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1,100,000 Shares
CT COMMUNICATIONS, INC.
COMMON STOCK
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UNDERWRITING AGREEMENT
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FIRST UNION CAPITAL MARKETS CORP.
XXXX XXXXX XXXX XXXXXX, INCORPORATED
XXXXX & XXXXXXXXXXXX, INC.
As Representatives of the Several
Underwriters Named in Schedule I
hereto
x/x Xxxxx Xxxxx Xxxxxxx Xxxxxxx Xxxx.
Xxxxxxxxxx Xxxxx
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000 _____________, 1999
Ladies and Gentlemen:
The certain shareholders named in Schedule II (the "Selling
Shareholders") of CT Communications, Inc., a North Carolina corporation (the
"Company"), propose, subject to the terms and conditions stated herein, to sell
to the underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of 1,100,000 shares of common stock ("Stock"), of the Company and, at the
election of the Underwriters, up to 165,000 additional shares of Stock solely to
cover any over-allotments. The aggregate of 1,100,000 shares of Stock to be sold
by the Selling Shareholders are herein called the "Firm Securities," and the
aggregate of 165,000 shares of Stock to be sold by the Selling Shareholders are
herein called the "Optional Securities." The Firm Securities and the Optional
Securities which the Underwriters elect to purchase pursuant to Section 2 hereof
are collectively called the "Securities."
1. Representations and Warranties
(a) The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(i) A registration statement on Form S-3 (File No. 333-______)
under the Securities Act of 1933, as amended (the "Act"), and as a part
thereof a preliminary prospectus, in respect of the Securities has been
filed with the United States Securities and Exchange Commission (the
"Commission") in the form heretofore delivered to you,
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and, excluding exhibits thereto, but including all documents
incorporated by reference in the Prospectus contained therein, to you
for each of the Underwriters; the Company meets the requirements for
the use of Form S-3 under the Act and such registration statement, as
amended, has been declared effective by the Commission in such form;
other than a registration statement, if any, increasing the size of the
offering, filed pursuant to Rule 462(b) under the Act, which became
effective upon filing, no other document with respect to such
registration statement (other than those documents incorporated into
such registration statement by reference) has heretofore been filed
with the Commission other than in accordance with Section 5(a) of this
Agreement; and no stop order suspending the effectiveness of such
registration statement has been issued and no proceeding for that
purpose has been instituted or threatened by the Commission (any
preliminary prospectus included in such registration statement or filed
with the Commission pursuant to Rule 424 of the rules and regulations
of the Commission under the Act being hereinafter called a "Preliminary
Prospectus;" the various parts of such registration statement,
including (i) 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)
of this Agreement and deemed by virtue of Rule 430A under the Act to be
part of the registration statement at the time it was declared
effective, together with any related registration statement filed with
the Commission for registration of a portion of the Securities, which
registration statement became effective pursuant to Rule 462(b) under
the Act, and (ii) the documents incorporated by reference in the
registration statement at the time it was declared effective, each as
amended at the time such part became effective, being herein called
collectively the "Registration Statement," and the final prospectus, in
the form first filed pursuant to Rule 424(b), being hereinafter called
the "Prospectus," provided, that if the Company elects to rely on Rule
434 under the Act, all references to the Prospectus shall be deemed to
include, without limitation, the form of prospectus and the abbreviated
term sheet, taken together, provided to the Underwriters by the Company
in reliance on Rule 434; any reference herein to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Form S-3
under the Act; and the terms "supplement" and "amendment" or "amend" as
used in this Agreement shall include all documents subsequently filed
by the Company with the Commission pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), that are deemed to be
incorporated by reference in the Prospectus;
(ii) 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 any
untrue statement of a material fact or omit to state a material fact
required to be set forth 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 the Underwriters through you
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expressly for use therein or by any of the Selling Shareholders
expressly for use in the preparation of the answers therein to Item 7
of Form S-3;
(iii) The Registration Statement conforms, and the Prospectus
and any amendments or supplements thereto 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 in
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 the
Underwriters through you expressly for use therein or by any of the
Selling Shareholders expressly for use in the preparation of the
answers therein to Item 7 of Form S-3;
(iv) Each document incorporated by reference in the
Prospectus, when it became effective or was filed, with the Commission,
as the case may be, conformed in all material respects to the
requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder, and none of such
documents 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, in light of the circumstances under which
they were made, not misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further amendment or
supplement thereto, when such documents become effective or are filed
with Commission, as the case may be, will conform in all material
respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder
and will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(v) Neither the Company nor any of its subsidiaries (as
defined in Rule 405 of the Act), a complete and correct list of which
is attached as Schedule III (the "Subsidiaries"), has sustained since
the dates as which information is given 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 labor
dispute or court or governmental action, order or decree, except 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 outstanding
capital stock or long-term debt of the Company or any of the
Subsidiaries or any change, or any development that is reasonably
likely, currently or prospectively, to have a material adverse change
in or effect on the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and the
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Subsidiaries, taken as a whole ("Material Adverse Effect"), otherwise
than as set forth or contemplated in the Prospectus;
(vi) This Agreement has been duly authorized, executed and
delivered by the Company;
(vii) The Company and each of the Subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all material personal property owned by them, in
each case free and clear of all liens, encumbrances and defects except
such as are described in the Prospectus or such as do not materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and the
Subsidiaries; and any material real property and buildings held under
lease by the Company or any of the 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 or such
Subsidiaries;
(viii) The Company and each of its Subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, with
power and authority (corporate and other) to own or lease their
respective properties and conduct their respective businesses as
described in the Prospectus, and each has been duly qualified as a
foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which they own or
lease properties, or conduct any business, so as to require such
qualification, except where the failure to so qualify would not result
in a Material Adverse Effect;
(ix) The Company has an authorized capitalization as set forth
in the Prospectus under the caption "Description of Securities" and
otherwise; all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
nonassessable and conform to the description of the capital stock of
the Company contained in the Prospectus; there are no preemptive or
other similar rights to subscribe for or to purchase any securities of
the Company; except as described in the Prospectus, there are no
warrants or options or similar rights to purchase any securities of the
Company; neither the filing of the Registration Statement nor the
offering or sale of the Securities as contemplated by this Agreement
gives rise to any rights for or relating to the registration of any
securities of the Company with respect to such filing, offering or
sale;
(x) All of the issued and outstanding shares of capital stock
of each of the Subsidiaries have been duly and validly authorized and
issued and are fully paid and nonassessable; and all outstanding shares
of capital stock of each of the Subsidiaries are directly owned by the
Company free and clear of all security interests, claims, equities,
liens or encumbrances;
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(xi) The performance of this Agreement and the consummation by
the Company of the other transactions herein contemplated will not
conflict with or result in a breach or violation of any terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which
the Company or any of the Subsidiaries is a party or by which the
Company or any of the Subsidiaries is bound or to which any of the
property or assets of the Company or any of the Subsidiaries is
subject, nor will such action result in any violation of the provisions
of the Articles of Incorporation or Bylaws of the Company (each as
amended to date the "Charter" and "Bylaws," respectively) or the
Articles of Incorporation or bylaws of any of the Subsidiaries or any
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of the
Subsidiaries or any of its or their properties; and no consent,
approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for the
issue and sale of the Securities or the consummation by the Company of
the transactions contemplated by this Agreement, except such as have
been obtained under the Act and such consents, approvals,
authorizations, registrations or qualifications as may be required by
the National Association of Securities Dealers, Inc. (the "NASD"), and
such as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Securities by the
Underwriters;
(xii) Neither the Company nor any of the Subsidiaries is in
violation of its charter or bylaws or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement, lease or other material agreement or instrument to which it
is a party or by which it or any of its properties may be bound;
(xiii) The statements set forth in the Prospectus under the
caption "Description of Securities," constitute an accurate summary of
the terms of the Stock in all material respects;
(xiv) There are no legal or governmental proceedings pending
to which the Company or any of the Subsidiaries is a party or of which
any property of the Company or any of the Subsidiaries is the subject,
which, if determined adversely to the Company or any of the
Subsidiaries, is reasonably likely, currently or prospectively,
individually or in the aggregate, to have a Material Adverse Effect
and, to the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or by others;
(xv) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in
the Investment Company Act of 1940, as amended (the "Investment Company
Act");
(xvi) The Company has not taken and, during the period of the
distribution of the Securities by the Underwriters (within the meaning
of the Act) (the "Prospectus Delivery Period") will not take, directly
or indirectly, any action which is designed to or which has constituted
or which might reasonably be expected to cause or result in
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stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities;
(xvii) To the Company's knowledge, KPMG, LLP, who have
certified certain financial statements of the Company and the
Subsidiaries, are independent public accountants as required by the Act
and the Exchange Act and the rules and regulations of the Commission
thereunder;
(xviii) The consolidated financial statements of the Company
and the Subsidiaries, together with related notes, as set forth in the
Registration Statement present fairly the consolidated financial
position and the results of operations of the Company and the
Subsidiaries at the indicated dates and for the indicated periods; such
financial statements have been prepared in accordance with United
States generally accepted accounting principles, consistently applied
throughout the periods presented except as noted in the notes thereon,
and all adjustments necessary for a fair presentation of results for
such periods have been made; and the selected financial information
included in the Prospectus presents fairly the information shown
therein and has been compiled on a basis consistent with the financial
statements presented therein;
(xix) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance 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 existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences;
(xx) The Company's and the Subsidiaries' computer software
(the "Software") is "Millennium Compliant," except where failure to be
Millennium Compliant would not have a Material Adverse Effect. For the
purposes of this Agreement "Millennium Compliant" means: (a) the
functions, calculations, and other computing processes of the Software
(collectively, "Processes") perform in a materially accurate manner
regardless of the date in time on which the Processes are actually
performed and regardless of the date input to the Software, and whether
or not the dates are affected by leap years; (b) the Software can
accept, store, sort, extract, sequence, and otherwise manipulate date
inputs and date values, and return and display date values, in a
materially accurate manner regardless of the dates used or format of
the date input; (c) the Software will function without interruptions
caused by the date in time on which the Processes are actually
performed or by the date input to the Software; (d) the Software
accepts and responds to four digit year date input in a manner that
resolves any material ambiguities as to the century in an accurate
manner; and (e) the Software displays, prints and provides electronic
output of date information in ways that are unambiguous as to the
determination of the century;
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(xxi) Except as set forth in the Registration Statement and
the Prospectus, there are no agreements, claims, payment, issuances,
arrangements or understandings, whether oral or written, for services
in the nature of finder's, consulting or origination fees with respect
to the sale of the Securities or any other arrangements, agreements,
understandings, payments or issuance with respect to the Company or any
of its officers, directors, shareholders, partners, employees,
Subsidiaries or affiliates that may affect the Underwriters'
compensation as determined by the NASD;
(xxii) The Company and each of the Subsidiaries holds and are
operating in compliance in all material respects with all franchises,
grants, authorizations, licenses, permits, easements, consents,
certificates and orders of any governmental or self-regulatory body
that are material to the operation of their respective businesses as
presently being conducted ("licenses") and all such licenses are valid
and in full force and effect, and the Company and each of the
Subsidiaries are in compliance, in all material respects, with all
laws, regulations, orders and decrees applicable to them;
(xxiii) All licenses issued by the Federal Communications
Commission and the North Carolina Utilities Commission (the "Licenses")
required for the operation of the business of the Company and its
Subsidiaries are in full force and effect and there are no pending
modifications, amendments or revocation proceedings which would
adversely affect the operations of the Company and its Subsidiaries.
All fees due and payable to governmental authorities pursuant to the
rules governing the Licenses have been paid and no event has occurred
with respect to the Licenses held by the Company and its Subsidiaries
which, with the giving of notice or the lapse of time or both, would
constitute grounds for revocation thereof. Each of the Company and its
Subsidiaries is in compliance in all material respects with the terms
of the Licenses, as applicable, and there is no condition, event or
occurrence existing, nor is there any proceeding being conducted of
which the Company has received notice, nor, to the Company's knowledge,
is there any proceeding threatened, by any governmental authority,
which would cause the termination, suspension, cancellation or
nonrenewal of any of the Licenses, or the imposition of any penalty or
fine by any regulatory authority;
(xxiv) The Company's Common Stock is listed on the Nasdaq
National Market (the "NASDAQ");
(xxv) The Company and each of the Subsidiaries are in
compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has
occurred with respect to any "pension plan" (as defined in ERISA) for
which the Company or any of the Subsidiaries would have any liability;
the Company and each of the Subsidiaries have not incurred and do not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Section
412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder ("Code"); and
each "pension plan" for which the Company and each of its Subsidiaries
would have any liability that is
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intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such
qualification;
(xxvi) No labor dispute with the employees of the Company or
any Subsidiary exists or, to the knowledge of the Company, is imminent
that might have a Material Adverse Effect;
(xxvii) The Company and each of the Subsidiaries have the
right to use all trademarks, trade names, trade secrets, servicemarks,
inventions, patent rights, mask works, copyrights, licenses, software
code, audiovisual works, formats, algorithms and underlying data that
are material to the operation of their business as presently being
conducted and proposed to be conducted as described in the Prospectus,
and the Company and each of the Subsidiaries have all required
approvals and governmental authorizations that are material to the
operation of their respective businesses as now conducted or proposed
to be conducted as described in the Prospectus; and neither the Company
nor any of the Subsidiaries is infringing any trademark, trade name
rights, patent rights, mask works, copyrights, licenses, trade secret,
servicemarks or other similar rights of others, and there is no claim
being made against the Company or any of the Subsidiaries regarding
trademark, trade names, patent, mask work, copyright, license, trade
secret or other infringement or assertion of intellectual property
rights which could have a Material Adverse Effect; the Company has
agreements in place with each employee, consultant or other person or
party engaged by the Company or any of its Subsidiaries that are
material to the operation of their respective businesses as now
conducted or proposed to be conducted as described in the Prospectus
and providing for the assignment to the Company or any of the
Subsidiaries, as the case may be, of all material intellectual property
and exploitation rights in the work performed and the protection of the
material trade secrets and confidential information of the Company,
each of the Subsidiaries and of third parties which have been developed
by such person for or on behalf of the Company or any of the
Subsidiaries;
(xxviii) The Company and each of the Subsidiaries have filed
all federal, state and foreign income, franchise and excise tax returns
which have been required to be filed (or have received an extension
with respect thereto), and have paid or made adequate reserves for, all
taxes indicated by said returns and all assessments received by them to
the extent that such taxes have become due and are not being contested
in good faith; to the best knowledge of the Company there is no tax
deficiency that has been or might be asserted against the Company that
would have a Material Adverse Effect;
(xxix) 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
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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;
(xxx) No relationship, direct or indirect, exists between or
among the Company or any of the Subsidiaries, on the one hand, and the
directors, officers, shareholders, customers or suppliers of the
Company or any of the Subsidiaries on the other hand, that is required
by the Act or the Exchange Act, or by the rules and regulations under
either of such Acts to be described in the Registration Statement and
the Prospectus or documents incorporated by reference therein that is
not so described; and
(xxxi) Except as described in the Prospectus, the Company and
the Subsidiaries maintain insurance of the types and in the amounts
that are customary or required for the business operated by them, all
of which insurance is in full force and effect.
(b) Each of the Selling Shareholders, severally, represents and
warrants to, and agrees with, the Underwriters and the Company that:
(i) No consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement in connection with the
execution and delivery by such Selling Shareholder of this Agreement
and the Power of Attorney (the "Power of Attorney") and the Custody
Agreement (the "Custody Agreement") hereinafter referred to, and for
the sale and delivery of the Securities to be sold by such Selling
Shareholder hereunder, except such as have been obtained under the Act
and from the Clerk of the Superior Court of Cabarrus County, North
Carolina and such as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Securities
by the Underwriters and the clearance of such offering with the NASD;
and such Selling Shareholder has full right, power, legal capacity and
authority to enter into this Agreement, the Power of Attorney and the
Custody Agreement and to sell, assign, transfer and deliver the
Securities to be sold by such Selling Shareholder hereunder;
(ii) The sale of the Securities to be sold by such Selling
Shareholder hereunder and the compliance by such Selling Shareholder
with all of the provisions of this Agreement, the Power of Attorney and
the Custody Agreement and the consummation of the transactions herein
and therein contemplated will not conflict with or result in a breach
or violation of any terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement,
guarantee or other agreement or instrument to which such Selling
Shareholder is bound or to which any of the property or assets of such
Selling Shareholder is subject, nor will such action result in any
violation of the provisions of the trust agreement of such Selling
Shareholder if such Selling Shareholder is a trust or the charter or
bylaws (or other governing documents) of such Selling Shareholder if
such Selling Shareholder is a corporation (or other entity) or any
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over such Selling Shareholder or the
property of such Selling Shareholder;
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(iii) The information contained in Schedule II with respect to
such Selling Shareholder is true and correct and such Selling
Shareholder has, and at such Delivery Date (as defined in Section 4
hereof), such Selling Shareholder will have, good and valid title to
the Securities to be sold by such Selling Shareholder hereunder, free
and clear of all liens, encumbrances, equities or claims; and, upon
delivery of such Securities and payment therefor pursuant hereto, good
and valid title to all such Securities, free and clear of all liens,
encumbrances, equities or claims, will be transferred to the several
Underwriters;
(iv) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
First Delivery Date (as defined in Section 4 hereof), such Selling
Shareholder shall not, directly or indirectly, offer, sell, contract to
sell, pledge, grant any option to purchase or otherwise sell or dispose
of, except as provided hereunder, any securities of the Company that
are substantially similar to the Securities, including but not limited
to any shares of Stock or any other capital stock of the Company or any
securities that are convertible into or exchangeable for, or that
represent the right to receive, Stock or any other capital stock of the
Company or any such substantially similar securities (other than
pursuant to bona fide gifts, if the recipient of such gifts agrees in
writing to be bound by the terms of this Agreement), without your prior
written consent;
(v) Such Selling Shareholder has not taken and during the
Prospectus Delivery Period will not take, directly or indirectly, any
action which is designed to or which has constituted or which might
reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities;
(vi) To the extent that any statements or omissions made in
the Registration Statement, any Preliminary Prospectus, the Prospectus
or any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to the Company by such
Selling Shareholder expressly for use therein (which information, you
acknowledge, is limited to the name and address of, and the number of
shares of Stock beneficially owned by, the respective Selling
Shareholder, the first sentence of the second paragraph under the
heading "Principal and Selling Stockholders" in the Registration
Statement as it relates to the respective Selling Shareholder, the
respective Selling Shareholder's responses to the Company's "NASD
Questionnaire to Selling Shareholders" and the respective Selling
Shareholders representations set forth herein), (a) such Preliminary
Prospectus and the Registration Statement did, and the Prospectus and
any further amendments or supplements to the Registration Statement and
the Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and (b) such Preliminary Prospectus and the Registration
Statement did not, and the Prospectus and any further amendments or
supplements to the Registration Statement and the Prospectus will not,
when they become effective or are filed with the Commission, as the
case may be, contain any untrue
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statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading.
(vii) In order to document the Underwriters' compliance with
the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982, as amended, with respect to the
transactions herein contemplated, such Selling Shareholder agrees to
deliver to you prior to or at the First Delivery Date (as hereinafter
defined) a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified by
Treasury Department regulations in lieu thereof);
(viii) Certificates in negotiable form representing all of the
Securities to be sold by such Selling Shareholder hereunder have been
placed in custody under a Custody Agreement and Power of Attorney, in
the form heretofore furnished to you, duly executed and delivered by
such Selling Shareholder to the Company, as custodian (the
"Custodian"), and to the Company, appointing the Company as such
Selling Shareholder's attorney-in-fact (the "Attorney-in-Fact") with
authority to execute and deliver this Agreement on behalf of such
Selling Shareholder, to determine the purchase price to be paid by the
Underwriters to the Selling Shareholders (subject to the limitations
set forth in the Power of Attorney) as provided in Section 2 hereof, to
authorize the delivery of the Securities to be sold by such Selling
Shareholder hereunder and otherwise to act on behalf of such Selling
Shareholder in connection with the transactions contemplated by this
Agreement and such Selling Shareholder's Custody Agreement and Power of
Attorney;
(ix) The Securities represented by the certificates held in
custody for such Selling Shareholder under such Selling Shareholder's
Custody Agreement and Power of Attorney are subject to the interests of
the Underwriters hereunder; the arrangements made by such Selling
Shareholder for such custody, and the appointment by such Selling
Shareholder of the Attorney-in-Fact by such Selling Shareholder's
Custody Agreement and Power of Attorney, are irrevocable to the extent
set forth in such Selling Shareholder's Custody Agreement and Power of
Attorney; the obligations of such Selling Shareholder hereunder shall
not be terminated by operation of law, whether by dissolution or the
occurrence of any other event; if any such event should occur, before
the delivery of the Securities hereunder, certificates representing the
Securities shall be delivered by or on behalf of the Selling
Shareholders in accordance with the terms and conditions of this
Agreement and each Selling Shareholder's respective Custody Agreement
and Power of Attorney; and actions taken by the Attorney-in-Fact
pursuant to any Custody Agreement and Power of Attorney shall be as
valid as if such dissolution or other event had not occurred,
regardless of whether or not the Custodian, the Attorney-in-Fact, or
either of them, shall have received notice of such dissolution or other
event;
(x) Except as otherwise disclosed to the Underwriters in
writing, such Selling Shareholder is not a member of or directly an
affiliate of or associated with any member of the NASD;
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(xi) Such Selling Shareholder agrees to deliver to the Company
or the Underwriters such documentation as the Company or the
Underwriters or any of their respective counsel may reasonably request
in order to effectuate any of the provisions of this Agreement; and
(xii) Each of the Power of Attorney, the Custody Agreement and
this Agreement has been duly executed and delivered by or on behalf of
each Selling Shareholder and is a valid and binding obligation of such
Selling Shareholder enforceable in accordance with its terms.
2. Purchase and Sale
Subject to the terms and conditions herein set forth, (a) each of the
Selling Shareholders agree, severally and not jointly, to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Selling Shareholders, at a purchase price per share of $____,
the number of Firm Securities to be purchased by such Underwriter as 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 Securities as provided below, the Selling Shareholders agree to sell to
each of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Selling Shareholders, at the purchase price set
forth in clause (a) of this Section 2, that portion of the number of Optional
Securities as to which such election shall have been exercised (to be adjusted
by you so as to eliminate fractional securities) determined by multiplying such
number of Optional Securities by a fraction, the numerator of which is the
maximum number of Optional Securities that 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 the Optional
Securities which all of the Underwriters are entitled to purchase hereunder. The
difference of $______ per Firm Security between the public offering price and
the price per Firm Security at which the Selling Shareholder will sell the Firm
Securities to the Underwriter is the "Underwriters' Discount."
The Selling Shareholders hereby grant to the Underwriters the right to
purchase at their election up to 165,000 Optional Securities, at the purchase
price per share set forth in the paragraph above, for the sole purpose of
covering over-allotments in the sale of the Firm Securities. Any such election
to purchase Optional Securities may be exercised no more than once only by
written notice from you to the Company and the Selling Shareholders given within
a period of 30 days after the date of this Agreement, setting forth the
aggregate amount of Optional Securities to be purchased and the date on which
such Optional Securities are to be delivered, as determined by you but in no
event earlier than the First Delivery Date (as defined in Section 4 hereof) or,
unless you otherwise agree in writing, earlier than two or later than 10
business days after the date of such notice.
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3. Offering by the Underwriters
Upon the authorization by you of the release of the Firm Securities,
the several Underwriters propose to offer the Firm Securities for sale upon the
terms and conditions set forth in the Prospectus.
4. Delivery and Payment
(a) Certificates in definitive form for the Securities to be purchased
by each Underwriter, and in such authorized denominations and registered in such
names as First Union Capital Markets Corp. ("First Union"), may request upon at
least 48 hours' prior notice to the Selling Shareholders shall be delivered by
or on behalf of the Selling Shareholders to you through the facilities of the
Depository Trust Company ("DTC") for the account of each 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 accounts specified by the
Custodian to First Union at least 48 hours in advance. Such certificates will be
made available for checking and packaging at least 24 hours prior to each
Delivery Date at the offices of DTC or its designated custodian. The time and
date of such delivery and payment shall be, with respect to the Firm Securities,
9:30 a.m., Charlotte, North Carolina time, on _______, 1999 or at such other
time and date as you and the Company may agree upon in writing, and, with
respect to the Optional Securities, 9:30 a.m., Charlotte, North Carolina time,
on the date specified by you in the written notice given by you of the
Underwriters' election to purchase such Optional Securities, or at such other
time and date as you and the Selling Shareholders may agree upon in writing.
Such time and date for delivery of the Firm Securities is herein called the
"First Delivery Date," such time and date for delivery of the Optional
Securities, if not the First Delivery Date, is herein called the "Second
Delivery Date," and each such time and date for delivery is herein called a
"Delivery Date."
(b) The documents to be delivered at each Delivery Date by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross receipt
for the Securities and any additional documents requested by the Underwriters
pursuant to Section 7(j) hereof and payment for the Securities, will be
delivered at the offices of Hunton & Xxxxxxxx, Bank of America Plaza, Suite
3500, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, and the
Securities will be delivered at DTC or its designated custodian, all at such
Delivery Date. A meeting will be held at Bank of America Plaza, Suite 3500, 000
Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 at 2:00 p.m., Charlotte,
North Carolina time, on the business day next preceding such Delivery Date, 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.
5. Agreements of the Company
The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form reasonably approved by you and
to file such Prospectus (or a term sheet as permitted by Rule 434(c)) pursuant
to Rule 424(b) under the Act not later than the Commission's close of business
on the second business day following the
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execution and delivery of this Agreement or transmit the Prospectus by means
reasonably calculated to result in filing with the Commission by that date, or,
if applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Act; to make no amendment or supplement to the Registration Statement or
Prospectus prior to any Delivery Date which shall be disapproved by you in
writing 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 file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
subsequent to the date of the Prospectus and for so long as the delivery of a
Prospectus is required in connection with the offering or sale of the
Securities; 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 Securities 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, to use promptly its best efforts to obtain its withdrawal;
(b) Promptly from time to time to take such actions as you may
reasonably request to qualify the Securities 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 Securities, 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., Charlotte, North Carolina time, on the
business day next succeeding the date of this Agreement and from time to time,
to furnish the Underwriters and the Selling Shareholders with copies of the
Registration Statement and the Prospectus at such locations and in such
quantities as you may from time to time reasonably request during such period
following the date hereof that a prospectus is required to be delivered in
connection with offers or sales of Securities, and, if the delivery of a
prospectus is required during this period 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 or to file under the
Exchange Act any document incorporated by reference in the Prospectus in order
to comply with the Act or the Exchange Act, to notify you and upon your request
to file such document and to prepare and furnish without charge to you 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;
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(d) As soon as practicable, but in any event not later than eighteen
months after the effective date of the Registration Statement, to make generally
available to its shareholders and to deliver to you, an earnings statement of
the Company, conforming with the requirements of Section 11(a) of the Act and
Rule 158 under the Act, covering a period of at least 12 months beginning after
the effective date of the Registration Statement;
(e) During the period beginning from the date hereof and continuing to
and including the date 180 days after the date of the First Delivery Date, not
to, directly or indirectly, offer, sell, contract to sell, pledge, grant any
option to purchase or otherwise sell or dispose of, except as provided
hereunder, any securities of the Company that are substantially similar to the
Securities, including but not limited to any shares of Stock or any other
capital stock of the Company or any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any other
capital stock of the Company or any such substantially similar securities (other
than (i) pursuant to the Company's benefit plans existing on, or upon the
conversion or exchange of convertible or exchangeable securities outstanding as
of, the date of this Agreement,(ii) by the exercise of the Company's Common
Stock Purchase Rights or (iii) pursuant to a merger, acquisition or other
business combination), without your prior written consent;
(f) During a period of three years after the effective date of the
Registration Statement, upon request, to furnish to the Company's stockholders
as soon as practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, stockholders' 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 first
fiscal quarter ending after the effective date of the Registration Statement),
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, and deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and (ii)
such additional publicly-disclosed information concerning the business and
financial condition of the Company as you may from time to time reasonably
request; and
(h) 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 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. Payment of Expenses
The Company and each of the Selling Shareholders covenant and agree
with one another and with the several Underwriters that (a) the Company will pay
or cause to be paid the
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following: (i) the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Securities 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 reproducing any
Agreement Among Underwriters, this Agreement, the Blue Sky Survey and any other
documents in connection with the offering, purchase, sale and delivery of the
Securities; (iii) the cost of copying or distributing the Blue Sky Memorandum
and any other documents such as underwriters' questionnaires and powers of
attorney in connection with the offering, purchase, sale and delivery of the
Securities; (iv) all expenses in connection with the registration of the offer
and sale of the Securities under the Act and qualification of the Securities 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;
(v) all fees and expenses in connection with listing the Securities on the
NASDAQ; (vi) the filing fees incident to securing any required review by the
NASD of the terms of the sale of the Securities; (vii) the cost of preparing
stock certificates; (viii) the costs or expenses of any transfer agent or
registrar; (ix) the costs and expenses of the Company and the Selling
Shareholders relating to investor presentations on any "road show" undertaken in
connection with the marketing of the Securities, 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 of any of the
Selling Shareholders and any such consultants, and the cost of any aircraft
chartered in connection with the road show with the prior approval of the
Company; and (x) all other costs and expenses incident to the offer and sale of
the Securities which are not otherwise specifically provided for in this Section
except as provided in clause (b) below; and (b) such Selling Shareholder will
pay or cause to be paid all costs and expenses incident to the performance of
such Selling Shareholder's obligations hereunder which are not otherwise
specifically provided for in this Section, including (i) any fees and expenses
of counsel for such Selling Shareholder, and (ii) the Underwriting Discount and
taxes incident to the sale and delivery of the Securities to be sold by such
Selling Shareholder to the Underwriters hereunder. It is understood, however,
that except as provided in this Section, Section 8 and Section 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 Securities by them,
and any advertising expenses connected with any offers they may make.
7. Conditions to Obligations of Underwriters
The obligations of the Underwriters hereunder, as to the Securities to
be delivered at each Delivery Date, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and each of the Selling Shareholders herein are, at and as of such
Delivery Date, true and correct in all material respects (except to the extent
the representation or warranty is already qualified by materiality, in which
case it shall be true in all respects), and the condition that the Company and
each of the Selling Shareholders shall have performed all of its or their
respective obligations hereunder theretofore to be performed, and the following
additional conditions:
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(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) under the Act within the applicable time period prescribed for
such filing by the rules and regulations under the Act and in accordance with
Section 5(a) of this Agreement; 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 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) Hunton & Xxxxxxxx, counsel for the Underwriters, shall have
furnished to you such opinion or opinions, dated such Delivery Date, with
respect to the incorporation of the Company, the validity of the Securities
being sold at such Delivery Date, 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;
(c) Xxxxx Xxxxx & Xxxxx, counsel for the Company, shall have furnished
to you their written opinion, dated such Delivery Date, in form and substance
reasonably satisfactory to you, to the effect set forth in Exhibit A attached
hereto;
(d) Xxxx, Xxxxxxxx & Xxxxxxxx, LLP, counsel for the Company, shall have
furnished to you their written opinion, dated such Delivery Date, in form and
substance reasonably satisfactory to you, to the effect set forth in Exhibit B
attached hereto;
(e) Each of Xxxxxx Xxxxxxx Xxxxxxxxx & Price, PLLC, counsel for The
Xxxxxx Foundation, Inc. and Xxxxxxxx, Xxxxxx and Chebot, counsel for World
Division of the General Board of Global Ministries of the United Methodist
Church, shall have furnished to you and the Company their written opinion with
respect to the respective Selling Shareholder, dated such Delivery Date, in form
and substance reasonably satisfactory to you, to the effect set forth in Exhibit
C attached hereto;
(f) On the date of the Prospectus prior to execution of this Agreement
and the effective date of any post-effective amendment to the Registration
Statement filed subsequent to the date of this Agreement and also at each
Delivery Date prior to delivery of the Securities to be delivered on such
Delivery Date, KPMG LLP shall have furnished to you and to the Selling
Shareholders a letter or letters, dated the respective date of delivery thereof,
in form and substance satisfactory to you and to the Selling Shareholders,
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 relating to the Company and its
Subsidiaries contained in the Registration Statement and Prospectus;
(g) (i) Neither the Company nor any of the Subsidiaries shall have
sustained, since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus, any loss or interference with their
business taken as a whole from fire, explosion, flood or other calamity, whether
or not covered by insurance, or from any labor dispute or court
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or governmental action, order or decree, except as set forth or contemplated in
the Prospectus, which is reasonably likely, currently or prospectively, to have
a Material Adverse Effect, and (ii) since the respective dates as of which
information is given in the Prospectus there shall not have been any change in
the outstanding capital stock or long-term debt of the Company or any of the
Subsidiaries, or any other change or development, that is reasonably likely,
currently or prospectively, to have a Material Adverse Effect, the effect of
which, in any such case described in clause (i) or (ii) is in your judgment so
material and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Securities being delivered at such
Delivery Date on the terms and in the manner contemplated by the Prospectus;
(h) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading of any of the
securities of the Company on NASDAQ; (ii) any United States federal or state
statute, regulation, rule or order of any court, legislative body, agency or
other governmental authority shall have been enacted, published, decreed or
promulgated or any proceeding or investigation shall have been commenced which,
in your judgment, materially and adversely affects the business or operations of
the Company; (iii) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or the Nasdaq National Market; (iv) a
general moratorium on commercial banking activities declared by either federal
or New York or North Carolina authorities; (v) the outbreak or escalation of
hostilities involving the United States or declaration by the United States of a
national emergency or war, if the effect of any such event specified in this
clause (v) in your judgment makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Securities being delivered at
such Delivery Date on the terms and in the manner contemplated in the
Prospectus; (vi) any downgrading in the rating of any debt securities of the
Company by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act), or any public announcement
that any such organization has under surveillance or review of its rating of any
debt securities of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); or (vii) such a material adverse change in general
economic, political, financial or international conditions affecting financial
markets in the United States having a material adverse impact on trading prices
of securities in general, as, in your judgment, makes it inadvisable to proceed
with the payment for and delivery of the Securities;
(i) The Company shall have furnished to you copies of agreements
between the Company and the directors and executive officers of the Company and
the Selling Shareholders substantially to the effect set forth in Exhibit D
hereof (provided that the time period covered by such agreement shall be from
the date hereof to and including the date 180 days (or 120 days with respect to
the directors and executive officers of the Company) after the date of the First
Delivery Date) in form and substance satisfactory to you; and
(j) The Company and each of the Selling Shareholders shall have
furnished or caused to be furnished to you at such Delivery Date certificates of
officers of the Company and each of the Selling Shareholders, respectively,
satisfactory to you as to the accuracy of the respective representations and
warranties of the Company and each of the Selling Shareholders, respectively,
herein at and as of such Delivery Date, as to the performance by the Company and
each of the Selling Shareholders of all of their respective obligations
hereunder to be performed
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at or prior to such Delivery Date, as to the matters set forth in subsections
(a) and (f) of this Section and as to such other matters as you may reasonably
request.
8. Indemnification and Contribution
(a) The Company 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 promptly 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 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 First Union expressly for use therein; provided, further, that the
foregoing indemnity with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter for whom the person asserting such losses,
claims, damages or liabilities purchased the securities, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent by or on behalf of such Underwriter to such person if
required by law to do so and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such losses, claims, damages or
liabilities, unless the failure to so deliver was the result of non-compliance
by the Company with Section 5(c) hereof.
The Company will indemnify and hold harmless each Selling Shareholder
against any losses, claims, damages or liabilities, joint or several, to which
such Selling Shareholder 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 promptly will reimburse each indemnified party for
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company 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 Selling Shareholders expressly for use therein (which information,
you acknowledge, is limited to the
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name and address of, and the number of shares of Stock beneficially owned by,
the respective Selling Shareholder, the first sentence of the second paragraph
under the heading "Principal and Selling Stockholders" in the Registration
Statement as it relates to the respective Selling Shareholder, the respective
Selling Shareholder's responses to the Company's "NASD Questionnaire to Selling
Shareholders" and the respecting Selling Shareholders representations set forth
herein).
(b) Subject to subsection (f) of this Section, each of the Selling
Shareholders, 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 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 a 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
Selling Shareholder expressly for use therein (which information, you
acknowledge, is limited to the name and address of, and the number of shares of
Stock beneficially owned by, the respective Selling Shareholder, the first
sentence of the second paragraph under the heading "Principal and Selling
Stockholders" in the Registration Statement as it relates to the respective
Selling Shareholder, the respective Selling Shareholder's responses to the
Company's "NASD Questionnaire to Selling Shareholders" and the respecting
Selling Shareholders representations set forth herein); 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 none of the Selling
Shareholders shall 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 the Underwriters through First Union expressly for
use therein, it being understood and agreed that the only such information
furnished by any Underwriter consists of the information described as such in
subsection (c) below; provided, further, that the foregoing indemnity with
respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter for whom the person asserting such losses, claims, damages or
liabilities purchased the securities, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
by or on behalf of such Underwriter to such person if required by law to do so
and if the Prospectus (as so amended or supplemented) would have cured the
defect giving rise to such losses, claims, damages or liabilities, unless the
failure to so deliver was the result of non-compliance by the Company with
Section 5(c) hereof.
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(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company and each Selling Shareholder against any losses, claims,
damages or liabilities to which the Company or such Selling Shareholder 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 the 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 First Union
expressly for use therein; and will reimburse the Company and each Selling
Shareholder for any legal or other expenses reasonably incurred by the Company
and such Selling Shareholder in connection with investigating or defending any
such action or claim. The Company and each of the Selling Shareholders
acknowledge that the only information that the Underwriters have furnished to
the Company and the Selling Shareholders expressly for use in the Registration
Statement, the Preliminary Prospectus or the Prospectus (or any amendment or
supplement thereto) are the statements set forth (i) on the last paragraph at
the bottom of the cover page concerning the terms of the offering by the
Underwriters, (ii) in the last [ ] paragraphs on the inside front cover page of
the Prospectus concerning over-allotments, syndicate short-covering
transactions, penalty bids, stabilization and passive market making by the
Underwriters, (iii) the concession and reallowance figures appearing in the
table under the caption "Underwriting"; and (iv) the [___] and [___] paragraphs
under the caption "Underwriting."
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) 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; provided, however,
that if the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have been advised by
counsel that representation of such indemnified party and the indemnifying party
may be inappropriate under applicable standards of professional conduct due to
actual or potential differing interests between them, the indemnified party or
parties shall have the right to select separate counsel to defend such action on
behalf of such indemnified party or parties. It is understood that the
indemnifying party shall, in connection with any such 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 reasonable fees
and expenses of only one separate firm of attorneys together with appropriate
local counsel at any time for all
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indemnified parties unless such firm of attorneys shall have reasonably
concluded that one or more indemnified parties has actual differing interests
with other indemnified parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to appoint counsel to defend
such action and approval by the indemnified party of such counsel, the
indemnifying party will not be liable for any settlement entered into without
its consent and will not be liable to such indemnified party under this Section
8 for any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof unless (i) the indemnified party
shall have employed separate counsel in accordance with the proviso to the next
preceding sentence, (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action or
(iii) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party; and except that, if
clause (i) or (iii) is applicable, such liability shall be only in respect of
the counsel referred to in such clause (i) or (iii). Notwithstanding the
immediately preceding sentence and the first sentence of this paragraph, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party under subsection (a), (b) or (c) above, as the case
may be, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to in subsection (a), (b) or (c) above,
as the case may be, in such proportion as is appropriate to reflect the relative
benefits received by the Company and each of the Selling Shareholders in
question on the one hand and the Underwriters on the other from the offering of
the Securities. 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 (d) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and the Selling
Shareholders in question 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 or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the Company and each of the Selling Shareholders in question 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 (after deducting the
total underwriting discount, but before deducting expenses) received by the
Company and each of the Selling Shareholders in question bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by
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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 the Selling Shareholder in
question 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, each of the Selling
Shareholders and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this subsection (e) 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 into account
the equitable considerations referred to above in this subsection (e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
referred to above in this subsection (e) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations under this subsection (e) are
several in proportion to their respective underwriting obligations and not
joint.
(f) The liability of each of the Selling Shareholders under this
Section 8 shall be limited to an amount equal to the initial public offering
price less the underwriting discount of the securities sold by such Selling
Shareholder to the Underwriters.
(g) The respective obligations of the Company and each of the Selling
Shareholders under this Section 8 shall be in addition to any liability which
the Company and such Selling Shareholder 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 each officer and director of any
Underwriter; 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 any Selling Shareholder and to each person, if any,
who controls the Company or any Selling Shareholder within the meaning of the
Act.
9. Default of Underwriters
(a) If any Underwriter shall default in its obligation to purchase the
Securities that it has agreed to purchase hereunder at a Delivery Date, you may
in your discretion arrange for you or another party or other parties to purchase
such Securities on the terms contained herein. If within 36 hours after such
default by any Underwriter you do not arrange for the purchase of such
Securities, then the Selling Shareholders shall be entitled to a further period
of 36 hours within which to procure another party or other parties satisfactory
to you to purchase such Securities on such terms. In the event that, within the
respective prescribed periods, you notify the Selling Shareholders that you have
so arranged for the purchase of such Securities, or the Selling
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Shareholders notify you that they have arranged for the purchase of such
Securities, you or the Company and the Selling Shareholders shall have the right
to postpone such Delivery Date 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, exercised in
consultation with Hunton & Xxxxxxxx, 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 Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters by you and the Selling
Shareholders as provided in subsection (a) above, the aggregate number of such
Securities which remains unpurchased does not exceed one-eleventh of the
aggregate number of all the Securities to be purchased at such Delivery Date,
then the Selling Shareholders shall have the right to require each
non-defaulting Underwriter to purchase the number of Securities that such
Underwriter agreed to purchase hereunder at such Delivery Date and, in addition,
to require each non-defaulting Underwriter to purchase its pro rata share (based
on the number of Securities which such Underwriter agreed to purchase hereunder
at such Delivery Date) of the Securities 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
Securities of a defaulting Underwriter or Underwriters by you and the Selling
Shareholders as provided in subsection (a) above, the aggregate number of such
Securities which remains unpurchased exceeds one-eleventh of the aggregate
number of all the Securities to be purchased at such Delivery Date, or if the
Selling Shareholders shall not exercise the right described in subsection (b)
above to require non-defaulting Underwriters to purchase Securities of a
defaulting Underwriter or Underwriters, then this Agreement (or, with respect to
the Second Delivery Date, the obligation of the Underwriters to purchase and of
the Selling Shareholders to sell the Optional Securities) shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter or
the Company and the Selling Shareholders, except for the expenses to be borne by
the Company and the Selling Shareholders and the Underwriters as provided in
Section 6 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. Representations and Indemnities to Survive
The respective indemnities, agreements, representations, warranties and
other statements of the Company, each of the Selling Shareholders 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 termination or cancellation of this Agreement or 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
or any of the Selling Shareholders, or any officer or director or controlling
person of the Company, or any controlling person of any Selling Shareholder and
shall survive delivery of and payment for the Securities.
