
the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) 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 and the
Selling Stockholders on the one hand and of the Underwriters on the other hand
in connection with the statements or
-41-
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other hand in
connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Securities pursuant to this Agreement (before deducting
expenses) received by the Company and the Selling Stockholders and the total
underwriting discount received by the Underwriters, bear to the aggregate
initial offering price of the Securities.
The relative fault of the Company and the Selling Stockholders on
the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Selling Stockholders
or by the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this Section
7 were determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to above in this
Section 7. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
7 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, (i) no Selling
Stockholder shall be required to contribute any amount in excess of the amount
of total net proceeds received by such Selling Stockholder from the sale of
Securities by such Selling Stockholder hereunder and (ii) no Underwriter shall
be required to contribute any amount in excess of the amount by
-42-
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.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial Securities set forth opposite their
respective names in Schedule A hereto and not joint.
The provisions of this Section shall not affect any agreement among
the Company and the Selling Stockholders with respect to contribution.
SECTION 8. Representations, Warranties and Agreements To Survive
Delivery. All representations, warranties, indemnities, agreements and other
statements of the Company and its officers and the Selling Stockholders
contained in or made pursuant to this Agreement shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter or controlling person, by or on behalf of the Company, or by or
on behalf of any Selling Stockholder, and shall survive delivery and payment for
the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination: General. (a) The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing Time
if (i) there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the Prospectus and on
or prior to the Closing Time, any Material Adverse Change with respect to the
Company, the Subsidiaries and the
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Restricted Affiliates, taken as a whole and whether or not arising in the
ordinary course of business, or (ii) since the date of this Agreement and on or
prior to the Closing Time, (A) there has occurred any outbreak of hostilities or
escalation of existing hostilities or other national or international calamity
or crisis or any change or development involving a prospective change in
national or international political, financial or economic conditions, in each
case, the effect of which on the financial securities markets of the United
States is such as to make it, in the judgment of the Representatives,
impracticable to market the Securities or to enforce contracts for the sale of
the Securities, or (B) trading in any securities of the Company has been
suspended or limited by the Commission or trading generally on the New York
Stock Exchange, the American Stock Exchange or the over-the-counter market has
been suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities generally have been required, by any
such exchange or by order of the Commission, the NASD or any other governmental
authority or (C) a general banking moratorium has been declared by either
Federal or New York authorities. As used in this Section 9(a), the term
"Prospectus" means the Prospectus in the form first used to confirm sales of the
Securities.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof, provided that Sections 1, 6, 7, and 8 shall
survive such termination and remain in full force and effect.
(c) This Agreement may also terminate pursuant to the provisions of
Section 5, with the effect stated in such Section.
SECTION 10. Default by One or More of the Underwriters. If one or
more of the Underwriters shall fail at the Closing Time or a Date of Delivery to
purchase the Securities which it is obligated to purchase under this Agreement
(the "Defaulted Securities"), the other Representatives shall have the right,
but not the obligation, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
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(a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement or, with respect
to any Date of Delivery which occurs after the Closing Time, the
obligation of the Underwriters to purchase and of the Company to sell the
Option Securities to be purchased and sold on such Date of Delivery shall
terminate without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery which is
after the Closing Time, which does not result in a termination of the obligation
of the Underwriters to purchase and the Company to sell the relevant Option
Securities, as the case may be, either the Representatives or the Company shall
have the right to postpone Closing Time or the relevant Date of Delivery, as the
case may be, for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 10.
SECTION 11. Default by One or More of the Selling Stockholders or
the Company. If a Selling Stockholder shall fail at the Closing Time to sell and
deliver the number of Securities which it is obligated to sell under this
Agreement and the Company does not exercise the right hereby granted to increase
the number of Securities to be sold by it hereunder by the number of Securities
which were to be sold by such defaulting Selling Stockholder, then the
Underwriters may, at the option of the Representatives, by notice from the
Representative to the Company and the non-defaulting Selling Stockholders,
either (a) terminate this Agreement without any liability on the part of the
non-defaulting party, except that the provisions of Sections 1, 4, 6, 7 and 8
shall remain in full force and effect
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or (b) elect to purchase the Securities which the non-defaulting Selling
Stockholders and the Company have agreed to sell hereunder. No action taken
pursuant to this Section 11 shall relieve any Selling Stockholder so defaulting
from liability in respect of such default.
In the event of a default by any Selling Stockholder as referred to
in this Section 11, each of the Representatives, the Company and the
non-defaulting Selling Stockholders shall have the right to postpone Closing
Time for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements.
SECTION 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives c/o Merrill Xxxxx & Co.,
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, North Tower, World Financial
Center, New York, New York 10281-1305, attention: Xxxx Xxxxxxxxx, Vice
President; notices to the Company shall be directed to RCN Corporation, 000
Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, attention: Chief Executive Officer, with a
copy to Xxxx Xxxxxxxxxx, Esq.; and notices to the Selling Stockholders shall be
directed to [ ].
SECTION 13. Information Supplied by the Underwriters. The statements
set forth in the last paragraph on the front cover page, in the last two
paragraphs on page [i] and in the fifth paragraph under the heading
"Underwriting" in the Prospectus (to the extent such statements relate to the
Underwriters) constitute the only information furnished by the Underwriters to
the Company for the purposes of Sections 1 and 6 hereof.
