[ ] Shares
TIME WARNER TELECOM INC.
CLASS A COMMON STOCK
UNDERWRITING AGREEMENT
[ ], 1999
[ ], 1999
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxx Brothers Inc.
Bear, Xxxxxxx & Co. Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxx Brothers International (Europe)
Bear, Xxxxxxx International Limited
c/o Morgan Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs and Mesdames:
Time Warner Telecom Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters (as defined below) [ ]
shares of its Class A Common Stock, par value $.01 per share (the "Firm
Shares").
The Company was recently formed to become the successor to both of
Time Warner Telecom LLC ("TWT LLC") and Time Warner Telecom Inc.("TWT Inc."),
acquiring the assets of TWT LLC through a merger of both TWT LLC and TWT Inc.
with and into the Company (the "Reconstitution") pursuant to a merger agreement
dated as of [ ], 1999 by and among TWT LLC, TWT Inc. and the Company (the
"Merger Agreement"). Immediately following the Reconstitution, the Class B
Common Stock of the Company will be owned, directly or indirectly, by Time
Warner, Inc., MediaOne of Colorado, Inc. and Advance/Xxxxxxxx Partnership (the
"Class B Stockholders"). The Reconstitution was consummated on [ ], 1999. In
connection with the Reconstitution, a stockholders' agreement was entered into
among the Company and the Class B Stockholders (the "Stockholders Agreement").
It is understood that, subject to the conditions hereinafter stated,
[ ] Firm Shares (the "U.S. Firm Shares") will be sold to the several U.S.
Underwriters named in Schedule I hereto (the "U.S. Underwriters") in connection
with the offering and sale of such U.S. Firm Shares in the United States and
Canada to United States and Canadian Persons (as such terms are
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defined in the Agreement Between U.S. and International Underwriters of
even date herewith), and [ ] Firm Shares (the "International Shares") will be
sold to the several International Underwriters named in Schedule II hereto (the
"International Underwriters") in connection with the offering and sale of such
International Shares outside the United States and Canada to persons other than
United States and Canadian Persons. Xxxxxx Xxxxxxx & Co. Incorporated, Xxxxxx
Brothers Inc. and Bear, Xxxxxxx & Co. Inc. shall act as representatives (the
"U.S. Representatives") of the several U.S. Underwriters, and Xxxxxx Xxxxxxx &
Co. International Limited, Xxxxxx Brothers International (Europe) and Bear,
Xxxxxxx International Limited shall act as representatives (the "International
Representatives") of the several International Underwriters. The U.S.
Underwriters and the International Underwriters are hereinafter collectively
referred to as the Underwriters.
The Company also proposes to issue and sell to the several U.S.
Underwriters not more than an additional [ ] shares of its Class A Common Stock,
par value $.01 per share (the "Additional Shares") if and to the extent that the
U.S. Representatives shall have determined to exercise, on behalf of the U.S.
Underwriters, the right to purchase such shares of common stock granted to the
U.S. Underwriters in Section 2 hereof. The Firm Shares and the Additional Shares
are hereinafter collectively referred to as the "Shares". The shares of Class A
Common Stock, par value $.01 per share of the Company to be outstanding after
giving effect to the sales contemplated hereby are hereinafter referred to as
the "Common Stock".
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Shares. The registration statement contains two prospectuses to be used in
connection with the offering and sale of the Shares: the U.S. prospectus, to be
used in connection with the offering and sale of Shares in the United States and
Canada to United States and Canadian Persons, and the international prospectus,
to be used in connection with the offering and sale of Shares outside the United
States and Canada to persons other than United States and Canadian Persons. The
international prospectus is identical to the U.S. prospectus except for the
outside front cover page. The registration statement as amended at the time it
becomes effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Securities Act of 1933, as amended (the "Securities Act"), is hereinafter
referred to as the "Registration Statement"; the U.S. prospectus and the
international prospectus in the respective forms first used to confirm sales of
Shares are hereinafter collectively referred to as the "Prospectus". If the
Company has filed an abbreviated registration statement to register additional
shares of Common Stock pursuant to Rule 462(b) under the Securities Act (the
"Rule 462 Registration Statement"), then any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462 Registration
Statement.
Xxxxxx Xxxxxxx & Co. Incorporated ("Xxxxxx Xxxxxxx") has agreed to
reserve a portion of the Shares to be purchased by it under this Agreement for
sale to the Company's directors, officers, employees and business associates and
other parties related to the Company (collectively, "Participants"), as set
forth in the Prospectus under the heading "Underwriters" (the "Directed Share
Program"). The Shares to be sold by Xxxxxx Xxxxxxx pursuant to the Directed
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Share Program are referred to hereinafter as the "Directed Shares". Any Directed
Shares not orally confirmed for purchase by any Participant by the end of the
first business day after the date on which this Agreement is executed will be
offered to the public by the Underwriters as set forth in the Prospectus.