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11. Termination and Payment of Expenses
If this Agreement shall be terminated pursuant to Section 9 hereof or
as a result of the occurrence of an event described in Section 7(h)(ii), (iii),
(iv), (v) or (vii) hereof, neither the Company nor the Selling Shareholders
shall then be under any liability to any Underwriter except as provided in
Section 6 and Section 8 hereof; but if for any other reason any Securities are
not delivered by or on behalf of the Selling Shareholders (with respect to Firm
Securities only) as provided herein, the Company will reimburse the Underwriters
through you for all out-of-pocket expenses, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Securities not so delivered, but the Company
and the Selling Shareholders shall then be under no further liability to any
Underwriter except as provided in Section 6 and Section 8 hereof.
12. Notices
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 First Union on behalf of you as the representative;
and in all dealings with any Selling Shareholder, you and the Company shall be
entitled to act and rely upon any statement, request, notice or agreement on
behalf of such Selling Shareholder made or given by the Attorney-in-Fact for
such Selling Shareholder, subject to the limitations set forth in the Power of
Attorney.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by reliable
courier, first-class mail, telex or facsimile transmission to you as
representatives in care of First Union Capital Markets Corp., 000 Xxxx Xxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention: [Corporate Finance Department]; if
to any of the Selling Shareholders or the Company shall be delivered or sent by
reliable courier, first-class mail, telex, or facsimile transmission to the
address of the Selling Shareholders and the Company set forth in the
Registration Statement (in the case of the Company, Attention: Xxxxx Xxxxxx);
provided, however, that any notice to any Underwriter pursuant to Section 8
hereof shall be delivered or sent by reliable courier, first-class mail, telex
or facsimile transmission to such Underwriter at its address set forth in the
Underwriters' Questionnaire or telex constituting such Questionnaire, which
address will be supplied to the Company or the Selling Shareholders by you upon
request. Any such statements, requests, notices or agreements shall take effect
upon receipt thereof.
13. Successors
This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, each of the Selling Shareholders, and the Company and, to
the extent provided in Sections 8 and 10 hereof, the officers and directors of
the Company and each of the Selling Shareholders and each person who controls
the Company, any Selling Shareholder, or any Underwriter, and their respective
heirs, executors, administrators, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this agreement. No
purchaser
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of any of the Securities from any Underwriter shall be deemed a successor or
assign by reason merely of such purchase.
14. Time of the Essence
Time shall be of the essence in this Agreement.
15. Business Day
As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
16. Applicable Law
This Agreement shall be construed in accordance with the internal laws
of the State of North Carolina.
17. Captions
The captions included in this Agreement are included solely for
convenience of reference and shall not be deemed to be a part of this Agreement.
18. Counterparts
This Agreement may be executed by any one or more of the parties 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.
19. Pronouns
All pronouns used herein shall be deemed to refer to the masculine,
feminine, or neuter gender as the text requires.
If the foregoing is in accordance with your understanding, please sign
and return to us four counterparts hereof, and upon the acceptance hereof by
you, this letter and such acceptance hereof shall constitute a binding agreement
among each of the Underwriters, the Company and each of the Selling
Shareholders. It is understood that your acceptance of this Agreement on behalf
of each of the Underwriters is pursuant to the authority set forth in a form of
Agreement Among Underwriters, the form of which will be submitted to the Company
and each of the Selling Shareholders for examination, upon request, but without
warranty on your part as to the authority of the signers thereof.
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Any person executing and delivering this Agreement as Attorney-in-Fact
for a Selling Shareholder represents by so doing that he has been duly appointed
as Attorney-in-Fact by such Selling Shareholder pursuant to a validly existing
and binding Power of Attorney which authorizes such Attorney-in-Fact to take
such action.
Very truly yours,
CT COMMUNICATIONS, INC.
By: _____________________________
Name:
Title:
The Xxxxxx Foundation, Inc.
By: CT Communications, Inc.,
Attorney-in-Fact acting on behalf of each of the
Selling Shareholders named in Schedule II to this
Agreement
By: ______________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: President
WORLD DIVISION OF THE GENERAL
BOARD OF GLOBAL MINISTRIES OF
THE UNITED METHODIST CHURCH
By: CT COMMUNICATIONS, INC.,
Attorney-in-Fact acting on behalf of each of the
Selling Shareholders named in Schedule II to this
Agreement
By: _____________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: President
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Accepted as of the date hereof
at Charlotte, North Carolina:
FIRST UNION CAPITAL MARKETS CORP.
XXXX XXXXX XXXXXX XXXX, INCORPORATED
XXXXX & XXXXXXXXXXXX, INC.
Representatives of the Underwriters
FIRST UNION CAPITAL MARKETS CORP.
By: ______________________________
Name:
Title:
XXXX XXXXX XXXXXX XXXX, INCORPORATED
By: ______________________________
Name:
Title:
XXXXX & XXXXXXXXXXXX, INC.
By: ______________________________
Name:
Title:
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SCHEDULE I
Optional
Securities
to be Purchased
if Maximum
Firm Securities Option
Underwriter to be Purchased Exercised
------------------------------------------------------------------ --------------- ---------------
First Union Capital Markets Corp...........................
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated.......................
Xxxxx & Xxxxxxxxxxxx, Inc..................................
[Names of other Underwriters]..............................
--------------- ---------------
Total.......................................
=============== ===============
30
SCHEDULE II
Number of Optional
Total Number Securities to be
of Firm Securities Sold if Maximum
to be Sold Option Exercised
--------------------------- ---------------------------
The Selling Shareholders(1):
------------------------------------------------
The Xxxxxx Foundation, Inc. ........... 600,000 90,000
World Division of the General Board of
Global Ministries of the United
Methodist Church....................... 500,000 75,000
.......................................
.......................................
.......................................
--------------------------- ---------------------------
Total....................................... 1,100,000 165,000
=========================== ===========================
------------------------
(1) Attorney-in-Fact for the Selling Shareholders is the Company.
31
SCHEDULE III
Subsidiaries of CT Communications, Inc.
State or Country
Name of Subsidiary of Incorporation
---------------------------------------------- ----------------
The Concord Telephone Company North Carolina
CTC Long Distance Services, Inc. North Carolina
CT Cellular, Inc. North Carolina
Carolina Personal Communications, Inc. (dba CT North Carolina
Wireless, Inc.)
CT Wireless Cable, Inc. North Carolina
CTC Exchange Services, Inc. North Carolina
CT Global Telecommunications, Inc. Delaware
CT Communications Northeast Trust Massachusetts
CTC Internet Services, Inc. North Carolina
CT Communications Northeast, inc. Massachusetts
