1
Exhibit 1.1
[Form of U.S. underwriting agreement]
CHARTER COMMUNICATIONS, INC.
CLASS A COMMON STOCK, PAR VALUE $.001 PER SHARE
UNDERWRITING AGREEMENT (U.S. VERSION)
November __, 1999
Xxxxxxx, Xxxxx & Co.,
Bear, Xxxxxxx & Co. Inc.,
Xxxxxx Xxxxxxx & Co. Incorporated,
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation,
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated,
Xxxxxxx Xxxxx Barney Inc.,
X. X. Xxxxxxx & Sons, Inc.,
X. X. Xxxx & Company,
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Xxxxx & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Charter Communications, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of 144,500,000 shares (the "Firm Shares") and, at the election of the
Underwriters, up to 21,675,000 additional shares (the "Optional Shares") of
Class A Common Stock, par value $.001 per share ("Stock"), of the Company (the
Firm Shares and the Optional Shares that the Underwriters purchase pursuant to
Section 2 hereof being collectively called the "Shares"). The Company will use
the proceeds to purchase limited liability company interests ("Membership
Units") of Charter Communications Holding Company, LLC, a Delaware limited
liability company ("Holding"), as described in the Prospectus (as hereinafter
defined).
It is understood and agreed to by all parties that the Company is
concurrently entering into an agreement (the "International Underwriting
Agreement") providing for the sale by the Company of up to a total of 29,325,000
shares of Stock (the "International Shares"), including the overallotment option
thereunder, through arrangements with certain underwriters outside the United
States (the "International Underwriters"), for whom Xxxxxxx Sachs International,
Bear,
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Xxxxxxx International Limited, Xxxxxx Xxxxxxx & Co. International Limited,
Xxxxxxxxx, Lufkin & Xxxxxxxx International, Xxxxxxx Xxxxx International and
Salomon Brothers International Limited are acting as lead managers. Anything
herein or therein to the contrary notwithstanding, the respective closings under
this Agreement and the International Underwriting Agreement are hereby expressly
made conditional on one another. The Underwriters hereunder and the
International Underwriters are simultaneously entering into an Agreement between
U.S. and International Underwriting Syndicates (the "Agreement between
Syndicates") which provides, among other things, for the transfer of shares of
Stock between the two syndicates. Two forms of prospectus are to be used in
connection with the offering and sale of shares of Stock contemplated by the
foregoing, one relating to the Shares hereunder and the other relating to the
International Shares. The latter form of prospectus will be identical to the
former except for the front and back cover pages and the "Underwriting" section.
Except as used in Sections 2, 3, 4, 9 and 11 herein, and except as the context
may otherwise require, references hereinafter to the Shares shall include all
the shares of Stock which may be sold pursuant to either this Agreement or the
International Underwriting Agreement, and references herein to any prospectus
whether in preliminary or final form, and whether as amended or supplemented,
shall include both the U.S. and the international versions thereof.
1. The Company and Holding, jointly and severally, represent and
warrant to, and agree with, each of the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-83887) (the
"Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in
the form heretofore delivered to you, and, excluding exhibits thereto,
delivered to you for each of the other Underwriters, have been declared
effective by the Commission in such form; other than a registration
statement, if any, increasing the size of the offering (a "Rule 462(b)
Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act"), which became effective upon
filing, no other document with respect to the Initial Registration
Statement has heretofore been filed with the Commission; and no stop order
suspending the effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration Statement,
if any, has been issued and no proceeding for that purpose has been
initiated or threatened by the Commission (any preliminary prospectus
included in the Initial Registration Statement or filed with the Commission
pursuant to Rule 424(a) of the rules and regulations of the Commission
under the Act is hereinafter called a "Preliminary Prospectus"; the various
parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and
including the information contained in the form of final prospectus filed
with the Commission pursuant to Rule 424(b) under the Act in accordance
with Section 5(a) hereof and deemed by virtue of
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Rule 430A under the Act to be part of the Initial Registration Statement at
the time it was declared effective, each as amended at the time such part
of the Initial Registration Statement became effective or such part of the
Rule 462(b) Registration Statement, if any, became or hereafter becomes
effective, are hereinafter collectively called the "Registration
Statement"; such final prospectus, in the form first filed pursuant to Rule
424(b) under the Act, is hereinafter called the "Prospectus");
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder, and did 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, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through
Xxxxxxx, Xxxxx & Co. expressly for use therein;
(c) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder and do
not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
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; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by an Underwriter through Xxxxxxx, Sachs & Co. expressly for use therein;
(d) None of the Company, Holding or any of Holding's subsidiaries has
sustained since the date of the latest audited financial statements
included in the Prospectus any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Prospectus; and,
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any change in
the capital stock, limited liability company interests or long-term debt of
the Company, Holding or any of Holding's subsidiaries or any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, financial
position, stockholders' or members' equity, or
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results of operations of the Company, Holding and Holding's subsidiaries,
otherwise than as set forth or contemplated in the Prospectus;
(e) Each of the Company, Holding and Holding's subsidiaries has good
and marketable title in fee simple to all real property and good and valid
title to all personal property owned by it reflected as owned in the
financial statements or elsewhere in the Prospectus, 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, Holding and Holding's subsidiaries; and any
real property and buildings held under lease by the Company, Holding and
Holding's subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company, Holding and Holding's subsidiaries;
(f) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware;
Holding has been duly formed and is validly existing as a limited liability
company in good standing under the laws of the State of Delaware; each of
the Company and Holding has power and authority (corporate and other) to
own its properties and conduct its business as described in the Prospectus
and to execute, deliver and perform its obligations under this Agreement,
and has been duly qualified as a foreign corporation or limited liability
company, as the case may be, for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification, and is not subject to liability or disability by reason of
the failure to be so qualified in any such jurisdiction, except where the
failure to be so qualified would not, individually and in the aggregate,
have a material adverse effect on the current or future financial position,
stockholders' or members' equity or results of operations of the Company,
Holding and Holding's subsidiaries, taken as a whole (a "Material Adverse
Effect"); each subsidiary of Holding has been duly incorporated or formed,
as the case may be, and is validly existing as a corporation or limited
liability company, as the case may be, in good standing under the laws of
its jurisdiction of incorporation or formation; and the Company does not
have any subsidiary (as such term is defined in the rules and regulations
under the Act) except that contemporaneously with the consummation of the
transactions contemplated by this Agreement, the Company will acquire an
approximate % equity interest and a 100% voting interest in
Holding;
(g) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable, and conform to the descriptions thereof contained in the
Prospectus; Holding has an authorized capitalization as set forth in the
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Prospectus, and all of the issued and outstanding Membership Units have
been duly and validly authorized and issued, are fully paid and
non-assessable, are owned directly by Charter Investment, Inc. ("Charter
Investment"), Vulcan Cable III Inc. ("Vulcan III") and those other persons
or entities described in the Prospectus, free and clear of all liens,
encumbrances, equities or claims, and conform to the description of the
Membership Units contained in the Prospectus; and all of the issued shares
of capital stock or limited liability company interests, as the case may
be, of each subsidiary of Holding have been duly and validly authorized and
issued, are fully paid and non-assessable, and are owned directly or
indirectly by Holding, free and clear of all liens, encumbrances, equities
or claims;
(h) The Shares have been duly and validly authorized and, when issued
and delivered against payment therefor as provided herein and in the
International Underwriting Agreement, will be duly and validly issued,
fully paid and non-assessable and will conform to the description of the
Stock contained in the Prospectus;
(i) The issue and sale of the Shares by the Company hereunder and
under the International Underwriting Agreement and the compliance by the
Company and Holding with all of the provisions of this Agreement and the
International Underwriting Agreement and the consummation of the
transactions herein and therein contemplated will not result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement, lease,
license, franchise agreement, permit or other agreement or instrument to
which the Company, Holding or any of Holding's subsidiaries is a party or
by which the Company, Holding or any of Holding's subsidiaries is bound or
to which any of the property or assets of the Company, Holding or any of
Holding's subsidiaries is subject, nor will such action result in any
violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company, Holding
or any of Holding's subsidiaries or any of their properties, including,
without limitation, the Communications Act of 1934, as amended, the Cable
Communications Policy Act of 1984, as amended, the Cable Television
Consumer Protection and Competition Act of 1992, as amended, and the
Telecommunications Act of 1996 (collectively, the "Cable Acts") or any
order, rule or regulation of the Federal Communications Commission (the
"FCC"), except where such breach or violation would not have a Material
Adverse Effect and would not have the effect of preventing the Company or
Holding from performing any of their respective obligations under this
Agreement; nor will such action result in any violation of the Restated
Certificate of Incorporation or Bylaws of the Company or the Certificate of
Formation or Amended and Restated Limited Liability Company Agreement of
Holding; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required, including, without limitation, under the Cable Acts or any order,
rule or regulation of the FCC, for the issue and sale of the Shares or the
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consummation by the Company and Holding of the transactions contemplated by
this Agreement and the International Underwriting Agreement, except the
registration under the Act of the Shares and such consents, approvals,
authorizations, registrations or qualifications as have been made or except
as may be required under state or foreign securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
Underwriters and the International Underwriters;
(j) None of the Company, Holding or any of Holding's subsidiaries is
(i) in violation of its certificate of incorporation, by-laws, certificate
of formation, limited liability company agreement or other organizational
document, as the case may be, (ii) in default in the performance or
observance of any obligation, agreement, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement, lease, license,
permit or other agreement or instrument to which it is a party or by which
it or any of its properties may be bound or (iii) in violation of the terms
of any franchise agreement, or any law, statute, rule or regulation or any
judgment, decree or order, in any such case, of any court or governmental
or regulatory agency or other body having jurisdiction over the Company,
Holding or Holding's subsidiaries or any of their properties or assets,
including, without limitation, the Cable Acts or any order, rule or
regulation of the FCC, except, in the case of clauses (ii) and (iii), such
as would not, individually and in the aggregate, have a Material Adverse
Effect;
(k) The provisions of the Company's Restated Certificate of
Incorporation and Bylaws, including, without limitation, the provisions
thereof relating to the Stock and the Company's Class B Common Stock, par
value .001 per share (the "Class B Stock"), are lawful and permitted under
the Delaware General Corporation Law, do not violate any Delaware statute
or rule or regulation of any Delaware governmental agency or body having
jurisdiction over the Company or Holding and, subject to principles of
equity, a Delaware court properly presented with the matter would so find;
Holding's Certificate of Formation and Amended and Restated Limited
Liability Company Agreement do not violate the Delaware Limited Liability
Company Act, the Amended and Restated Limited Liability Company Agreement
is enforceable against the parties thereto in accordance with its terms,
and the Certificate of Formation and Amended and Restated Limited Liability
Company Agreement do not violate any Delaware statute, any rule or
regulation of any Delaware governmental agency or body having jurisdiction
over the Company or Holding or any order of any Delaware court having
jurisdiction over the Company or Holding;
(l) The statements set forth in the Prospectus under the captions
"Risks Factors --Regulatory and Legislative Matters", "Business --
Acquisitions", "Regulation and Legislation", "Management", "Certain
Relationships and Related Transactions", "Description of Certain
Indebtedness", "Description of Capital Stock and Membership Units", "Shares
Eligible For Future Sale" and "Certain United States Tax Consequences for
Non-United States Holders", insofar as they purport to describe the
provisions of the laws, documents and arrangements referred to therein, are
accurate in all material respects;
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(m) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings (including, without limitation, by the FCC or any
franchising authority) pending to which the Company, Holding or any of
Holding's subsidiaries is a party or of which any property of the Company,
Holding or any of Holding's subsidiaries is the subject which, if
determined adversely to the Company, Holding or any of Holding's
subsidiaries, would, individually or in the aggregate, have a Material
Adverse Effect; and, to the best knowledge of the Company and Holding and
except as disclosed in the Prospectus, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others;
(n) Each of the Company, Holding and Holding's subsidiaries carries
insurance (including self-insurance) in such amounts and covering such
risks as in the reasonable determination of the Company and Holding is
adequate for the conduct of its business and the value of its properties;
(o) Except as set forth in the Prospectus, there is no strike, labor
dispute, slowdown or work stoppage with the employees of any of the
Company, Holding or Holding's subsidiaries which is pending or, to the best
knowledge of the Company and Holding, threatened which would, individually
or in the aggregate, have a Material Adverse Effect;
(p) Neither the Company nor Holding is and, after giving effect to the
offering and sale of the Shares, will be an "investment company" or an
entity "controlled" by an "investment company," as such terms are defined
in the U.S. Investment Company Act of 1940, as amended (the "Investment
Company Act");
(q) The audited consolidated financial statements (including the notes
thereto) included in the Prospectus present fairly in all material respects
the respective consolidated financial positions, results of operations and
cash flows of the entities to which they relate at the dates and for the
periods to which they relate and have been prepared in accordance with U.S.
generally accepted accounting principles ("GAAP") applied on a consistent
basis, except as otherwise stated therein; the supporting schedules
included in the Registration Statement present fairly in accordance with
GAAP the information required to be stated therein; and the summary and
selected financial data in the Prospectus present fairly in all material
respects the information shown therein and have been prepared and compiled
on a basis consistent with the audited financial statements included
therein;
(r) The pro forma financial statements (including the notes thereto)
and the other pro forma financial information included in the Prospectus
(i) comply as to form in all material respects with the applicable
requirements of Regulation S-X for Form S-1 promulgated under the
Securities Exchange Act of 1934, as amended, and (ii) have been properly
computed on the bases described therein; the assumptions used in the
preparation of the pro
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forma financial data and other pro forma financial information included in
the Prospectus are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein;
(s) Each of the following firms are independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder, based upon representations by such firms to us: (i) Xxxxxx
Xxxxxxxx LLP, who have certified certain financial statements of the
Company, Holding, CCA Group, CharterComm Holdings, L.P., Long Beach
Acquisition Corp., Sonic Communications Cable Television Systems and
Greater Media Cablevision Systems; (ii) KPMG LLP, who have certified
certain financial statements of Marcus Cable Company, L.L.C., Helicon
Partners I L.P. and affiliates, TCI Falcon Systems and Bresnan
Communications Group Systems; (iii) Ernst & Young LLP, who have certified
certain financial statements of Renaissance Media Group LLC, the combined
statements of the Picayune MS, Lafourche LA St. Tammany LA, St. Xxxxxx LA,
Point Coupee LA and Jackson TN cable television systems, R/N South Florida
Cable Management Limited Partnership, Indiana Cable Associates, Ltd.,
Falcon Communications, L.P. and Fanch Cable Systems (comprised of
components of TWFanch-one Co. and TWFanch-two Co.); and (iv)
PriceWaterhouseCoopers LLP, who have certified certain financial statements
of InterMedia Cable Systems, Xxxxxx Acquisition Partners L.L.L.P., Xxxxxx
Cable Income Partners LP, Avalon Cable LLC, Avalon Cable of Michigan
Holdings, Cable Michigan, Inc., Amrac Clear View, a Limited Partnership,
Pegasus Cable Television of Connecticut, Inc. and the Massachusetts
operations of Pegasus Cable Television, Inc.
(t) The Company and Holding have reviewed their operations and those
of Holding's subsidiaries to evaluate the extent to which the business or
operations of the Company, Holding or any of Holding's subsidiaries will be
affected by the Year 2000 Problem. As a result of such review, except as
disclosed in the Prospectus, the Company and Holding have no reason to
believe that the Year 2000 Problem will have a Material Adverse Effect or
result in any material loss or interference with the business or operations
of the Company, Holding or Holding's subsidiaries. The "Year 2000 Problem"
as used herein means any significant risk that computer hardware or
software used in the receipt, transmission, processing, manipulation,
storage, retrieval, retransmission or other utilization of data or in the
operation of mechanical or electrical systems of any kind will not, in the
case of dates or time periods occurring after December 31, 1999, function
at least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000;
(u) The Company, Holding and Holding's subsidiaries own or possess, or
can acquire on reasonable terms, adequate licenses, trademarks, service
marks, trade names or copyrights (collectively, "Intellectual Property")
necessary to conduct the
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business now or proposed to be operated by each of them as described in the
Prospectus, except where the failure to own, possess or have the ability to
acquire any Intellectual Property would not, individually and in the
aggregate, have a Material Adverse Effect; and none of the Company, Holding
or Holding's subsidiaries has received any notice of infringement of or
conflict with (and none actually knows of any such infringement of or
conflict with) asserted rights of others with respect to any Intellectual
Property which, if any such assertion of infringement or conflict were
sustained would, individually or in the aggregate, have a Material Adverse
Effect;
(v) Except as described in the Prospectus, the Company, Holding and
Holding's subsidiaries have obtained all consents, approvals, orders,
certificates, licenses, permits, franchises and other authorizations of and
from, and have made all declarations and filings with, all governmental and
regulatory authorities (including, without limitation, the FCC), all
self-regulatory organizations and all courts and other tribunals legally
necessary to own, lease, license and use their respective properties and
assets and to conduct their respective businesses in the manner described
in the Prospectus, except to the extent that the failure to so obtain or
file would not, individually and in the aggregate, have a Material Adverse
Effect;
(w) Each of the franchises held by the Company, Holding and Holding's
subsidiaries that are material to the Company, Holding and Holding's
subsidiaries, taken as a whole, is in full force and effect, with no
material restrictions or qualifications; and to the best knowledge
of the Company and Holding, no event has occurred which permits, or with
notice or lapse of time or both would permit, the revocation or non-renewal
of any franchises, assuming the filing of timely renewal applications and
the timely payment of all applicable filing and regulatory fees to the
applicable franchising authority, or which might result, individually or in
the aggregate, in any other material impairment of the rights of the
Company, Holding and Holding's subsidiaries in the franchises. Except as
described in the Prospectus, the Company and Holding have no reason to
believe that any franchise that is required for the operation of the
Company, Holding and Holding's subsidiaries will not be renewed in the
ordinary course;
(x) The Company, Holding and Holding's subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permit, license or approval,
except where such noncompliance with
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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, individually and in the
aggregate, have a Material Adverse Effect;
(y) The Company, Holding and Holding's subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns
required to be filed as of the date hereof, except where the failure to so
file such returns would not, individually and in the aggregate, have a
Material Adverse Effect, and have paid all taxes shown as due thereon; and
there is no tax deficiency that has been asserted against the Company,
Holding or any of Holding's subsidiaries that could reasonably be expected
to result, individually and in the aggregate, in a Material Adverse Effect;
(z) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company, Holding or any of their
affiliates and any person granting such person the right to require the
Company or Holding to file a registration statement under the Act with
respect to any securities of the Company or Holding or to require the
Company or Holding to include such securities with the Shares registered
pursuant to the Registration Statement;
(aa) Except as described in the Prospectus, there are no outstanding
options, warrants or other rights calling for the issuance of, and no
commitments, plans or arrangements to issue, any securities of the Company
or Holding or any security convertible into or exchangeable for securities
of the Company or Holding;
(ab) There are no contracts, other documents or other agreements
required to be described in the Registration Statement or to be filed as
exhibits to the Registration Statement by the Act or by the rules and
regulations thereunder which have not been described or filed as required;
the contracts so described in the Prospectus are in full force and effect
on the date hereof; and none of the Company, Holding or Holding's
subsidiaries and, to the best of the Company's and Holding's knowledge, any
other party is in breach of or default under any of such contracts, except
for those breaches or defaults that would not, individually and in the
aggregate, result in a Material Adverse Effect;
(ac) The Company, Holding and Holding's subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with the existing
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assets at reasonable intervals and appropriate action is taken with respect
to any differences; and
(ad) To the best knowledge of the Company and Holding, the
representations and warranties with respect to the matters covered in paragraphs
(d), (j) (other than clause (i) thereof), (m), (n), (o), (t), (u), (v), (w) and
(x) of this Section 1 are true and correct with respect to each of the cable
systems or the companies owning the cable systems, as the case may be, being
acquired in the pending acquisitions described in "Business - Acquisitions -
Pending Acquisitions" in the Prospectus (each such cable system or company being
deemed to be a subsidiary of Holding for purposes of such representations and
warranties).
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $______, the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto and (b) in the event
and to the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Company agrees to issue and sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the purchase price per share set forth
in clause (a) of this Section 2, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction, the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase
at their election up to 21,675,000 Optional Shares, at the purchase price per
share set forth in the paragraph above, for the purpose of covering
over-allotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company,
given within a period of 30 calendar days after the date of this Agreement,
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you but
in no event earlier than the First Time of Delivery (as defined in Section 4
hereof) or, unless you and the Company otherwise agree in writing, earlier than
two or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares,
the several Underwriters propose to offer the Firm Shares for sale upon the
terms and conditions set forth in the Prospectus.
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4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Xxxxxxx, Xxxxx & Co. may request upon at least forty-eight hours' prior
notice to the Company, shall be delivered by or on behalf of the Company to
Xxxxxxx, Sachs & Co., through the facilities of The Depository Trust Company
("DTC"), for the account of such Underwriter, against payment by or on behalf of
such Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified by the Company to Xxxxxxx, Xxxxx & Co.
at least forty-eight hours in advance. The Company will cause the certificates
representing the Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with respect
thereto at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be, with respect
to the Firm Shares, 9:30 a.m., New York City time, on November _, 1999 or
such other time and date as Xxxxxxx, Sachs & Co. and the Company may agree upon
in writing, and, with respect to the Optional Shares, 9:30 a.m., New York time,
on the date specified by Xxxxxxx, Xxxxx & Co. in the written notice given by
Xxxxxxx, Sachs & Co. of the Underwriters' election to purchase such Optional
Shares, or such other time and date as Xxxxxxx, Xxxxx & Co. and the Company may
agree upon in writing. Such time and date for delivery of the Firm Shares is
herein called the "First Time of Delivery", such time and date for delivery of
the Optional Shares, if not the First Time of Delivery, is herein called the
"Second Time of Delivery", and each such time and date for delivery is herein
called a "Time of Delivery."
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the cross
receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(m) hereof, will be delivered at the offices
of Debevoise & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Closing Location"), and the Shares will be delivered at the Designated Office,
all at such Time of Delivery. A meeting will be held at the Closing Location at
2:00 p.m., New York City time, on the New York Business Day next preceding such
Time of Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 4, "New York Business Day"
shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
5. The Company and Holding, jointly and severally, agree with each of
the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if
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applicable, such earlier time as may be required by Rule 430A(a)(3) under
the Act; to make no further amendment or any supplement to the Registration
Statement or Prospectus which shall be disapproved by you promptly after
reasonable notice thereof; to advise you, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement has
been filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish you with copies thereof;
to advise you, promptly after it receives notice thereof, of the issuance
by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus, of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
prospectus or suspending any such qualification, promptly to use its best
efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with
such laws so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be necessary to complete the
distribution of the Shares, 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;
(c) Prior to 10:00 A.M. New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to
furnish the Underwriters with copies of the Prospectus in New York City in
such quantities as you may reasonably request, and, if the delivery of a
prospectus is required at any time prior to the expiration of nine months
after the time of issue of the Prospectus in connection with the offering
or sale of the Shares and if at such time any event shall have occurred as
a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Prospectus in order
to comply with the Act, to notify you and upon your request to prepare and
furnish without charge to each Underwriter and to any dealer in securities
as many copies as you may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct
such statement or omission or effect such compliance, and in case any
Underwriter is required to deliver a prospectus in connection with sales of
any of the Shares at any time nine months or more
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after the time of issue of the Prospectus, upon your request but at the
expense of such Underwriter, to prepare and deliver to such Underwriter as
many copies as you may request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations thereunder (including, at the option of the Company,
Rule 158);
(e) During the period beginning from the date hereof and continuing to
and including the date 180 days after the date of the Prospectus, the
Company and Holding will not offer, sell, contract to sell or otherwise
dispose of, except as provided hereunder and under the International
Underwriting Agreement, any securities of the Company or Holding that are
substantially similar to the Shares, including but not limited to any
securities that are convertible into or exchangeable for, or that represent
the right to receive, Stock or Class B Stock or any such substantially
similar securities (other than pursuant to employee stock option plans
existing on, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, the date of this Agreement), or
file any registration statement under the Act (other than a registration
statement on Form S-8 covering Stock that may issued pursuant to the
exercise of options under Holding's option plan described in the
Prospectus, or, registration statements on Form S-1 covering resales of
Stock that may be issued to persons or entities receiving Stock or
Membership Units in connection with the Xxxxxx, Falcon and Bresnan
acquisitions, as described in the Prospectus) or enter into hedging
transactions with respect to any of the foregoing, without your prior
written consent, except that this Section 5(e) shall not prevent the
Company or Holding from offering and selling convertible debt, convertible
preferred or other equity securities to finance a portion of the purchase
price for Bresnan Communications Limited Partnership;
(f) To furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' and members' equity and cash flows of
the Company and its consolidated subsidiaries certified by independent
public accountants) and, as soon as practicable after the end of each of
the first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the effective date of the Registration Statement), to
make available to its stockholders consolidated summary financial
information of the Company and its subsidiaries for such quarter in
reasonable detail;
(g) During a period of three years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders of the
Company; and to deliver to you as soon as they are available, copies
of any reports and financial statements furnished to or filed with the
Commission or
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any national securities exchange on which any class of securities of the
Company is listed;
(h) To use the net proceeds received by it from the sale of the Shares
pursuant to this Agreement and the International Underwriting Agreement in
the manner specified in the Prospectus under the caption "Use of Proceeds";
(i) To use its best efforts to have the Shares approved for quotation
on the Nasdaq National Market ("Nasdaq");
(j) To file with the Commission such information on Form 10-Q or Form
10-K as may be required by Rule 463 under the Act; and
(k) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of this
Agreement; and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or
give irrevocable instructions for the payment of such fee pursuant to Rule
111(b) under the Act.
6. The Company and Holding, jointly and severally, covenant and agree
with the several Underwriters that the Company and Holding, jointly and
severally, will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's and Holding's counsel and
accountants in connection with the registration of the Shares under the Act and
all other expenses in connection with the preparation, printing and filing of
the Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the International Underwriting
Agreement, the Agreement between Syndicates, the Selling Agreement, the Blue Sky
Memorandum, closing documents (including compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Shares; (iii) all expenses in connection with the qualification of the Shares
for offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky survey;
(iv) all fees and expenses in connection with listing the Shares on Nasdaq; (v)
the filing fees incident to, and the fees and disbursements of counsel for the
Underwriters in connection with, securing any required review by the National
Association of
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Securities Dealers, Inc. of the terms of the sale of the Shares; (vi) the cost
of preparing stock certificates; (vii) the cost and charges of any transfer
agent or registrar; and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, and Sections 8 and 11 hereof, the Underwriters will
pay all of their own costs and expenses, including the fees of their counsel,
stock transfer taxes on resale of any of the Shares by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to
be delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and Holding herein are, at and as of such Time of Delivery, true and
correct, the condition that the Company and Holding shall have performed all of
their obligations hereunder theretofore to be performed, and the following
additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing
by the rules and regulations under the Act and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement; no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction;
(b) Debevoise & Xxxxxxxx, counsel for the Underwriters, shall have
furnished to you such opinion (a draft of such opinion is attached as Annex
II(a) hereto), dated such Time of Delivery, with respect to the matters
covered in paragraphs (i), (ii), (v), (viii) (as to the Stock and the
Membership Units) and (x) of subsection (c) below as well as such other
related matters as you may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters;
(c) Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, counsel for the Company and
Holding, shall have furnished to you their written opinion (a draft of such
opinion is attached as Annex II(b) hereto), dated such Time of Delivery, in
form and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware; Holding has been duly formed and is validly existing as a
limited liability company in good standing
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under the laws of the State of Delaware; and each of the Company and
Holding has power and authority (corporate or other) to own or lease
its properties and conduct its business as described in the Prospectus
and to execute, deliver and perform its obligations under this
Agreement;
(ii) The Company has an authorized capitalization as set forth
under the caption "Capitalization" in the Prospectus and all of the
issued shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable,
and the Shares conform in all material respects to the description
thereof contained in the Prospectus; the Firm Shares, when issued and
delivered, against payment thereof as contemplated by this Agreement,
will be duly and validly authorized and issued, fully paid and
non-assessable;
(iii) Holding has an authorized capitalization as set forth in
the Prospectus, and all of the issued and outstanding Membership Units
have been duly and validly authorized and issued and are fully paid
and non-assessable, and the Membership Units conform to the
description thereof contained in the Prospectus;
(iv) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company, Holding or any of Holding's
subsidiaries is a party or of which any property of the Company,
Holding or any of Holding's subsidiaries is the subject which, if
determined adversely to the Company, Holding or any of Holding's
subsidiaries, would, individually or in the aggregate, have a Material
Adverse Effect; and, to the best of such counsel's knowledge and other
than as set forth in the Prospectus, no such proceedings are overtly
threatened by governmental authorities or by others;
(v) This Agreement and the International Underwriting Agreement
have been duly authorized, executed and delivered by each of the
Company and Holding;
(vi) The issue and sale of the Shares being delivered at such
Time of Delivery by the Company and the compliance by the Company and
Holding with all of the provisions of this Agreement and the
International Underwriting Agreement and the consummation of the
transactions herein and therein contemplated will not, to the best of
such counsel's knowledge, result in any violation of the provisions of
the Restated Certificate of Incorporation or Bylaws of the Company or
the Certificate of Formation or Amended and Restated Limited Liability
Company Agreement of Holding, or any Federal or New York statute or
any order, rule or regulation of any Federal or New York State court
or governmental agency or body having jurisdiction over the Company,
Holding or Holding's subsidiaries or any of their properties;
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(vii) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
referred to in paragraph (vi) is required for the issue and sale of
the Shares or the consummation by the Company and Holding of the
transactions contemplated by this Agreement and the International
Underwriting Agreement, except the registration under the Act of the
Shares, and such consents, approvals, authorizations, registrations or
qualifications as have been obtained or may be required under state or
foreign securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters and the
International Underwriters;
(viii) The statements set forth in the Prospectus under the
captions "Description of Certain Indebtedness," "Description of
Capital Stock and Membership Units," "Shares Eligible For Future
Sale," and "Certain United States Tax Consequences for Non-United
States Holders," insofar as they purport to describe the provisions of
the laws, documents and arrangements referred to therein, fairly
summarize such laws and documents in all material respects;
(ix) After giving effect to the offering and sale of the Shares,
neither the Company nor Holding will be an "investment company" or an
entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act; and
(x) The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to such
Time of Delivery (other than the financial statements and related
notes and schedules therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder,
although they do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those referred to
in the opinion;
Such counsel shall also state as follows: We have not
independently verified the accuracy, completeness or fairness of the
statements made or included in the Registration Statement or the
Prospectus, except as described in specified paragraphs of the
opinion. However, in connection with the preparation by the Company of
the Registration Statement and the Prospectus, we participated in
various discussions and meetings with the Underwriters'
representatives, officers and other representatives of the Company,
and representatives of the Company's independent public accountants at
which the contents of the Registration Statement and the Prospectus
were discussed. No information has come to our attention which causes
us to conclude that (i) the Registration Statement at the time it
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, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the date hereof
contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not
misleading (except, in each case in respect of the Registration
Statement or the Prospectus or any supplement thereto, that we express
no view as to financial statements and notes thereto, financial
schedules and other financial information included therein and to the
exhibits to the Registration Statement).
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(d) Xxxxxx Xxxx, Esq., General Counsel of the Company and Holding,
shall have furnished to you his written opinion (a draft of such opinion is
attached as Annex II(c) hereto), dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) Each subsidiary of Holding listed on a schedule attached to
such counsel's opinion (the "Charter Subsidiaries") has been duly
incorporated or formed, as the case may be, and is validly existing as
a corporation or limited liability company, as the case may be, in
good standing under the laws of its jurisdiction of incorporation or
formation; and all of the issued shares of capital stock or limited
liability company interests, as the case may be, of each Charter
Subsidiary have been duly and validly authorized and issued, are fully
paid and non-assessable and are owned directly or indirectly by
Holding, free and clear of all liens, encumbrances, equities or claims
(such counsel being entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect to matters of
fact upon certificates of officers of Holding or its subsidiaries);
(ii) Each of the Company, Holding and the Charter Subsidiaries
has been duly qualified as a foreign corporation or limited liability
company, as the case may be, for the transaction of business and is in
good standing under the laws of each jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification, and is subject to no liability or disability by reason
of failure to be so qualified in any such jurisdiction, except where
the failure to be so qualified would not, individually and in the
aggregate, have a Material Adverse Effect (such counsel being entitled
to rely in respect of the opinion in this clause upon opinions of
local counsel and in respect of matters of fact upon certificates of
officers of the Company, Holding or Holding's subsidiaries);
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(iii) The issue and sale of the Shares being delivered at such
Time of Delivery by the Company and the compliance by the Company and
Holding with all of the provisions of this Agreement and the
International Underwriting Agreement and the consummation of the
transactions herein and therein contemplated will not, to the best of
his knowledge, result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement, lease, license, permit or other
agreement or instrument to which the Company, Holding or any of
Holding's subsidiaries is a party or by which the Company, Holding or
any of Holding's subsidiaries is bound or to which any of the
properties or assets of the Company, Holding or any of Holding's
subsidiaries is bound or to which any of the property or assets of the
Company, Holding or any of Holding's subsidiaries is subject other
than such breaches, violations or defaults which would not,
individually and in the aggregate, have a Material Adverse Effect and
would not have the effect of preventing the Company or Holding from
performing any of their respective obligations under this Agreement,
nor will such action result in any violation of any statute or any
order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the Company,
Holding or any of Holding's subsidiaries or any of their properties;
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(iv) None of the Company, Holding or any of Holding's
subsidiaries is (i) in violation of its certificate of incorporation,
by-laws, certificate of formation, limited liability company agreement
or other organizational document, as the case may be, (ii) in default
in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement, lease, license, permit or other
agreement or instrument to which it is a party or by which it or any
of its properties may be bound, or (iii) in violation of the terms of
any franchise agreement, or any law, statute, rule or regulation or
any judgment, decree or order, in any such case, of any court or
governmental or regulatory agency or other body having jurisdiction
over the Company, Holding or Holding's subsidiaries or any of their
properties or assets, including, without limitation, the Cable Acts or
any order, rule or regulation of the FCC, except, in the case of
clauses (ii) and (iii), such as would not, individually and in the
aggregate, have a Material Adverse Effect; and
(v) To the best knowledge of such counsel and other than as set
forth in the Prospectus, there are no persons with registration or
similar rights to have any securities of the Company or Holding
registered pursuant to the Registration Statement or otherwise
registered under the Act, and there are no outstanding options,
warrants or other rights calling for the issuance of, and no
commitments, plans or arrangements to issue, any securities of the
Company or Holding or any security convertible into or exchangeable
for securities of the Company or Holding;
(e) Xxxx, Raywid & Xxxxxxxxx, L.L.P., special regulatory counsel to
the Company and Holding, shall have furnished to you their written opinion
(a draft of such opinion is attached as Annex II(d) hereto), dated such
Time of Delivery, in form and substance reasonably satisfactory to you, to
the effect that:
(i) The issue and sale of the Shares being delivered at such Time
of Delivery by the Company and the compliance by the Company and
Holding with all of the provisions of this Agreement and the
International Underwriting Agreement and the consummation of the
transactions herein and therein contemplated do not and will not
contravene the Cable Acts or any order, rule or regulation of the FCC
to which the Company, Holding or any of Holding's subsidiaries or any
of their properties is subject;
(ii) To the best of such counsel's knowledge, no consent,
approval, authorization or order of, or registration, qualification or
filing with, the FCC is required under the Cable Acts or any order,
rule or regulation of the FCC in connection with the issue and sale of
the Shares being delivered at such Time of Delivery and the compliance
by the Company and Holding with all of the provisions of this
Agreement and the International
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Underwriting Agreement and the consummation of the transactions herein
and therein contemplated;
(iii) The statements set forth in the Prospectus in the "Risk
Factors" section under the subheading "Risks Related to Regulatory and
Legislative Matters" and in "Regulation and Legislation," insofar as
they constitute summaries of laws referred to therein, concerning the
Cable Acts and the published rules, regulations and policies
promulgated by the FCC thereunder, fairly summarize the matters
described therein;
(iv) To the knowledge of such counsel based solely upon its
review of publicly available records of the FCC and operational
information provided by the Company's, Holding's and Holding's
subsidiaries' management, the Company, Holding and Holding's
subsidiaries hold all FCC licenses for cable antenna relay services
necessary to conduct the business of the Company, Holding and
Holding's subsidiaries as currently conducted, except to the extent
the failure to hold such FCC licenses would not, individually and in
the aggregate, be reasonably expected to have a Material Adverse
Effect;
(v) Except as disclosed in the Prospectus and except with respect
to rate regulation matters, and general rulemakings and similar
matters relating generally to the cable television industry, to such
counsel's knowledge, based solely upon its review of the publicly
available records of the FCC and upon inquiry of the Company's,
Holding's and Holding's subsidiaries' management, during the time the
cable systems of the Company, Holding and Holding's subsidiaries have
been owned by the Company, Holding and Holding's subsidiaries (A)
there has been no adverse FCC judgment, order or decree issued by the
FCC relating to the ongoing operations of any of the Company, Holding
or Holding's subsidiaries that has had or could reasonably be expected
to have a Material Adverse Effect; and (B) there are no actions,
suits, proceedings, inquiries or investigations by or before the FCC
pending or threatened in writing against or specifically affecting the
Company, Holding or any of Holding's subsidiaries or any cable system
of the Company, Holding or any of Holding's subsidiaries which could,
individually or in the aggregate, be reasonably expected to result in
a Material Adverse Effect;
(f) Xxxxxxxx, Xxxxxx & Finger, special Delaware counsel to the
Company and Holding, shall have furnished to you their written opinion,
dated such Time of Delivery, confirming their written opinion, dated
October 18, 1999, previously delivered to you (a copy of the October 18th
opinion is attached as Annex II(e) hereto);
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(g) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of
any post-effective amendment to the Registration Statement filed
subsequent to the date of this Agreement and also at each Time of
Delivery, each of Xxxxxx Xxxxxxxx LLP, KPMG LLP, Ernst & Young LLP and
PricewaterhouseCoopers LLP shall have furnished to you a letter or
letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to you, to the effect set forth in Annex I hereto
(the executed copy of the letters delivered prior to the execution of this
Agreement are attached as Annex I(a) hereto and a draft of the form of
letters to be delivered on the effective date of any post-effective
amendment to the Registration Statement and as of each Time of Delivery is
attached as Annex I(b) hereto);
(h) (i) None of the Company, Holding or any of Holding's subsidiaries
shall have sustained since the date of the latest audited financial
statements included in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Prospectus, and
(ii) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock,
limited liability company interests or long-term debt of the Company,
Holding or any of Holding's subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' or members' equity, or
results of operations of the Company, Holding and Holding's subsidiaries,
otherwise than as set forth or contemplated in the Prospectus, the effect
of which, in any such case described in clause (i) or (ii), is in the
judgment of the Representatives so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the
terms and in the manner contemplated in the Prospectus;
(i) On or after the date hereof (i) no downgrading shall have occurred
in the rating accorded the debt securities of any of Holding's subsidiaries
by any "nationally recognized statistical rating organization", as that
term is defined by the Commission for purposes of Rule 436(g)(2) under the
Act, and (ii) no such organization shall have publicly announced that it
has under surveillance or review, with possible negative implications, its
rating of any of the debt securities of any of Holding's subsidiaries;
(j) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on Nasdaq; (ii) a suspension or material limitation in
trading in the Company's securities on Nasdaq; (iii) a general moratorium
on commercial banking activities declared by either Federal or New York
State authorities; or (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war, if the effect of any such event specified in
this clause (iv) in the judgment of the Representatives makes it
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impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the
terms and in the manner contemplated in the Prospectus;
(k) The Shares to be sold at such Time of Delivery shall have been
duly approved for quotation on Nasdaq;
(l) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from the persons and entities named in
Schedule II hereto, substantially to the effect set forth in Subsection
5(e) hereof in form and substance satisfactory to you;
(m) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement;
(n) The Company and Holding shall have furnished or caused to be
furnished to you at such Time of Delivery certificates of officers of the
Company and Holding satisfactory to you as to the accuracy of the
representations and warranties of the Company and Holding herein at and as
of such Time of Delivery, as to the performance by the Company and Holding
of all of their obligations hereunder to be performed at or prior to such
Time of Delivery, as to the matters set forth in subsections (a) and (h) of
this Section and as to such other matters as you may reasonably request;
(o) Xx. Xxxx X. Xxxxx, through Vulcan III, shall have purchased
additional Membership Units in Holding for a purchase price of $750 million
at a price per membership unit equal to the net initial public offering
price for the Shares;
(p) The Amended and Restated Limited Liability Company Agreement of
Holding shall have been duly executed and delivered by the parties thereto;
(q) Charter Investment shall have assigned to the Company all of its
rights and obligations under the Amended and Restated Management Agreement,
dated March 17, 1999, between Charter Communications Operating, LLC and
Charter Investment; the Company and Holding shall have entered into a
management agreement, as described in the Prospectus; and the Company and
Charter Investment shall have entered into a services agreement, as
described in the Prospectus;
(r) The executive officers identified in the Prospectus as executive
officers of the Company shall have been duly appointed as officers of the
Company and the Company shall
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25
have assumed all obligations of Charter Investment under each of their
employment agreements, if any; and
(s) Charter Investment shall have assigned to Holding all of its
rights and obligations under Charter Investment's agreements described in
the Prospectus as being assigned to Holding.
8. (a) The Company and Holding, jointly and severally, will indemnify
and hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company and Holding shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through Xxxxxxx, Sachs &
Co. expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company and
Holding against any losses, claims, damages or liabilities to which the Company
and Holding may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through Xxxxxxx, Xxxxx & Co. expressly for use therein; and will reimburse the
Company and Holding for any legal or other expenses reasonably incurred by the
Company and Holding in connection with investigating or defending any such
action or claim as such expenses are incurred.
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26
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. Any indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all indemnified
parties. The Company and Holding shall not be required to indemnify the
Underwriters for any amounts paid or payable by the Underwriters in the
settlement of any action, proceeding or investigation without the written
consent of the Company to such settlement, which consent shall not be
unreasonably withheld. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim 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.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and Holding on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under Subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified
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27
party in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company and Holding on the one hand
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and Holding on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Shares purchased under this
Agreement (before deducting expenses) received by the Company and Holding bear
to the total underwriting discounts and commissions received by the Underwriters
with respect to the Shares purchased under this Agreement, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and Holding on
the one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, Holding and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this subsection (d)
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
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include 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 subsection (d), 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 which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company and Holding under this Section 8
shall be in addition to any liability which the Company and Holding may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section 8 shall be in addition to
any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company and Holding (including any person who, with his or her consent, is named
in the Registration Statement as about to become a director of the Company) and
to each person, if any, who controls the Company and Holding within the meaning
of the Act.
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28
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
satisfactory to you to purchase such Shares on such terms. In the event that,
within the respective prescribed periods, you notify the Company that you have
so arranged for the purchase of such Shares, or the Company notifies you that it
has so arranged for the purchase of such Shares, you or the Company shall have
the right to postpone such Time of Delivery for a period of not more than seven
days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Shares to be purchased at such Time of Delivery, then the Company shall have
the right to require each non-defaulting Underwriter to purchase the number of
Shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Shares to be purchased at such Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter, the Company or Holding, except for the expenses to
be borne by the Company, Holding and the Underwriters as provided in Section 6
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29
hereof and the indemnity and contribution agreements in Section 8 hereof; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, Holding and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, Holding or any officer or director or controlling
person of the Company or Holding, and shall survive delivery of and payment for
the Shares.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, the Company and Holding shall not then be under any liability to any
Underwriter except as provided in Sections 6 and 8 hereof; but if, for any other
reason, any Shares are not delivered by or on behalf of the Company as provided
herein, the Company and Holding will reimburse the Underwriters through you for
all out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Shares not so delivered,
but the Company and Holding shall then be under no further liability to any
Underwriter in respect of the Shares not so delivered except as provided in
Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Xxxxxxx, Sachs & Co. on behalf of you as the
representatives.