1. Representations and Warranties. The Company
represents and warrants to and agrees with each of the
Underwriters that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or, to the
knowledge of the Company, threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) the Registration Statement and the Prospectus
comply and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations
and warranties set forth in this paragraph do not apply to statements or
omissions in the Registration Statement or the Prospectus, or any amendment
or supplement thereto, based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(c) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(d) Each subsidiary of the Company has been duly incorporated or,
in the case of partnerships or limited liability companies, duly organized,
is validly existing as a corporation, a partnership or a limited liability
company, as the case may be, in good standing under the laws of the
jurisdiction of its incorporation or organization, has the power and
authority to own its property and to conduct its business as described in
the Prospectus and is duly qualified to transact business and is in good
standing in each
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jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries, taken
as a whole; all of the issued shares of capital stock of each subsidiary of
the Company that is a corporation have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims; and all of the partnership interests and membership
interests in each subsidiary of the Company that is a partnership or a
limited liability company, as the case may be, are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims.
(e) This Agreement has been duly authorized, executed and
delivered by the Company.
(f) The Merger Agreement has been duly authoand delivered by each
of the parties thereto and is a valid and binding agreement of each of the
parties thereto, enforceable in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability.
(g) No consent, approval, waiver or authorization that is
material to the Company and its subsidiaries taken as a whole is required
to be obtained by any of the parties to the Merger Agreement, and no notice
or filing that is material to the Company and its subsidiaries taken as a
whole is required to be given by such parties to, or made by such parties
to, or made by such parties with, any federal, state, local or other
governmental authority or any other person in connection with the
execution, delivery and performance by such parties of the Merger
Agreement.
(h) The execution, delivery and performance of the Merger
Agreement by the parties thereto, and the consummation of the transactions
contemplated thereby, does not and will not (i) violate any provision of
the charter or bylaws or partnership agreement or other organizational
documents of such parties or (ii) violate or result in a breach of or
constitute a default under any law of any country or governmental authority
to which such party is subject.
(i) The authorized capital stock of the Company confomatters to
the description thereof contained in the Prospectus under the caption
"Description of Capital Stock".
(j) The shares of Common Stock outstanding prior to the issuance
of the Shares have been duly authorized and are validly issued, fully paid
and nonassessable.
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(k) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and nonassessable, and the issuance of such Shares will
not be subject to any preemptive or similar rights.
(l) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will
not contravene any provision of applicable law or the certificate of
incorporation or bylaws of the Company or any agreement or other instrument
binding upon the Company or any of its subsidiaries that is material to the
Company and its subsidiaries, taken as a whole, or any judgment, order or
decree of any governmental body, agency or court having jurisdiction over
the Company or any of its subsidiaries, and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by the Company of its obligations
under this Agreement, except (1) such as may have been obtained and (2)
such as may be required by the securities or Blue Sky laws of the various
states and other jurisdictions in connection with the offer and sale of the
Shares.
(m) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).
(n) There are no legal or governmental proceedings pending or, to
the knowledge of the Company, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(o) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in
all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
(p) The Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act").
(q) The Company and its subsidiaries (i) are in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection
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of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"),
(ii) have received all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(r) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for cleanup, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(s) Except as set forth in the Prospectus, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company or to require the Company to include such
securities with the Shares registered pursuant to the Registration
Statement.
(t) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (1) the Company and
its subsidiaries have not incurred any material liability or obligation,
direct or contingent, nor entered into any material transaction not in the
ordinary course of business; (2) the Company and its subsidiaries have not
purchased any of its outstanding capital stock, nor has the Company
declared, paid or otherwise made any dividend or distribution of any kind
on its capital stock other than ordinary and customary dividends; and (3)
there has not been any material change in the capital stock, short-term
debt or long-term debt of the Company and its subsidiaries, taken as a
whole, except in each case as set forth or described in the Prospectus.
(u) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries or such as do not, singly or in the aggregate,
have or could not result in a material adverse effect on the Company and
its subsidiaries, taken as a whole; and any real property and buildings
held under lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such
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exceptions as do not interfere with the use made and
proposed to be made of such property and buildings by the
Company and its subsidiaries or such as do not, singly or
in the aggregate, have or could not result in a material adverse effect on
the Company and its subsidiaries, taken as a whole, in each case except as
described in the Prospectus.
(v) Except as set forth in the Prospectus, the Company and its
subsidiaries own or possess, or can acquire on reasonable terms, all
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names, currently employed by them in
connection with the business now operated by them, except where the failure
to own or possess or to have the right to acquire any of the foregoing,
singly or in the aggregate, does not have a material adverse effect on the
Company and its subsidiaries, taken as a whole, and neither the Company nor
any of its subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any of the
foregoing which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(w) No labor dispute with the employees of the Company or any of
its subsidiaries exists, except as described in the Prospectus, or, to the
knowledge of the Company, is imminent, except for disputes that do not or
would not have a material adverse effect on the Company and its
subsidiaries taken as a whole; and the Company is not aware of any
existing, threatened or imminent labor disturbance by the employees of any
of its principal suppliers or contractors that could have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(x) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; and neither of the Company nor any of its subsidiaries has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business at a
cost that would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, except as described in the Prospectus.
(y) The Company and its subsidiaries possess all permits,
licenses, rights of way, approvals, consents and other authorizations
issued by the appropriate federal, state, local or foreign regulatory
agencies or bodies (including the Federal Communications Commission (the
"FCC"), the public utilities commission, or any equivalent body, of each
state in which the Company does business and any other relevant State or
local governmental department, commission, board, bureau, agency, court or
other authority thereof (the "Local Authorities")) required for the conduct
of the telecommunications business now operated by the Company
(collectively, the "Governmental Licenses"),
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except where the failure to possess any such Governmental
Licenses would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole;
the Company and its subsidiaries are in compliance with the terms
and conditions of all such Licenses, except where
the failure so to comply would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a
whole; all of the Governmental Licenses are valid and in full force and
effect, except where the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect would
not, singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole; there is no outstanding
adverse judgment, decree or order that has been issued by the FCC or any of
the Local Authorities against the Company or any of its subsidiaries and
which, singly or in the aggregate, would have a material adverse effect on
the Company and its subsidiaries, taken as a whole; and neither the Company
nor any of its subsidiaries has received any notice of or is aware of
proceedings relating to the revocation or modification of any such
Governmental Licenses or, except as set forth in the Prospectus, that would
otherwise affect the operations of the Company or its subsidiaries and
which, singly or in the aggregate, would have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
(z) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (1) transactions are executed in accordance with management's general
or specific authorizations; (2) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (3)
access to assets is permitted only in accordance with management's general
or specific authorization; and (4) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
Furthermore, the Company represents and warrants to Xxxxxx Xxxxxxx
that (i) the Registration Statement, the Prospectus and any preliminary
prospectus comply, and any further amendments or supplements thereto will
comply, with any applicable laws or regulations of foreign jurisdictions in
which the Prospectus or any preliminary prospectus, as amended or supplemented,
if applicable, are distributed in connection with the Directed Share Program,
and that (ii) no authorization, approval, consent, license, order, registration
or qualification of or with any government, governmental instrumentality or
court, other than such as have been obtained, is necessary under the securities
laws and regulations of foreign jurisdictions in which the Directed Shares are
offered outside the United States. The Company has not offered, or caused the
Underwriters to offer, Shares to any person pursuant to the Directed Share
Program with the specific intent to unlawfully influence (i) a customer or
supplier of the Company to alter the customer's or supplier's level or type of
business with the Company, or (ii) a trade journalist or publication to write or
publish favorable information about the Company or its products.
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2. Agreements to Sell and Purchase. The Company hereby agrees to sell
to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective numbers of Firm Shares set forth in Schedules I and II
hereto opposite its names at U.S.$[ ] a share ("Purchase Price").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the U.S. Underwriters the Additional Shares, and the U.S. Underwriters shall
have a one-time right to purchase, severally and not jointly, up to [ ].
Additional Shares at the Purchase Price. If the U.S. Representatives, on behalf
of the U.S. Underwriters, elect to exercise such option, the U.S.
Representatives shall so notify the Company in writing not later than 30 days
after the date of this Agreement, which notice shall specify the number of
Additional Shares to be purchased by the U.S. Underwriters and the date on which
such shares are to be purchased. Such date may be the same as the Closing Date
(as defined below) but not earlier than the Closing Date nor later than ten
business days after the date of such notice. Additional Shares may be purchased
as provided in Section 4 hereof solely for the purpose of covering
overallotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each U.S. Underwriter agrees, severally
and not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as the U.S. Representatives may
determine) that bears the same proportion to the total number of Additional
Shares to be purchased as the number of U.S. Firm Shares set forth in Schedule I
hereto opposite the name of such U.S. Underwriter bears to the total number of
U.S. Firm Shares.
The Company hereby agrees that, without the prior written consent of
Xxxxxx Xxxxxxx and Xxxxxx Brothers Inc. on behalf of the Underwriters, it will
not, during the period ending 180 days after the date of the Prospectus, (i)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly,
any shares of Common Stock or any securities convertible into or exercisable
or exchangeable for Common Stock or (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (A) the Shares to
be sold hereunder or (B) the issuance by the Company of (i) shares of Common
Stock upon the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof of which the Underwriters have been advised in
writing and (ii) grants from time to time of stock options and other incentive
compensation pursuant to the 1998 Option Plan provided that such options or
awards do not vest during the period of 180 days ending after the date of the
Prospectus.
3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment
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is advisable. The Company is further advised by you that the Shares are to be
offered to the public initially at U.S.$[ ] a share (the "Public Offering
Price") and to certain dealers selected by you at a price that represents a
concession not in excess of U.S.$[ ] a share under the Public Offering Price,
and that any Underwriter may allow, and such dealers may reallow, a concession,
not in excess of U.S.$[ ] a share, to any Underwriter or to certain other
dealers.
4. Payment and Delivery. Payment for the Firm Shares shall be made to
the Company in Federal or other funds immediately available in New York City
against delivery of such Firm Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on [ ], 1999, or at such other
time on the same or such other date, not later than [ ], 1999, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "Closing Date".
Payment for any Additional Shares shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
notice described in Section 2 or at such other time on the same or on such other
date, in any event not later than [ ], 1999, as shall be designated in writing
by the U.S. Representatives. The time and date of such payment are hereinafter
referred to as the "Option Closing Date".