SECTION 14. Parties. This Agreement shall inure to the benefit of
and be binding upon the Underwriters, the Company and the Selling Stockholders
and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters, their respective affiliates and the
Company and its successors and legal representatives and the controlling persons
and officers, directors, employees and agents referred to in Sections 6 and 7
and their heirs and legal representatives and the Selling Stockholders, any
legal or equitable right, remedy or claim under, by virtue of or in respect of
this Agreement or any provision herein con-
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tained. This Agreement and all conditions and provisions hereof are intended to
be for the sole and exclusive benefit of the Underwriters their respective
affiliates and the Company and its successors and legal representatives, and
said controlling persons and officers, directors, employees and agents and their
heirs and legal representatives, and said controlling persons and officers,
directors, employees and agents and their heirs and legal representatives and
the Selling Stockholders, and for the benefit of no other person, firm or
corporation. No purchaser of Securities from any Underwriter shall be deemed to
be a successor by reason merely of such purchase.
SECTION 15. Governing Law and Time. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. Specified times
of day refer to New York time.
SECTION 16. Counterparts. This Agreement may be executed in one or
more counterparts and, when each party has executed a counterpart, all such
counterparts taken together shall constitute one and the same agreement.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Attorney-in-Fact for
the Selling Stockholders a counterpart hereof, whereupon this instrument, along
with all counterparts, will become a binding agreement among the Underwriters,
the Company and the Selling Stockholders in accordance with its terms.
Very truly yours,
RCN CORPORATION
By:
---------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President
and Chief Financial
Officer
By:
---------------------------------------
As Attorney-in-Fact acting on behalf
of the Selling Stockholders named in
Schedule B hereto
Confirmed and accepted as of
the date first above written:
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
XXXXX XXXXXX INC.
NATIONSBANC XXXXXXXXXX SECURITIES LLC
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
PRUDENTIAL SECURITIES INCORPORATED
By: Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
By:
-------------------------------------------
Name:
Title:
SCHEDULE A
Number of
Initial
Name of Underwriter Securities
------------------- ----------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated...........................
Xxxxx Xxxxxx Inc...................................
NationsBanc Xxxxxxxxxx Securities, LLC.............
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Prudential Securities Incorporated.................
---------------
Total ................................. 10,989,010
SCHEDULE B
Number of Initial Maximum Number of
Securities to be Option Securities
Sold to be Sold
---------------------------------------
RCN Corporation 10,583,032 1,648,351
Commonwealth Telephone Enterprises
Inc. Employees' Retirement Plan 375,816 0
Xxxxxx X. Xxxxxxx 12,000 0
Xxxx X. Xxxxxxx 2,612 0
Xxxxxxxxxxx X. Xxxxx 15,550 0
----------- ----------
Total 10,989,010 1,648,351
SCHEDULE C
RCN CORPORATION
10,989,010 Shares of Common Stock
(Par Value $1.00 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $_________.
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $______, being an amount equal to the initial
public offering price set forth above less $_______ per share; provided that the
purchase price per share for any Option Securities purchased upon the exercise
of the over-allotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by the Company
and payable on the Initial Securities but not payable on the Option Securities.
SCHEDULE D
Restricted Affiliates
Percentage
Organized Ownership
Name of Entity Under Laws of of Company
-------------- ------------- ----------
SCHEDULE E
[List of persons and entities
subject to lock-up]
[Form of lock-up from directors, officers or other stockholders pursuant to
Section 5(n)]
Exhibit A
June , 1998
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated,
Xxxxx Xxxxxx Inc.
NationsBanc Xxxxxxxxxx Securities LLC
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Prudential Securities Incorporated
as Representatives of the several
Underwriters to be named in the
within-mentioned Underwriting Agreement
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Proposed Public Offering by RCN Corporation
Dear Sirs:
The undersigned, a stockholder [and an officer and/or director] of RCN
Corporation, a Delaware corporation (the "Company"), understands that Xxxxxxx
Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx
Xxxxx") Xxxxx Xxxxxx Inc., NationsBanc Xxxxxxxxxx Securities LLC, Xxxxxxxxx,
Xxxxxx & Xxxxxxxx Securities Corporation and Prudential Securities Incorporated
propose to enter into a Underwriting Agreement (the "Underwriting Agreement")
with the Company providing for the public offering of shares (the "Securities")
of the Company's common stock, par value $1.00 per share (the "Common Stock").
In recognition of the benefit that such an offering will confer upon the
undersigned as a stockholder [and an officer and/or director] of the Company,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned agrees with each underwriter to
be named in the Underwriting Agreement that, during a period of 90 days from the
date of the Underwriting Agreement, the undersigned will not, without the prior
written consent of Xxxxxxx
Xxxxx, directly or indirectly, (i) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant for the sale of, or otherwise dispose of or
transfer any shares of the Company's Common Stock or any securities convertible
into or exchangeable or exercisable for Common Stock, whether now owned or
hereafter acquired by the undersigned or with respect to which the undersigned
has or hereafter acquires the power of disposition, or file any registration
statement under the Securities Act of 1933, as amended, with respect to any of
the foregoing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Common Stock, whether any such swap
transaction is to be settled by delivery of Common Stock or other securities, in
cash or otherwise.
Very truly yours,
Signature:
------------------------
Print Name:
