Exhibit 1.1
173,913,000 SHARES
GENUITY INC.
Class A Common Stock
(par value $0.01 per share)
UNDERWRITING AGREEMENT
., 2000
., 2000
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Xxxxx Barney Inc.
Bear, Xxxxxxx & Co. Inc.
Chase Securities Inc.
Credit Suisse First Boston Corporation
Deutsche Bank Securities, Inc.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Xxxxxxx, Sachs & Co.
X.X. Xxxxxx Securities Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
UBS Warburg LLC
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
c/o Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
Genuity Inc., a Delaware corporation (the "COMPANY"), proposes to
issue and sell to the several Underwriters named in Schedule I hereto (the
"UNDERWRITERS") 173,913,000 shares of its Class A Common Stock, par value $0.01
per share (the "FIRM SHARES").
The Company also proposes to issue and sell to the several
Underwriters not more than an additional 26,087,000 shares of its Class A Common
Stock, par value $0.01 per share (the "ADDITIONAL SHARES"), if and to the extent
that Xxxxxx Xxxxxxx & Co. Incorporated and Xxxxxxx Xxxxx Barney Inc. shall have
determined to exercise, on behalf of the Underwriters, the right to purchase
such shares of Class A Common Stock granted to the Underwriters in Section 2
hereof. The Firm Shares and the Additional Shares are hereinafter collectively
referred to as the "SHARES". The shares of Class A Common Stock, par value
$0.01 per share, of the Company to be outstanding after giving effect to the
sales contemplated hereby are hereinafter referred to as the "CLASS A SHARES".
The outstanding shares of Class B Common Stock, par value $0.01 per share, of
the Company are hereinafter referred to
as the "Class B Shares". The Class A Shares and the Class B Shares are
hereinafter collectively referred to as the "COMMON STOCK".
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement relating to the Shares. The registration
statement as amended at the time it becomes effective, including the information
(if any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), is hereinafter referred to as the "REGISTRATION
STATEMENT"; the prospectus in the form first used to confirm sales of Shares is
hereinafter referred to as the "PROSPECTUS". If the Company has filed an
abbreviated registration statement to register additional Class A Shares,
pursuant to Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION
STATEMENT"), then any reference herein to the term "Registration Statement"
shall be deemed to include such Rule 462 Registration Statement.
Xxxxxxx Xxxxx Xxxxxx Inc. has agreed to reserve a portion of the
Shares to be purchased by it under this Agreement for sale to the Company's
directors, officers and employees (collectively, "PARTICIPANTS"), as set forth
in the Prospectus under the heading "Underwriting" (the "DIRECTED SHARE
PROGRAM"). The Shares to be sold by Xxxxxxx Xxxxx Barney Inc. and its
affiliates pursuant to the Directed Share Program are referred to hereinafter as
the "DIRECTED SHARES". Any Directed Shares not orally confirmed for purchase by
any Participants by the end of the business day on which this Agreement is
executed will be offered to the public by the Underwriters as set forth in the
Prospectus.
It is understood and agreed that Xxxxxx Xxxxxxx & Co. Incorporated and
Xxxxxxx Xxxxx Barney Inc. are joint book-running managers for the offering and
any determinations or other actions to be made under this agreement by you or by
the representatives of the Underwriters shall require the concurrence of both
Xxxxxx Xxxxxxx & Co. Incorporated and Xxxxxxx Xxxxx Barney Inc.
Prior to the execution and delivery of this Agreement, the Company has
effected a recapitalization by
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amending and restating its Certificate of Incorporation in the form filed as an
exhibit to the Registration Statement (the "RESTATED CERTIFICATE") and by the
Company and GTE Corporation ("GTE") having taken the actions contemplated under
the caption "Recapitalization" in Note 14 of the Notes to the Financial
Statements included in the Prospectus (the "RECAPITALIZATION").
GTE and Xxxx Atlantic Corporation ("XXXX ATLANTIC") are parties to the
Merger Agreement, dated as of July 27, 1998, as a result of which GTE will
become a wholly owned subsidiary of Xxxx Atlantic (the "MERGER") following the
sale of the Firm Shares contemplated hereby and satisfaction or waiver of other
closing conditions, which is expected to occur promptly following the Closing
Date (as defined in Section 4 hereof).
1. Representations and Warranties. The Company represents and
warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or, to the knowledge
of the Company, threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, (ii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all material
respects with the Securities Act and the applicable rules and regulations
of the Commission thereunder and (iii) the Prospectus, as of its date, does
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in
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this paragraph do not apply to statements or omissions in the Registration
Statement or the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through
you expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(d) The Recapitalization has become effective. The Company owns,
directly or through its wholly owned subsidiaries, all the assets and
businesses described in the Financial Statements included in the
Prospectus.
(e) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole. All of the issued shares of capital stock of each subsidiary of the
Company have been duly and validly authorized and issued, are fully paid
and non-assessable and are owned directly by the Company, free and clear of
all liens, encumbrances, equities or claims.
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(f) This Agreement has been duly authorized, executed and delivered by
the Company.