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
5. Conditions to the Underwriters' Obligations. The obligations of the
Company to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than [ ](New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the
direction of the possible change, in
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the rating accorded any of the Company's securities by any "nationally
recognized statistical rating organization", as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, from that set
forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate from the Company, dated the Closing Date and signed by an
executive officer of the Company, to the effect set forth in Section
5(a)(i) above and to the effect that the representations and warranties of
the Company contained in this Agreement are true and correct as of the
Closing Date and that the Company has complied with all of the agreements
and satisfied all of the conditions on its part to be performed or
satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon
the best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of Cravath, Swaine & Xxxxx, outside counsel for the Company, dated
the Closing Date, to the effect that:
(i) based solely on a certificate of good standing from the
Secretary of State of the State of Delaware, the Company has been duly
incorporated, and is validly existing and in good standing under the
laws of the State of Delaware, with full corporate power and authority
to own its property and to conduct its business as described in the
Prospectus;
(ii) the authorized capital stock of the Company conforms as
to legal matters to the description thereof contained in the
Prospectus under the caption "Description of Capital Stock";
(iii)the shares of Common Stock outstanding prior to the
issuance of the Shares have been duly authorized and are validly
issued, fully paid and nonassessable;
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(iv) the Shares have been duly authorized and, when issued
and delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and nonassessable, and the issuance of such
Shares will not be subject to any statutory, or to such counsel's
knowledge, contractual preemptive rights;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the certificate
of incorporation or bylaws of the Company or, to such counsel's
knowledge, any agreement or other instrument binding upon the Company
or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or, to the best of such counsel's
knowledge, any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Company or any of its
subsidiaries, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for
the performance by the Company of its obligations under this
Agreement, except such as has been obtained under the Securities Act
and such as may be required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the Shares by
the Underwriters;
(vii) the statements (A) in the Prospectus under the captions
"Certain Relationships and Related Transactions", "Certain United
States Federal Tax Consequences to Non-United States Holders of Common
Stock", "Description of Certain Indebtedness" and "Description of
Capital Stock" and (B) in the Registration Statement in Items 14 and
15, in each case insofar as such statements constitute summaries of
the legal matters, documents or proceedings referred to therein,
fairly present the information required to be described with respect
to such legal matters, documents and proceedings and summarize in all
material respects the matters referred to therein;
(viii) to such counsel's knowledge, there are no (i) legal or
governmental proceedings pending or threatened to which the Company or
any of its subsidiaries is a party or to which any of the properties
of the Company or any of its subsidiaries is subject that are required
to be described in the Registration Statement or the Prospectus and
are not so described or (ii) contracts, indentures, mortgages, loan
agreements, notes, leases or other documents that are required to be
described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not described
or filed as required;
13
(ix) to such counsel's knowledge, there are no statutes or
regulations (other than federal, state or local telecommunications
statutes or regulations as to which such counsel need express no
opinion) that are required to be described in the Registration
Statement or the Prospectus that are not described as required;
(x) the Company is not and, after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as such term is defined in the Investment Company Act;
(xi) the Merger Agreement has been duly authorized, executed
and delivered by TWT LLC, TWT Inc. and the Company, and constitutes a
valid and binding agreement of each of TWT LLC, TWT Inc. and the
Company, enforceable against each of them in accordance with its terms
(subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws affecting
creditors' rights generally and general principles of equity
including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether in
a proceeding in equity or at law); and
(xii)the Stockholders Agreement has been duly authorized,
executed and delivered by the Company, and constitutes a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms (subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws affecting creditors' rights generally and general
principles of equity including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing, regardless
of whether in a proceeding in equity or at law).
(d) The Underwriters shall have received on the Closing Date a
statement of Cravath, Swaine & Xxxxx, outside counsel for the Company,
dated the Closing Date, to the effect that:
Although such counsel has made certain inquiries and
investigations in connection with the preparation of the Registration
Statement and the Prospectus, the limitations inherent in the role of
outside counsel are such that such counsel cannot and does not assume
responsibility for the accuracy or completeness of the statements made
in the Registration Statement and Prospectus, except in so far as such
statements relate to such counsel and except to the extent set forth
in paragraph (vii) of such counsel's opinion to you dated the Closing
Date. Subject to the foregoing, such counsel hereby advises you that
such counsel's work in connection with this matter did not disclose
any information that gave such counsel
14
reason to believe that: (i) the Registration Statement at the time the
Registration Statement became effective, or the Prospectus as of the
date hereof (in each case except for the financial statements and
other information of a statistical, accounting or financial nature
included therein, as to which such counsel does not express any view)
was not appropriately responsive in all material respects to the
requirements of the Securities Act and the applicable rules and
regulations of the Commission thereunder, or (ii) the Registration
Statement at the time the Registration Statement 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, as of its
date and as of the date hereof, included or includes an untrue
statement of a material fact 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 (in each case
except for the financial statements and other information of a
statistical, accounting or financial nature included therein as to
which such counsel does not express any view).