All statements, requests, notices and agreements hereunder shall be
in writing, and if to the Underwriters shall be delivered or sent by mail, telex
or facsimile transmission to you as the representatives in care of Xxxxxxx,
Xxxxx & Co., 00 Xxx Xxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Registration Department; and if to the Company or Holding shall be delivered or
sent by mail, telex or facsimile transmission to the address of the Company set
forth in the Registration Statement, Attention: Secretary; provided, however,
that any notice to an Underwriter pursuant to Section 8(c) hereof shall be
delivered or sent by mail, telex or facsimile transmission to such Underwriter
at its address set forth in its Underwriters' Questionnaire, or telex
constituting such Questionnaire, which address will be supplied to the Company
by you upon request. Any such statements, requests, notices or agreements shall
take effect at the time of receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company, Holding and, to the extent provided
in Sections 8 and 10 hereof, the
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30
officers and directors of the Company and Holding and each person who controls
the Company, Holding or any Underwriter, and their respective heirs, executors,
administrators and successors, and no other person shall acquire or have any
right under or by virtue of this Agreement. No purchaser of any of the Shares
from any Underwriter shall be deemed a successor or assign by reason merely of
such purchase.
14. Time shall be of the essence of this Agreement. As used herein,
the term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
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31
If the foregoing is in accordance with your understanding, please
sign and return to us twelve counterparts hereof, and upon the acceptance hereof
by you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement between each of the Underwriters,
the Company and Holding. It is understood that your acceptance of this letter on
behalf of each of the Underwriters is pursuant to the authority set forth in a
form of Agreement among Underwriters (U.S. Version), the form of which shall be
submitted to the Company for examination upon request, but without warranty on
your part as to the authority of the signers thereof.
Very truly yours,
Charter Communications, Inc.
By: _____________________________
Name:
Title:
Charter Communications Holding Company, LLC
By: _____________________________
Name:
Title:
Accepted as of the date hereof:
Xxxxxxx, Sachs & Co.
Bear, Xxxxxxx & Co. Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxxx Xxxxx Barney Inc.
X. X. Xxxxxxx & Sons, Inc.
X. X. Xxxx & Company
By: _____________________________
Name:
Title:
For themselves and as representatives of the several Underwriters.
32
SCHEDULE I
NUMBER OF OPTIONAL
TOTAL NUMBER SHARES TO BE
OF PURCHASED IF
FIRM SHARES MAXIMUM OPTION
UNDERWRITER TO BE PURCHASED EXERCISED
----------- --------------- ---------
Xxxxxxx, Xxxxx & Co....................................................
Bear, Xxxxxxx & Co. Inc................................................
Xxxxxx Xxxxxxx & Co. Incorporated......................................
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation....................
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated.....................
Xxxxxxx Xxxxx Barney Inc...............................................
X. X. Xxxxxxx & Sons, Inc..............................................
X. X. Xxxx & Company...................................................
[Names of other Underwriters]..........................................
Total...........................................................
33
SCHEDULE II
Charter Investment, Inc.
Vulcan Cable III Inc.
Xxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxx
Xxxxx X. Xxxxxxx
Xxxx Xxx Xxxxx
Xxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxx
Xxxx X. Kalkwalf
Xxxxx X. Xxxxx
Xxxxx X. XxXxxx
Xxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxx
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxx
Xxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxxx, Xx.
J. Xxxxxxxxx Xxxxxx
Xxxx X. Xxxxxxxxx
Xxxxx Xxxxx
Xxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxxx III
Xxxxx X. Xxxxxx
Xxxxxxx Xxxxxxx
Xxxxx X. Xxxxxxxxx III
Xxxx X. Xxx
Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx Xxxxxxxxxx
Xxxx Xxxxxxxxxx
Xxxxxx X. Xxxx
Xxxxxxxx X. Xxxxx
Xxxx Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxx, Xx.
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34
Xxxxx X. XxXxxxxxxx
Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxxx
Xxxx X. Xxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxx
Xxxx X. XxXxxxxx
Xxx X. Xxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxx
Xxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxxx X. XxXxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxxxx X. XxXxxxxxx
Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxx
Xxxx X. Xxxxxx
Xxxxxx X. Carnicia
Xxxxx X. Xxxx
Xxxxx X. Xxxxx
35
ANNEX I
FORM OF COMFORT LETTER
Pursuant to Section 7(d) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
the Company, Holding and Holding's subsidiaries within the meaning of the Act
and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial forecasts
and/or pro forma financial information) examined by them and included in the
Prospectus or the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Act and the related
published rules and regulations thereunder; and, if applicable, they have made a
review in accordance with standards established by the American Institute of
Certified Public Accountants of the unaudited consolidated interim financial
statements, selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter, as indicated
in their reports thereon, copies of which have been furnished separately to the
representatives of the Underwriters (the "Representatives");
(iii)They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus as indicated in
their reports thereon copies of which [have been separately furnished to the
Representatives][are attached hereto] and on the basis of specified procedures
including inquiries of officials of the Company who have responsibility for
financial and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i) below
comply as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations, nothing
came to their attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the related
published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company for the
five most recent fiscal years included in the Prospectus agrees with the
corresponding amounts (after restatements where applicable) in the audited
consolidated financial statements for such five fiscal years which were
36
included or incorporated by reference in the Company's Annual Reports on Form
10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on the
basis of limited procedures specified in such letter nothing came to their
attention as a result of the foregoing procedures that caused them to believe
that this information does not conform in all material respects with the
disclosure requirements of Items 301, 302, 402 and 503(d), respectively, of
Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards, consisting
of a reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and Holding and its subsidiaries, inspection of the
minute books of the Company and Holding and its subsidiaries since the date of
the latest audited financial statements included in the Prospectus, inquiries of
officials of the Company and Holding and its subsidiaries responsible for
financial and accounting matters and such other inquiries and procedures as may
be specified in such letter, nothing came to their attention that caused them to
believe that:
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with
the basis for the corresponding amounts in the audited consolidated
financial statements included in the Prospectus;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived any unaudited condensed
financial statements referred to in clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in clause (B) were not determined on a
basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus;
37
(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the pro
forma adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest financial statements
included in the Prospectus) or any increase in the consolidated
long-term debt of the Company, Holding and Holding's subsidiaries, or
any decreases in consolidated net current assets or stockholders'
equity or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each case
as compared with amounts shown in the latest balance sheet included
in the Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may occur
or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in clause (E) there were any decreases in consolidated net
revenues or operating profit or the total or per share amounts of
consolidated net income or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Representatives, except in each case for
decreases or increases which the Prospectus discloses have occurred
or may occur or which are described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and (vi)
above, they have carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards, with
respect to certain amounts, percentages and financial information specified by
the Representatives, which are derived from the general accounting records of
the Company, Holding and Holding's subsidiaries, which appear in the Prospectus,
or in Part II of, or in exhibits and schedules to, the Registration Statement
specified by the Representatives, and have compared certain of such amounts,
percentages and financial information with the accounting records of the
Company, Holding and Holding's subsidiaries and have found them to be in
agreement.