(g) Each of the (i) Purchase, Resale and Marketing Agreement, dated .,
2000, between Xxxx Atlantic and the Company, (ii) Intellectual Property
Ownership and Cross License Agreement, dated ., 2000, between GTE Service
Corporation ("GTE SERVICE") and the Company, (iii) Software Development and
Technical Services Agreement, dated ., 2000, between GTE Service and the
Company, (iv) Software License Agreement, dated ., 2000, between GTE
Service and the Company, (v) Agreement for Transition Services, dated .,
2000, between GTE Service and the Company, (vi) Agreement for Information
Technology Transition Services, dated ., 2000, between GTE Service and the
Company, (vi) Master Services Agreement for Monitoring and Services, dated
September 14, 1999, between GTE Network Services and the Company, as
amended, (vii) Registration Rights Agreement, dated ., 2000, between GTE
and the Company and (viii) Subscription and Recapitalization Agreement,
dated ., 2000, between GTE and the Company, and (ix) Asset Transfer
Agreement, dated , 2000, between GTE and the Company (collectively, the
"INTERCOMPANY AGREEMENTS") has been duly authorized, executed and delivered
by the Company, is in full force and effect, and constitutes a valid and
legally binding obligation of the Company enforceable in accordance with
its terms, subject to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights and to
general equity principles. Each of the transactions contemplated in the
Asset Transfer Agreement, dated ., 2000, between GTE and the Company, have
been consummated in accordance with the terms of such agreement.
(h) The (i) Network Services Agreement, dated December 31, 1999,
between America Online, Inc. and BBN Corporation and (ii) Master Agreement
for Data Communications, dated January 8, 2000, between AOL Japan, Inc. and
GTE Internetworking International Corporation (collectively, the "AOL
AGREEMENTS") are in full force and effect and are the only agreements
between the Company or any of its subsidiaries, on the
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one hand, and America Online, Inc. or any of its subsidiaries, on the other
hand. Neither the Company nor any of its subsidiaries is in breach of or in
default under the AOL Agreements, nor has the Company or any of its
subsidiaries received notice of any breach of or default under the AOL
Agreements.
(i) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(j) The Class B Shares have been duly authorized and are validly
issued, fully paid and non-assessable and are owned directly by GTE, free
and clear of all liens, encumbrances, equities or claims. There are no
Class A Shares outstanding prior to the issuance of the Shares.
(k) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such Shares will
not be subject to any preemptive or similar rights.
(l) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement and the
Intercompany Agreements will not contravene any provision of applicable law
or the certificate of incorporation or by-laws of the Company or any
agreement or other instrument binding upon the Company or any of its
subsidiaries that is material to the Company and its subsidiaries, taken as
a whole, or any judgment, order or decree of any governmental body, agency
or court having jurisdiction over the Company or any subsidiary (including,
without limitation, the Federal Communications Commission (the "FCC")), and
no consent, approval, authorization or order of, or qualification with, any
governmental body or agency (including, without limitation, the FCC) is
required for the performance by the Company of its obligations under this
Agreement and the Intercompany Agreements, except such as may be required
by state or foreign securities or Blue Sky laws in connection with the
offer and sale of the Shares.
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(m) The consummation of the Merger has been approved by the FCC
pursuant to an order [that has become final and non-appealable] and the
compliance with the conditions of such order will not have a material
adverse effect on the Company and its subsidiaries, taken as a whole,
except as described in the Prospectus.
(n) There are no material intercompany rights, obligations or other
arrangements between the Company or its subsidiaries, on the one hand, and
GTE or Xxxx Atlantic or their respective subsidiaries, on the other hand,
except for the Intercompany Agreements and other matters described in the
Prospectus.
(o) There has not occurred any material adverse change, or any
development reasonably likely to result in a material adverse change, in
the condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).
(p) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(q) Each preliminary prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in
all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
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(r) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, will not be required to register as an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
(s) The Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(t) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(u) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the
Company or to require the Company to include such securities with the
Shares registered pursuant to the Registration Statement.
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(v) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (1) the Company and
its subsidiaries have not incurred any material liability or obligation,
direct or contingent, or entered into any material transaction, in each
case other than in the ordinary course of business; (2) the Company has not
purchased any of its outstanding capital stock, nor declared, paid or
otherwise made any dividend or distribution of any kind on its capital
stock; and (3) there has not been any material change in the capital stock,
short-term debt or long-term debt of the Company and its subsidiaries,
except in each case as described in the Prospectus.
(w) Neither the Company nor any of its subsidiaries owns any real
property. The Company and its subsidiaries have good and marketable title
to all personal property owned by them which is material to the business of
the Company and its subsidiaries, 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 personal property and do
not interfere with the use made and proposed to be made of such personal
property by the Company and its subsidiaries; and any real property,
buildings, equipment and fiber optic capacity held under lease or
indefeasible right of use by the Company and its subsidiaries are held by
them under valid, subsisting and enforceable leases and indefeasible rights
of use with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such property, buildings, equipment
and fiber optic capacity by the Company and its subsidiaries, in each case
except as described in the Prospectus.
(x) The Company and its subsidiaries own or have the right to use all
material patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names currently employed by them in
connection with the business now operated by them, and neither the Company
nor any of its subsidiaries has received any written
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notice of infringement of or conflict with asserted rights of others with
respect to any of the foregoing which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(y) No material labor dispute with the employees of the Company or any
of its subsidiaries exists, except as described in the Prospectus, or, to
the knowledge of the Company, is imminent; and the Company is not aware of
any existing, threatened or imminent labor disturbance by the employees of
any of its principal suppliers, manufacturers or contractors that could
have a material adverse effect on the Company and its subsidiaries, taken
as a whole.
(z) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are, in the Company's reasonable judgment, prudent and
customary in the businesses in which they are engaged; neither the Company
nor any of its subsidiaries has been refused any insurance coverage sought
or applied for; and neither the Company nor any of its subsidiaries has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business at a
cost that would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, except as described in the Prospectus.
(aa) No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock or from repaying to the
Company any loans or advances to such subsidiary from the Company or any
other subsidiary of the Company, in each case except as described in the
Prospectus.
(bb) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or
foreign regulatory
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authorities necessary to conduct their respective businesses, except where
the failure to possess any such certificate, authorization or permit would
not have a material adverse effect on the Company and its subsidiaries,
taken as a whole, and neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the Company and its
subsidiaries, taken as a whole, except as described the Prospectus.
(cc) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (1) transactions are executed in accordance with management's general
or specific authorizations; (2) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (3)
access to assets is permitted only in accordance with management's general
or specific authorization; and (4) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(dd) The Company and each of its subsidiaries has filed all material
foreign, federal, state and local tax returns that are required to be filed
or has requested extensions thereof and has paid all taxes required to be
paid by it and any other assessment, fine or penalty levied against it, to
the extent that any of the foregoing is due and payable, except for such
tax, assessment, fine or penalty that is currently being contested in good
faith or as described in the Prospectus.
(ee) The Registration Statement, the Prospectus and any preliminary
prospectus comply, and any amendments or supplements thereto will comply,
with any applicable laws or regulations of foreign jurisdictions in which
the Prospectus or any
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preliminary prospectus, as amended or supplemented, if applicable, are
distributed in connection with the Directed Share Program.
(ff) No consent, approval, authorization or order of, or qualification
with, any governmental body or agency, other than those obtained, is
required in connection with the offering of the Directed Shares in any
jurisdiction where the Directed Shares are being offered.
(gg) The Company has not offered, or caused Xxxxxxx Xxxxx Barney Inc.
or its affiliates to offer, Shares to any person pursuant to the Directed
Share Program with the specific intent to unlawfully influence (i) a
customer or supplier of the Company to alter the customer's or supplier's
level or type of business with the Company, or (ii) a trade journalist or
publication to write or publish favorable information about the Company or
its products.
2. Agreements to Sell and Purchase. The Company hereby agrees to
sell to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective numbers of Firm Shares set forth in Schedule I hereto
opposite its name at $. a share (the "PURCHASE PRICE").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have a
one-time right to purchase, severally and not jointly, all or a portion of such
Additional Shares at the Purchase Price. If Xxxxxx Xxxxxxx & Co. Incorporated
and Xxxxxxx Xxxxx Barney Inc., on behalf of the Underwriters, elect to exercise
such option, they shall so notify the Company in writing not later than 30 days
after the date of this Agreement, which notice shall specify the number of
Additional Shares to be purchased by the Underwriters and the date on which such
shares are to be purchased. Such date may be the same as the Closing Date (as
defined below) but not earlier than the Closing Date nor later than ten business
days after the date of such notice. Additional
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Shares may be purchased as provided in Section 4 hereof solely for the purpose
of covering over-allotments made in connection with the offering of the Firm
Shares. If any Additional Shares are to be purchased, each Underwriter agrees,
severally and not jointly, to purchase the number of Additional Shares (subject
to such adjustments to eliminate fractional shares as Xxxxxx Xxxxxxx & Co.
Incorporated and Xxxxxxx Xxxxx Barney Inc. may determine) that bears the same
proportion to the total number of Additional Shares to be purchased as the
number of Firm Shares set forth in Schedule I hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.
The Company hereby agrees that, without the prior written consent of
Xxxxxx Xxxxxxx & Co. Incorporated and Xxxxxxx Xxxxx Barney Inc. on behalf of the
Underwriters, it will not, during the period ending 180 days after the date of
the Prospectus, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly (ANY OF THE FOREGOING, A "TRANSFER"), any Class A Shares
or any securities convertible into or exercisable or exchangeable for Class A
Shares or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Class A Shares, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Class A Shares or such other securities,
in cash or otherwise. The foregoing sentence shall not apply to (A) the Shares
to be sold hereunder, (B) the issuance by the Company of Class B Shares on the
Option Closing Date (as defined in Section 4 hereof) in connection with the
issuance of the Additional Shares, (C) the grant of options to officers,
employees or directors of the Company pursuant to stock option plans described
in the Prospectus, (D) the issuance by the Company of Class A Shares upon
the conversion of a security outstanding on the date hereof and described in the
Prospectus or upon the exercise of an option issued pursuant to stock option
plans described in the Prospectus OR (E) ANY SECURITIES THAT ARE SUBSTANTIALLY
SIMILAR TO THE SHARES OR CONVERTIBLE INTO OR EXCHANGEABLE FOR CLASS A SHARES OR
CLASS B SHARES WHICH REPRESENT PAYMENT OF ALL OR PART OF THE PURCHASE PRICE OF A
BUSINESS OR ASSETS THE COMPANY ACQUIRES; PROVIDED THE COMPANY SHALL TAKE ALL
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ACTION NECESSARY TO ENSURE THE HOLDER OF ANY SECURITIES ISSUED PURSUANT TO
CLAUSE (E) WILL NOT TRANSFER SUCH SECURITIES FOR A PERIOD OF 180 DAYS FROM THE
DATE OF THE PROSPECTUS.
3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Company is further
advised by you that the Shares are to be offered to the public initially at $ .
a share (the "PUBLIC OFFERING PRICE") and to certain dealers selected by you at
a price that represents a concession not in excess of $ . a share under the
Public Offering Price, and that any Underwriter may allow, and such dealers may
reallow, a concession, not in excess of $ . a share, to any Underwriter or to
certain other dealers.
4. Payment and Delivery. Payment for the Firm Shares shall be made
to the Company in Federal or other funds immediately available in New York City
against delivery of such Firm Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on , 2000, or at such other time
on the same or such other date, not later than , 2000, as shall be designated in
writing by you. The time and date of such payment are hereinafter referred to
as the "CLOSING DATE".
Payment for any Additional Shares shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
notice described in Section 2 or at such other time on the same or on such other
date, in any event not later than , 2000, as shall be designated in writing by
Xxxxxx Xxxxxxx & Co. Incorporated and Xxxxxxx Xxxxx Barney Inc. The time and
date of such payment are hereinafter referred to as the "OPTION CLOSING DATE".
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may
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be, for the respective accounts of the several Underwriters, with any transfer
taxes payable in connection with the transfer of the Shares to the Underwriters
duly paid, against payment of the Purchase Price therefor.
5. Conditions to the Underwriters' Obligations. The obligations of
the Company to sell the Shares to the Underwriters and the several obligations
of the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or any development
reasonably likely to result in a change, in the condition, financial
or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, from that set forth in
the Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in your judgment, is
material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
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(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in Section 5(a)(i) above and to the
effect that the representations and warranties of the Company contained in
this Agreement are true and correct as of the Closing Date and that the
Company has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before
the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of Ropes & Xxxx, outside counsel for the Company, dated the Closing
Date, to the effect that:
(i) the Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of
Delaware, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in the
Commonwealth of Massachusetts;
(ii) each of the subsidiaries of the Company set forth in
Schedule II hereto (each, a "SIGNIFICANT SUBSIDIARY") has been
duly incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation and
has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus;
(iii) the Restated Certificate has been filed with the Secretary
of State of the State of Delaware and has become effective;
(iv) the authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof
-16-
contained in the Prospectus under the caption "Description of Capital
Stock";
(v) the shares of Common Stock outstanding prior to the issuance
of the Shares have been duly authorized and are validly issued, fully
paid and non-assessable;
(vi) all of the issued shares of capital stock of each
Significant Subsidiary have been duly authorized and are validly
issued, fully paid and non-assessable and are owned of record by the
Company and, to such counsel's knowledge, are free and clear of all
liens, encumbrances, equities or claims;
(vii) the Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of
such Shares will not be subject to any statutory preemptive or, to
such counsel's knowledge, similar contractual rights;
(viii) this Agreement has been duly authorized, executed and
delivered by the Company;
(ix) the issuance and sale by the Company of the Shares and the
performance by the Company of its obligations under this Agreement
does not and will not (A) violate the Restated Certificate or the by-
laws of the Company, (B) breach or result in a default under any
agreement, indenture or other instrument filed as an exhibit to the
Registration Statement to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is
bound, or to which any properties or assets of the Company or any of
its subsidiaries is subject, or (C) violate any existing Delaware
corporate, Massachusetts or federal law, rule, administrative
regulation or any decree known to such counsel of any court or any
governmental agency or body specifically naming the Company or any of
its subsidiaries or any of their
-17-
respective properties, except that, for purposes of paragraph (ix)(C),
such counsel need not express any opinion as to state securities or
Blue Sky laws or antifraud provisions of federal and state securities
laws;
(x) the statements (A) in the Prospectus under the captions
"Business - Our Relationship With America Online", "Important United
States Tax Consequences to Non-U.S. Holders of Class A Common Stock",
"Related Party Transactions", "Description of Capital Stock" and
"Underwriting" and (B) in the Registration Statement in Items 14 and
15, in each case insofar as such statements constitute summaries of
the legal matters, documents or proceedings referred to therein,
fairly present the information called for with respect to such legal
matters, documents and proceedings and fairly summarize the matters
referred to therein;
(xi) after due inquiry, such counsel does not know of any legal
or governmental proceedings pending or threatened to which the Company
or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject that
are required to be described in the Registration Statement or the
Prospectus and are not so described or of any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as
required;
(xii) the Company is not and, after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus, will not be required to
register as an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended; and
(xiii) (A) such counsel believes that the Registration Statement
and Prospectus (except for
-18-
financial statements and schedules and other financial data included
therein as to which such counsel need not express any belief) comply
as to form in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder, (B)
nothing that has come to such counsel's attention has caused it to
believe that (except for financial statements and schedules and other
financial data as to which such counsel need not express any belief)
the Registration Statement and the prospectus included therein at the
time the Registration Statement became effective contained any 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 (C) nothing that has come to such counsel's
attention has caused it to believe that (except for financial
statements and schedules and other financial data as to which such
counsel need not express any belief) the Prospectus contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxxxx & Xxxxx, special regulatory counsel for the Company and
GTE, dated the Closing Date, to the effect that:
(i) the consummation of the Merger has been approved by the FCC
pursuant to an order [that has become final and non-appealable];
(ii) (A) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
and each Intercompany Agreement, (B) the execution and delivery by
each of GTE and GTE Service of, and the performance by each of GTE and
GTE Service of its obligations under, each Intercompany Agreement to
which it is a party, and (C) the issue and sale of the Shares
contemplated hereby, will not contravene (1) the Communications Act of
-19-
1934, as amended, (2) the Telecommunications Act of 1996, (3) the
published rules or regulations promulgated by the FCC or (4) the order
issued by the FCC approving the Merger;
(iii) all consents, approvals or authorizations of the FCC
necessary for (1) the execution and delivery of this Agreement and the
issue and sale of the Shares contemplated hereby and (2) the execution
and delivery of each of the Intercompany Agreements have been obtained
by the Company and GTE, as appropriate;
(iv) the statements in the Prospectus under the caption "[INSERT
REFERENCE TO SECTION DESCRIBING FCC ORDER]", insofar as such
statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly present the information called
for with respect to such legal matters, documents and proceedings and
fairly summarize the matters referred to therein;
(v) (A) nothing that has come to such counsel's attention has
caused it to believe that, insofar as matters relating to the order
issued by the FCC approving the Merger and the proceedings in
connection therewith are concerned, the Registration Statement and the
prospectus included therein at the time the Registration Statement
became effective contained any 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 (B)
nothing that has come to such counsel's attention has caused it to
believe that, insofar as matters relating to the order issued by the
FCC approving the Merger and the proceedings in connection therewith
are concerned, the Prospectus contains any untrue statement of a
material fact or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
-20-
(e) The Underwriters shall have received on the Closing Date an
opinion of Wiley, Rein & Fielding, special regulatory counsel for the
Company and GTE, dated the Closing Date, to the effect that the statements
in the Prospectus under the captions "Prospectus Summary Our Relationship
With Verizon", "Risk Factors Risks Related to Legal Uncertainty" and
"Business Regulatory Matters", in each case insofar as such statements
constitute summaries of the Communications Act of 1934, as amended, and the
Telecommunications Act of 1996 and the published rules and regulations
promulgated thereunder by the FCC and any orders issued by the FCC in
respect of the Merger, are true and correct in all material respects.
(f) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxxxx & Xxxxxxxx, counsel for the Underwriters, dated the
Closing Date, with respect to the incorporation of the Company, the
validity of the Shares, the Registration Statement, the Prospectus and
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.
With respect to Section 5(c)(xiii) above, Ropes & Xxxx may state that
its opinion is based upon its participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements
thereto and review and discussion of the contents thereof, but are without
independent check or verification, except as specified.
The opinions of Ropes & Gray, Kirkland & Xxxxx and Xxxxx, Xxxx &
Fielding described in Sections 5(c), (d) and (e) above shall be rendered to
the Underwriters at the request of the Company and shall so state therein.
(g) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Underwriters,
from Xxxxxx Xxxxxxxx LLP, independent
-21-
public accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus; provided that
the letter delivered on the Closing Date shall use a "cut-off date" not
earlier than the date hereof.
(h) The Firm Shares shall have been accepted for listing and trading
on the Nasdaq National Market.
(i) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and each of the officers and directors of the
Company, the Participants and GTE relating to sales and certain other
dispositions of Class A Shares or certain other securities, delivered to
you on or before the date hereof, shall be in full force and effect on the
Closing Date.
(j) Each of the Intercompany Agreements shall have been duly
authorized, executed and delivered by each party thereto and shall be in
full force and effect on the Closing Date.
The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
GTE, to the effect that:
Each of the Intercompany Agreements to which GTE or GTE Service
is a party (i) has been duly authorized, executed and delivered by GTE
or GTE Service, as the case may be, and (ii) ASSUMING DUE
AUTHORIZATION, EXECUTION AND DELIVERY BY THE OTHER PARTIES THERETO, is
in full force and effect and constitutes a valid and legally binding
obligation of GTE OR GTE SERVICE, AS THE CASE MAY BE, ENFORCEABLE
AGAINST GTE or GTE Service, as the case may be, in accordance with its
terms, subject to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general equity principles. The execution and delivery by
each
-22-
of GTE and GTE Service of, and the performance by each of GTE and GTE
Service of its obligations under, each of the Intercompany Agreements
to which it is a party will not contravene any provision of applicable
law or its certificate of incorporation or by-laws or any agreement or
other instrument binding upon GTE or any of its subsidiaries that is
material to GTE and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over GTE or any of its subsidiaries (including,
without limitation, the FCC), and EXCEPT FOR THOSE CONSENTS,
APPROVALS, AUTHORIZATIONS, ORDERS, OR QUALIFICATIONS ALREADY OBTAINED,
no consent, approval, authorization or order of, or qualification
with, any governmental body or agency (including, without limitation,
the FCC) is required for the performance by GTE and GTE Service of
their respective obligations under the Intercompany Agreements to
which they are a party.
The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
THE XXXX ATLANTIC AFFILIATE ("BA MARKETING ENTITY") THAT IS PARTY TO THE
PURCHASE, RESALE AND MARKETING AGREEMENT, DATED ____, 2000 ("MARKETING
AGREEMENT"), to the effect that:
THE MARKETING AGREEMENT (i) has been duly authorized, executed
and delivered by BA MARKETING ENTITY, AND (ii) ASSUMING DUE
AUTHORIZATION, EXECUTION AND DELIVERY BY THE COMPANY and the closing
of the merger between Xxxx Atlantic and GTE will be in full force and
effect and will constitute a valid and legally binding obligation of
BA MARKETING ENTITY enforceable AGAINST BA MARKETING ENTITY in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity
-23-
principles. The execution and delivery by BA MARKETING ENTITY of, and
the performance by BA MARKETING ENTITY of its obligations under, THE
MARKETING AGREEMENT will not contravene any provision of applicable
law or its certificate of incorporation or by-laws or any agreement or
other instrument binding upon BA MARKETING ENTITY or any of its
subsidiaries that is material to BA MARKETING ENTITY and its
subsidiaries, taken as a whole, or any judgment, order or decree of
any governmental body, agency or court having jurisdiction over BA
MARKETING ENTITY or any of its subsidiaries (including, without
limitation, the FCC), and EXCEPT FOR THOSE CONSENTS, APPROVALS,
AUTHORIZATIONS, ORDERS, OR QUALIFICATIONS ALREADY OBTAINED, no
consent, approval, authorization or order of, or qualification with,
any governmental body or agency (including, without limitation, the
FCC) is required for the performance by BA MARKETING ENTITY of its
obligations under the MARKETING AGREEMENT.
(k) The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to Xxxxxx Xxxxxxx & Co.
Incorporated and Xxxxxxx Xxxxx Barney Inc. on the Option Closing Date of
such documents as they may reasonably request with respect to the good
standing of the Company, the approval of the Additional Shares for listing
and trading on the Nasdaq National Market, the due authorization and
issuance of the Additional Shares and other matters related to the issuance
of the Additional Shares.
6. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, [12] signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other
-24-
Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and to furnish to you in New York City, without charge,
prior to 10:00 a.m. New York City time on the business day next succeeding
the date of this Agreement and during the period mentioned in Section 6(c)
below, as many copies of the Prospectus and any supplements and amendments
thereto or to the Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement or the
Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public offering
of the Shares as in the opinion of counsel for the Underwriters the
Prospectus is required by law to be delivered in connection with sales by
an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish
to the Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To apply for listing of the Shares on the Nasdaq National Market.
-25-
(e) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation.
(f) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the twelve-
month period ending [June 30], 2001 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(g) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of its obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and the Company's accountants in connection with the
registration and delivery of the Shares under the Securities Act and all
other fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies
thereof to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and delivery
of the Shares to the Underwriters, including any transfer or other taxes
payable thereon, (iii) the cost of printing or producing any Blue Sky
memorandum in connection with the offer and sale of the Shares under state
securities laws and all expenses in connection with the qualification of
the Shares for offer and sale under state securities laws as provided in
Section 6(e) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky memorandum, (iv) all
filing fees and the reasonable fees and disbursements of counsel to the
Underwriters incurred in connection with the review and qualification of
the offering of the Shares by the National Association of Securities
-26-
Dealers, Inc., (v) all fees and expenses in connection with the preparation
and filing of the registration statement on Form 8-A relating to the Class
A Shares and all costs and expenses incident to listing the Shares on the
Nasdaq National Market, (vi) the cost of printing certificates representing
the Shares, (vii) the costs and charges of any transfer agent, registrar or
depositary, (viii) the costs and expenses of the Company relating to
investor presentations on any "road show" undertaken in connection with the
marketing of the offering of the Shares, including, without limitation,
expenses associated with the production of road show slides and graphics,
fees and expenses of any consultants engaged in connection with the road
show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and any
such consultants, and the cost of any aircraft chartered with the consent
of the Company in connection with the road show, (ix) all fees and
disbursements of counsel incurred by the Underwriters in connection with
the Directed Share Program and stamp duties, similar taxes or duties or
other taxes, if any, incurred by the Underwriters in connection with the
Directed Share Program, and (x) all other costs and expenses incident to
the performance of the obligations of the Company hereunder for which
provision is not otherwise made in this Section. It is understood,
however, that except as provided in this Section, Section 7 entitled
"Indemnity and Contribution", Section 8 entitled "Directed Share Program
Indemnification" and the last paragraph of Section 10 below, the
Underwriters will pay all of their costs and expenses, including fees and
disbursements of their counsel, stock transfer taxes payable on resale of
any of the Shares by them and any advertising expenses connected with any
offers they may make.
(h) To place stop transfer orders on any Directed Shares that have
been sold to Participants subject to the three month restriction on sale,
transfer, assignment, pledge or hypothecation imposed by NASD Regulation,
Inc. under its Interpretative Material 2110-1 on free-riding and
withholding to the extent
-27-
necessary to ensure compliance with the three month restrictions.
(i) To comply with all applicable securities and other applicable
laws, rules and regulations in each jurisdiction in which the Directed
Shares are offered in connection with the Directed Share Program.
7. Indemnity and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), from and
against any and all losses, claims, damages and liabilities, joint or
several, (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) that arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any preliminary prospectus
or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or that arise out of or
are based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through
you expressly for use therein; provided, however, that the foregoing
indemnity, with respect to any preliminary prospectus, shall not inure to
the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus was not sent or
given by or on behalf of such Underwriter to such person, if required by
law so to have been delivered, at or prior to the written confirmation of
the sale of the Shares to such person,
-28-
and if the Prospectus would have cured the defect giving rise to such
losses, claims, damages or liabilities, unless such failure is the result
of noncompliance by the Company with Section 6(a) hereof. This indemnity
agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity from the
Company to such Underwriter, but only with reference to information
relating to such Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use in the Registration Statement,
any preliminary prospectus, the Prospectus or any amendments or supplements
thereto. This indemnity agreement will be in addition to any liability
which any Underwriter may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to Section 7(a) or 7(b), such person (the "INDEMNIFIED
PARTY") shall promptly notify the person against whom such indemnity may be
sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party,
upon request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to
the retention of such counsel, (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both parties by the
same counsel
-29-
would be inappropriate due to actual or potential differing interests
between them or (iii) the indemnifying party shall not have retained
counsel satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such
proceeding. It is understood that the indemnifying party shall not, in
respect of the legal expenses of any indemnified party in connection with
any proceeding or related proceedings in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm (in addition to
any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Xxxxxx Xxxxxxx & Co. Incorporated and Xxxxxxx
Xxxxx Barney Inc., in the case of parties indemnified pursuant to Section
7(a), and by the Company in the case of parties indemnified pursuant to
Section 7(b). The indemnifying party shall not be liable for any settlement
of any proceeding effected without its written consent, but if settled with
such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been
a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) To the extent the indemnification provided for in Section 7(a) or
7(b) is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect
the
-30-
relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Shares or (ii) if
the allocation provided by clause 7(d)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause 7(d)(i) above but also the
relative fault of the Company on the one hand and of the Underwriters on
the other hand in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other hand in
connection with the offering of the Shares shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the
Shares (before deducting expenses) received by the Company and the total
underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover of the Prospectus, bear to
the aggregate Public Offering Price of the Shares. The relative fault of
the Company on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the respective
number of Shares they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 7(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph
-31-
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 7, each director, officer, employee and agent of
an Underwriter and each person who controls any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act,
each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms
and conditions of paragraphs (d) and (e) of this Section 7. The remedies
provided for in this Section 7 are not exclusive and shall not limit any
rights or remedies which may otherwise be available to any indemnified
party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter or by or on behalf of the Company, its officers
or directors or any person controlling the Company and (iii) acceptance of
and payment for any of the Shares.
-32-
8. Directed Share Program Indemnification. (a) The Company agrees to
indemnify and hold harmless Xxxxxxx Xxxxx Xxxxxx Inc. and its affiliates
and each person, if any, who controls Xxxxxxx Xxxxx Barney Inc. or its
affiliates within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (the "SSB ENTITIES"), from and against any
and all losses, claims, damages and liabilities, joint or several,
(including, without limitation, any legal or other expenses reasonably
incurred in connection with defending or investigating any such action or
claim) (i) that arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any material
prepared by or with the consent of the Company for distribution to
Participants in connection with the Directed Share Program, or that arise
out of or are based upon any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading; (ii) that arise out of or are based upon
the failure of any Participant to pay for and accept delivery of Directed
Shares that the Participant has agreed to purchase; or (iii) related to,
arising out of, or in connection with the Directed Share Program other than
losses, claims, damages or liabilities (or expenses relating thereto) that
are finally judicially determined to have resulted from the bad faith or
gross negligence of the SSB Entities. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(b) In case any proceeding (including any governmental investigation)
shall be instituted involving any SSB Entity in respect of which indemnity
may be sought pursuant to Section 8(a), the SSB Entity seeking indemnity
shall promptly notify the person against whom such indemnity may be sought
in writing and the indemnifying party, upon request of the SSB Entity,
shall retain counsel reasonably satisfactory to the SSB Entity to represent
the SSB Entity and any other indemnified party that the indemnifying party
may designate in such proceeding and shall pay the fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
SSB Entity shall have the right to retain its own counsel, but
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the fees and expenses of such counsel shall be at the expense of such SSB
Entity unless (i) the indemnifying party shall have agreed to the retention
of such counsel, (ii) the named parties to any such proceeding (including
any impleaded parties) include both the indemnifying party and the SSB
Entity and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them
or (iii) the indemnifying party shall not have retained counsel
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such
proceeding. It is understood that the indemnifying party shall not, in
respect of the legal expenses of the SSB Entities in connection with any
proceeding or related proceedings the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all SSB Entities. Any such firm for the SSB Entities shall be
designated in writing by Xxxxxxx Xxxxx Xxxxxx Inc. The indemnifying party
shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to
indemnify the SSB Entities from and against any loss or liability by reason
of such settlement or judgment. The indemnifying party shall not, without
the prior written consent of Xxxxxxx Xxxxx Barney Inc., effect any
settlement of any pending or threatened proceeding in respect of which any
SSB Entity is or could have been a party and indemnity could have been
sought hereunder by such SSB Entity, unless such settlement includes an
unconditional release of the SSB Entities from all liability on claims that
are the subject matter of such proceeding.
(c) To the extent the indemnification provided for in Section 8(a) is
unavailable to a SSB Entity or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then the indemnifying
party, in lieu of indemnifying the SSB Entity thereunder, shall contribute
to the amount paid or payable by the SSB Entity as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative
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benefits received by the Company on the one hand and the SSB Entities on
the other hand from the offering of the Directed Shares or (ii) if the
allocation provided by clause 8(c)(i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause 8(c)(i) above but also the relative fault of
the Company on the one hand and of the SSB Entities on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one
hand and of the SSB Entities on the other hand in connection with the
offering of the Directed Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the
Directed Shares (before deducting expenses) and the total underwriting
discounts and commissions received by the SSB Entities for the Directed
Shares, bear to the aggregate Public Offering Price of the Shares. If the
loss, claim, damage or liability is caused by an untrue or alleged untrue
statement of a material fact, the relative fault of the Company on the one
hand and the SSB Entities on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement or the omission or alleged omission relates to information
supplied by the Company or by the SSB Entities and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(d) The Company and the SSB Entities agree that it would not be just
or equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation (even if the SSB Entities were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 8(c). The
amount paid or payable by the SSB Entities as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by the SSB Entities
in connection
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with investigating or defending any such action or claim. Notwithstanding
the provisions of this Section 8, no SSB Entity shall be required to
contribute any amount in excess of the amount by which the total price at
which the Directed Shares distributed to the public were offered to the
public exceeds the amount of any damages that such SSB Entity has otherwise
been required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. The remedies provided for in this Section
8 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any SSB Entity at law or in equity.
(e) The indemnity and contribution provisions contained in this
Section 8 shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any SSB Entity or the Company, its officers or directors or any
person controlling the Company and (iii) acceptance of and payment for any
of the Directed Shares.
9. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 9(a)(i) through 9(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.
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10. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
that it has or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule I bears to the
aggregate number of Firm Shares set forth opposite the names of all such non-
defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; provided that in no event shall the
number of Shares that any Underwriter has agreed to purchase pursuant to this
Agreement be increased pursuant to this Section 10 by an amount in excess of
one-ninth of such number of Shares without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Firm Shares to be purchased, and arrangements satisfactory
to you and the Company for the purchase of such Firm Shares are not made within
36 hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter or the Company. In any such case
either you or the Company shall have the right to postpone the Closing Date, but
in no event for longer than seven days, in order that the required changes, if
any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. If, on the Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional Shares
and the aggregate number of Additional Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Additional Shares to be
purchased, the non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase Additional
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Shares or (ii) purchase not less than the number of Additional Shares that such
non-defaulting Underwriters would have been obligated to purchase in the absence
of such default. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
13. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
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Very truly yours,
Genuity Inc.
By:_______________________
Name:
Title:
Accepted as of the date hereof
XXXXXX XXXXXXX & CO. INCORPORATED
XXXXXXX XXXXX BARNEY INC.
Acting severally on behalf of themselves
and the several Underwriters
named in Schedule I hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By:___________________________
Name:
Title:
By: Xxxxxxx Xxxxx Barney Inc.
By:___________________________
Name:
Title:
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SCHEDULE I
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Xxxxx Barney Inc.
Bear, Xxxxxxx & Co. Inc.
Chase Securities Inc.
Credit Suisse First Boston Corporation
Deutsche Bank Securities, Inc.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Xxxxxxx, Sachs & Co.
X.X. Xxxxxx Securities Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
UBS Warburg LLC
-----------
Total......................................................... 173,913,000
===========
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SCHEDULE II
Significant Subsidiaries of the Company
---------------------------------------
BBN Corporation
GTE Intelligent Network Services Incorporated
GTE TELECOM INCORPORATED
========================
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EXHIBIT A
[FORM OF LOCK-UP AGREEMENT]
., 2000
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Xxxxx Barney Inc.
Bear, Xxxxxxx & Co. Inc.
Chase Securities Inc.
Credit Suisse First Boston Corporation
Deutsche Bank Securities, Inc.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Xxxxxxx, Sachs & Co.
X.X. Xxxxxx Securities Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
UBS Warburg LLC
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
c/o Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated
("XXXXXX XXXXXXX") and Xxxxxxx Xxxxx Xxxxxx Inc. ("SSB") propose to enter into
an Underwriting Agreement (the "UNDERWRITING AGREEMENT") with Genuity Inc., a
Delaware corporation (the "COMPANY"), providing for the public offering (the
"PUBLIC OFFERING") by the several underwriters, including Xxxxxx Xxxxxxx and SSB
(the "UNDERWRITERS") of shares (the "SHARES") of the Class A Common Stock, par
value $0.01 per share, of the Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Xxxxxx
Xxxxxxx and SSB on behalf of the Underwriters, it will not, during the period
commencing on the date hereof and ending 180 days after the date of the final
prospectus relating to
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the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock,
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) the sale of any Shares
to the Underwriters pursuant to the Underwriting Agreement or (b) transactions
relating to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering. In addition, the
undersigned agrees that, without the prior written consent of Xxxxxx Xxxxxxx and
SSB on behalf of the Underwriters, it will not, during the period commencing on
the date hereof and ending 180 days after the date of the Prospectus, make any
demand for or exercise any right with respect to, the registration of any shares
of Common Stock or any security convertible into or exercisable or exchangeable
for Common Stock. The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent and registrar against
the transfer of the undersigned's shares of Common Stock except in compliance
with the foregoing restrictions.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
Public Offering. The undersigned further understands that this Lock-Up
Agreement is irrevocable and shall be binding upon the undersigned's heirs,
legal representatives, successors and assigns. This instrument shall terminate
if the Underwriting Agreement relating to the Public Offering shall terminate or
be terminated prior to payment for and delivery of the Common Stock thereunder.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are
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subject to negotiation between the Company and the Underwriters.
The execution of this Lock-Up Agreement does not constitute an
obligation of the undersigned to purchase any Shares or an agreement by the
Underwriters to sell any Shares to the undersigned.
Very truly yours,
_________________________
(Name)
_________________________
(Address)
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