(e) The Underwriters shall have received on the Closing Date an
opinion of Xxxx X. Xxxxx, Esq., General Counsel to the Company, dated the
Closing Date, to the effect that:
(i) the Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of Delaware,
with full corporate power and authority to own its property and to
conduct its business as described in the Prospectus;
(ii) the Company is duly qualified to transact business and
is in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(iii)each subsidiary of the Company has been duly
incorporated or, in the case of partnerships or limited liability
companies, duly organized, is validly existing as a corporation, a
partnership or a limited liability company, as the case may be, in
good standing under the laws of the jurisdiction of its incorporation
or organization, as the case may be, has the power and authority to
own its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole;
15
(iv) all of the issued shares of capital stock of each
subsidiary of the Company that is a corporation have been duly and
validly authorized and issued, are fully paid and non-assessable and
are owned directly by the Company free and clear of all liens,
encumbrances, equities or claims; and all of the partnership interests
and membership interests in each subsidiary of the Company that is a
partnership or limited liability company, as the case may be, are
owned directly by the Company free and clear of all liens,
encumbrances, equities or claims;
(v) The statements contained in the Registration Statement
under the captions "Risk Factors -- Risks Relating to Long Distance",
"Risk Factors -- Dependence Upon Interconnection with ILECs;
Competition", "Risk Factors -- Federal and State Regulation", "Risk
Factors -- Relationship with TW Cable", "Certain Relationships and
Related Transactions -- Certain Operating Agreements", "Business --
Competition", "Business -- State Regulation" and "Business -- Local
Government Authorizations", insofar as such statements constitute a
summary of the legal or regulatory matters or legal or regulatory
proceedings referred to therein, are correct in all material respects
and do not omit a material fact necessary to make the statements
contained therein not misleading;
(vi) to such counsel's knowledge, the Company possesses the
Governmental Licenses and the Company is in compliance with the terms
and conditions of all such Governmental Licenses, except where the
failure to so comply would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as
a whole, and all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full
force and effect would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole;
(vii) there is no outstanding adverse judgment, decree or
order that has been issued by the FCC or any of the Local Authorities
against the Company and its subsidiaries which, singly or in the
aggregate, would have a material adverse effect on the Company and its
subsidiaries, taken as a whole, and, to the best of such counsel's
knowledge, neither the Company nor any of its subsidiaries is the
object of, or threatened by, any proceedings relating to the
revocation or modification of any such Governmental Licenses or,
except as set forth in the Prospectus, that would otherwise affect the
operation of the Company, which, singly or in the aggregate, would
have a material adverse effect on the Company and its subsidiaries,
taken as a whole;
(viii) the Company has obtained all telecommunications,
regulatory or public utility authorizations and consents from New
York, Tennessee, North
16
Carolina and Hawaii required for the issuance of the Shares, and no
further filings with, authorizations, approval, consent, license,
order, registrations, qualification or decree is necessary or required
from any other Local Authorities having jurisdiction over
telecommunications matters for the Company in connection with the due
authorization, execution and delivery of this Agreement or for the
offering, issuance, sale or delivery of the Shares, except for notice
filings where the failure to make such filings would not materially
adversely affect the performance by the Company of its obligations
under this Agreement;
(ix) the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated in
this Agreement, the issuance and sale of the Shares, and the use of
the proceeds from the sale of the Shares to the extent expressly
described in the Prospectus under the caption "Use of Proceeds" and
compliance by the Company with its obligations under this Agreement do
not and will not, whether with or without the giving of notice or
lapse of time or both, result in any violation of any applicable law,
statute, rule, regulation, judgment, order, writ or decree, known to
such counsel of any Local Authority having jurisdiction over the
Company or any of its subsidiaries or any of its assets or operations
with respect to the provision of telecommunications services except
for such violations that would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole; and
(x) to such counsel's knowledge, there are no
telecommunications statutes or regulations that are required to be
described in the Registration Statement or the Prospectus that are not
described as required.
In rendering opinion (vi) above, the General Counsel may rely, as
to matters involving the application of the laws of California, Florida,
Hawaii, Indiana, New York, North Carolina, Texas and Wisconsin, upon the
opinions of special counsel to the Company (which opinions shall be dated
and furnished to the Underwriters on the Closing Date and shall be
satisfactory in form and substance to counsel for the Underwriters,
provided that the General Counsel shall state in his opinion that he
believes that he is justified in relying upon such opinions).
(f) The Underwriters shall have received on the Closing Date an
opinion of Greenberg, Traurig, regulatory counsel for the Company, dated
the Closing Date, to the effect that:
(i) The statements contained in the Registration Statement
under the captions "Risk Factors -- Governmental and Other
Authorizations", "Business -- Government Regulation" and "Business --
Federal Regulation", insofar as such statements constitute a summary
of the legal or regulatory matters or legal or regulatory proceedings
referred to therein, are correct in all material respects and
17
do not omit a material fact necessary to make the statements contained
therein not misleading; and
(ii) The execution and delivery of and compliance by the
Company with the Merger Agreement and the Stockholders Agreement does
not violate the Federal Communications Act of 1934, as amended, or the
rules and regulations of the FCC.
(g) The Underwriters shall have received on the Closing Date an
opinion of Xxxxx, Xxxxxxx & Xxxxx LLP, outside counsel for Advance/Xxxxxxxx
Partnership, dated as of the Closing Date, to the effect that the
Stockholders Agreement has been duly authorized, executed and delivered by,
and is a valid and binding agreement of, Advance/Xxxxxxxx Partnership,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity.
(h) The Underwriters shall have received on the Closing Date an
opinion of Weil, Gotshal & Xxxxxx LLP, outside counsel for MediaOne Group,
Inc., dated as of the Closing Date, to the effect that the Stockholders
Agreement has been duly authorized, executed and delivered by, and is a
valid and binding agreement of, MediaOne Group, Inc., enforceable against
it in accordance with its terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
general principles of equity.
(i) The Underwriters shall have received on the Closing Date an
opinion of Shearman & Sterling, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in Sections 5(c)(iv),
5(c)(v), 5(c)(vii) (but only as to the statements in the Prospectus under
"Description of Capital Stock" and "Underwriters") and 5(d) above.
With respect to Section 5(d) above, Cravath, Swaine & Xxxxx and
Shearman & Sterling may provide their statements in separate letters and
may state that their opinion and belief are based upon their participation
in the preparation of the Registration Statement and Prospectus and any
amendments or supplements thereto and review and discussion of the contents
thereof, but are without independent check or verification, except as
specified.
The opinion of Cravath, Swaine & Xxxxx described in Section 5(c)
above shall be rendered to the Underwriters at the request of the Company
and shall so state therein.
(j) The Underwriters shall have received, on each of the date
hereof and the Closing Date, a letter dated the date hereof or the Closing
Date, as the case may be,
18
in form and substance satisfactory to the Underwriters, from Ernst & Young,
LLP, independent public accountants, containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus;
provided that the letter delivered on the Closing Date shall use a "cut-off
date" not earlier than the date hereof.
(k) The Reconstitution (as defined in the Prospectus) shall have
been consummated.
(l) The "lockup" agreements, each substantially in the form of
Exhibit A hereto, between you and certain shareholders, officers and
directors of the Company relating to sales and certain other dispositions
of shares of Common Stock or certain other securities, delivered to you on
or before the date hereof, shall be in full force and effect on the Closing
Date.
(m) The Common Stock shall have been approved for trading on the
Nasdaq National Market, subject only to official notice of issuance.
The several obligations of the U.S. Underwriters to purchase
Additional Shares hereunder are subject to the delivery to the U.S.
Representatives on the Option Closing Date of such documents as they may
reasonably request with respect to the good standing of the Company, the due
authorization and issuance of the Additional Shares and other matters related to
the issuance of the Additional Shares.
6. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, five signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City, without
charge, prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 6(c) below, as many copies of the Prospectus and any supplements
and amendments thereto or to the Registration Statement as you may
reasonably request.
(b) Before amending or supplementing the Registration Statement
or the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
19
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if it
is necessary to amend or supplement the Prospectus to comply with
applicable law, forthwith to prepare, file with the Commission and furnish,
at its own expense, to the Underwriters and to the dealers (whose names and
addresses you will furnish to the Company) to which Shares may have been
sold by you on behalf of the Underwriters and to any other dealers upon
request, either amendments or supplements to the Prospectus so that the
statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to a purchaser,
be misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
(d) To endeavor to qualify the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request; provided that, in connection therewith, the Company
shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction.
(e) To make generally available to the Company's security holders
and to you as soon as practicable an earning statement covering the
twelve-month period ending March 31, 2000 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause
to be paid all expenses incident to the performance of its obligations
under this Agreement, including: (i) the fees, disbursements and expenses
of the Company's counsel and the Company's accountants in connection with
the registration and delivery of the Shares under the Securities Act and
all other fees or expenses in connection with the preparation and filing of
the Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies
thereof to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and delivery
of the Shares to the Underwriters, including any transfer or other taxes
payable thereon, (iii) the cost of printing or producing any Blue Sky or
Legal Investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws
as provided in Section 6(d) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky or
Legal Investment memorandum, (iv) all filing fees and the reasonable fees
and disbursements of counsel to the Underwriters incurred in
20
connection with the review and qualification of the offering of the Shares
by the National Association of Securities Dealers, Inc. (The "NASD"), (v)
all fees and expenses in connection with the preparation and filing of the
registration statement on Form 8-A relating to the Common Stock and all
costs and expenses incident to listing the Shares on the Nasdaq National
Market, (vi) the cost of printing certificates representing the Shares,
(vii) the costs and charges of any transfer agent, registrar or depositary,
(viii) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the
marketing of the offering of the Shares, including, without limitation,
expenses associated with the production of road show slides and graphics,
fees and expenses of any consultants engaged in connection with the road
show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and any
such consultants, and the cost of any aircraft chartered in connection with
the road show, provided, that the Underwriters will reimburse the Company
for the Underwriters' pro rata share of the cost of such chartered
aircraft, (ix) all expenses in connection with any offer and sale of the
Shares outside of the United States, including all filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in
connection with offers and sales outside of the United States and (x) all
other costs and expenses incident to the performance of the obligations of
the Company hereunder for which provision is not otherwise made in this
Section. It is understood, however, that except as provided in this
Section, Section 7 entitled "Indemnity and Contribution", and the last
paragraph of Section 10 below, the Underwriters will pay all of their costs
and expenses, including fees and disbursements of their counsel, stock
transfer taxes payable on resale of any of the Shares by them and any
advertising expenses connected with any offers they may make.
(g) That in connection with the Directed Share Program, the
Company will ensure that the Directed Shares will be restricted to the
extent required by the NASD or the NASD rules from sale, transfer,
assignment, pledge or hypothecation for a period of three months following
the date of the effectiveness of the Registration Statement. Xxxxxx Xxxxxxx
will notify the Company as to which Participants will need to be so
restricted. The Company will direct the transfer agent to place stop
transfer restrictions upon such securities for such period of time.
(h) To pay all fees and disbursements of counsel incurred by the
Underwriters in connection with the Directed Share Program and stamp
duties, similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Directed Share Program.
Furthermore, the Company covenants with Xxxxxx Xxxxxxx that the
Company will comply with all applicable securities and other applicable laws,
rules and regulations in each foreign jurisdiction in which the Directed Shares
are offered in connection with the Directed Share Program.
21
7. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 7(a) or 7(b), such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Xxxxxx Xxxxxxx, in the case of parties indemnified
pursuant to Section 7(a), and by the Company,
22
in the case of parties indemnified pursuant to Section 7(b). The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section 7(a) or
7(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation provided by
clause 7(d)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
7(d)(i) above but also the relative fault of the Company on the one hand and of
the Underwriters on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other hand in
connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the Company on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
23
(e) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 7(d). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 7 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or by or on behalf of the Company, its officers or directors or
any person controlling the Company and (iii) acceptance of and payment for any
of the Shares.
8. Directed Share Program Indemnification. (a) The Company agrees to
indemnify and hold harmless Xxxxxx Xxxxxxx and each person, if any, who controls
Xxxxxx Xxxxxxx within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act ("Xxxxxx Xxxxxxx Entities"), from and against any
and all losses, claims, damages and liabilities (including, without limitation,
any legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) (i) caused by any untrue statement or
alleged untrue statement of a material fact contained in any material prepared
by or with the consent of the Company for distribution to Participants in
connection with the Directed Share Program (exclusive of the procedural
memorandum and the indication of interest form accompanying any brokerage
account applications related to the Directed Share Program supplied by any
Xxxxxx Xxxxxxx Entity) or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; (ii) caused by the failure of any Participant
to pay for and accept delivery of Directed Shares which, immediately following
the effectiveness of the Registration Statement, were subject to a properly
confirmed agreement to purchase; or (iii) related to, arising out of, or in
connection with the Directed Share Program, other than losses, claims, damages
or liabilities (or expenses relating thereto) that are finally judicially
determined to have resulted from the bad faith or gross negligence of Xxxxxx
Xxxxxxx Entities.
24
(b) In case any proceeding (including any governmental investigation)
shall be instituted involving any Xxxxxx Xxxxxxx Entity in respect of which
indemnity may be sought pursuant to Section 8(a), the Xxxxxx Xxxxxxx Entity
seeking indemnity, shall promptly notify the Company in writing and the Company,
upon request of the Xxxxxx Xxxxxxx Entity, shall retain counsel reasonably
satisfactory to the Xxxxxx Xxxxxxx Entity to represent the Xxxxxx Xxxxxxx Entity
and any others the Company may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any Xxxxxx Xxxxxxx Entity shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Xxxxxx Xxxxxxx Entity unless (i) the Company shall have agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Company and the Xxxxxx
Xxxxxxx Entity and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. The
Company shall not, in respect of the legal expenses of the Xxxxxx Xxxxxxx
Entities in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Xxxxxx Xxxxxxx Entities. Any such
separate firm for the Xxxxxx Xxxxxxx Entities shall be designated in writing by
Xxxxxx Xxxxxxx. The Company shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Company agrees to
indemnify the Xxxxxx Xxxxxxx Entities from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time a Xxxxxx Xxxxxxx Entity shall have requested the Company to
reimburse it for fees and expenses of counsel as contemplated by the second and
third sentences of this paragraph, the Company agrees that it shall be liable
for any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt by the Company
of the aforesaid request and (ii) the Company shall not have reimbursed the
Xxxxxx Xxxxxxx Entity in accordance with such request prior to the date of such
settlement. The Company shall not, without the prior written consent of Xxxxxx
Xxxxxxx, effect any settlement of any pending or threatened proceeding in
respect of which any Xxxxxx Xxxxxxx Entity is or could have been a party and
indemnity could have been sought hereunder by such Xxxxxx Xxxxxxx Entity, unless
such settlement includes an unconditional release of the Xxxxxx Xxxxxxx Entities
from all liability on claims that are the subject matter of such proceeding.
(c) To the extent the indemnification provided for in Section 8(a) is
unavailable to a Xxxxxx Xxxxxxx Entity or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then the Company in lieu of
indemnifying the Xxxxxx Xxxxxxx Entity thereunder, shall contribute to the
amount paid or payable by the Xxxxxx Xxxxxxx Entity as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Xxxxxx Xxxxxxx Entities on the other hand from the offering of the Directed
Shares or (ii) if the allocation provided by clause 8(c)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause 8(c)(i) above but also the
relative fault of the
25
Company on the one hand and of the Xxxxxx Xxxxxxx Entities on the other hand in
connection with any statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Xxxxxx Xxxxxxx Entities on the other hand in connection with the
offering of the Directed Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Directed Shares (before
deducting expenses) and the total underwriting discounts and commissions
received by the Xxxxxx Xxxxxxx Entities for the Directed Shares, bear to the
aggregate Public Offering Price of the Directed Shares. If the loss, claim,
damage or liability is caused by an untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact, the
relative fault of the Company on the one hand and the Xxxxxx Xxxxxxx Entities on
the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement or the omission or alleged omission
relates to information supplied by the Company or by the Xxxxxx Xxxxxxx Entities
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(d) The Company and the Xxxxxx Xxxxxxx Entities agree that it would
not be just or equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Xxxxxx Xxxxxxx Entities were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in
Section 8(c). The amount paid or payable by the Xxxxxx Xxxxxxx Entities as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
the Xxxxxx Xxxxxxx Entities in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 8, no
Xxxxxx Xxxxxxx Entity shall be required to contribute any amount in excess of
the amount by which the total price at which the Directed Shares distributed to
the public were offered to the public exceeds the amount of any damages that
such Xxxxxx Xxxxxxx Entity has otherwise been required to pay. The remedies
provided for in this Section 8 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
(e) The indemnity and contribution provisions contained in this
Section 8 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Xxxxxx Xxxxxxx Entity or the Company, its officers or directors or any
person controlling the Company and (iii) acceptance of and payment for any of
the Directed Shares.
9. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the NASD, the Chicago
Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board
of Trade, (ii) trading of any securities of the Company shall have been
suspended on any exchange
26
or in any over-the-counter market, (iii) a general moratorium on commercial
banking activities in New York shall have been declared by either Federal or New
York State authorities or (iv) there shall have occurred any outbreak or
escalation of hostilities or any change in financial markets or any calamity or
crisis that, in your judgment, is material and adverse and (b) in the case of
any of the events specified in clauses 9(a)(i) through 9(a)(iv), such event,
singly or together with any other such event, makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus.
10. Effectiveness; Defaulting Underwriters. This
Agreement shall become effective upon the execution and delivery
hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
that it has or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule I or Schedule
II bears to the aggregate number of Firm Shares set forth opposite the names of
all such non-defaulting Underwriters, or in such other proportions as you may
specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 10 by
an amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares and the aggregate
number of Firm Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Firm Shares to be purchased, and
arrangements satisfactory to you and the Company for the purchase of such Firm
Shares are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case either you or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. If, on the
Option Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Additional Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Shares to be purchased, the non-defaulting Underwriters
shall have the option to (i) terminate their obligation hereunder to purchase
Additional Shares or (ii) purchase not less than the number of Additional Shares
that such non-defaulting Underwriters would have been obligated to purchase in
the absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of
27
the conditions of this Agreement, or if for any reason the Company shall be
unable to perform its obligations under this Agreement, the Company will
reimburse the Underwriters or such Underwriters as have so terminated this
Agreement with respect to themselves, severally, for all out-of-pocket expenses
(including the fees and disbursements of their counsel) reasonably incurred by
such Underwriters in connection with this Agreement or the offering contemplated
hereunder.
11. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the
State of New York.
28
13. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
TIME WARNER TELECOM INC.
By:_______________________
Name:
Title:
Accepted as of the date hereof
XXXXXX XXXXXXX & CO. INCORPORATED
XXXXXX BROTHERS INC.
BEAR, XXXXXXX & CO. INC.
Acting severally on behalf of themselves and the several U.S. Underwriters named
in Schedule I hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By:___________________________
Name:
Title:
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
XXXXXX BROTHERS INTERNATIONAL (EUROPE)
BEAR, XXXXXXX INTERNATIONAL LIMITED
Acting severally on behalf of themselves
and the several International Underwriters
named in Schedule II hereto.
By: Xxxxxx Xxxxxxx & Co. International Limited
By: ____________________________
Name:
Title:
SCHEDULE I
U.S. UNDERWRITERS
Number of
Firm Shares
Underwriter To Be Purchased
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxx Brothers Inc.
Bear, Xxxxxxx & Co. Inc.
---------------
Total U.S. Firm Shares ..............
===============
SCHEDULE II
INTERNATIONAL UNDERWRITERS
Number of
Firm Shares
Underwriter To Be Purchased
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxx Brothers International (Europe)
Bear, Xxxxxxx International Limited
---------------
Total International Firm Shares ......
===============
EXHIBIT A
[FORM OF LOCK-UP LETTER]
[ ], 1999
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxx Brothers Inc.
Bear, Xxxxxxx & Co. Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxx Brothers International (Europe)
Bear, Xxxxxxx International Limited
c/o Morgan Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated ("Xxxxxx
Xxxxxxx"), Xxxxxx Xxxxxxx & Co. International Limited ("MSIL"), Xxxxxx
Brothers Inc. ('Xxxxxx Brothers') and Xxxxxx Brothers International
(Europe) ('LBIE') propose to enter into an Underwriting Agreement (the
"Underwriting Agreement") with Time Warner Telecom Inc., a Delaware corporation
(the "Company") providing for the public offering (the "Public Offering") by
the several Underwriters, including Xxxxxx Xxxxxxx, MSIL, Xxxxxx Brothers and
LBIE (the "Underwriters") of [ ] shares (the "Shares") of the
Class A Common Stock, par value $.01 per share of the Company (the "Common
Stock").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Xxxxxx Xxxxxxx and
Xxxxxx Brothers on behalf of the Underwriters, it will not, during the period
commencing on the date hereof and ending 180 days after the date of the final
prospectus relating to the Public Offering (the "Prospectus"), (1) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly,
any shares of Common Stock or any securities convertible into or exercisable
or exchangeable for Common Stock, or (2) enter into any swap or other
arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (a) the sale of any Shares to the
Underwriters pursuant to the Underwriting Agreement or (b) transactions relating
to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering. In addition, the
undersigned agrees that, without the prior written consent of Xxxxxx Xxxxxxx on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 180 days after the date of the Prospectus, make any
demand for or exercise any right with respect to, the registration of any shares
of Common Stock or any security convertible into or exercisable or exchangeable
for Common Stock.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
-------------------------
(Name)
-------------------------
(Address)
A-2
