EXHIBIT 99.1
UNDERWRITING AGREEMENT
LODGENET ENTERTAINMENT CORPORATION
3,950,000 shares
Common Stock
($0.01 Par Value)
June 29, 2004
UNDERWRITING AGREEMENT
June 29, 2004
UBS Securities LLC
Bear, Xxxxxxx & Co. Inc.
CIBC World Markets Corp.
as Managing Underwriters
c/o UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
LodgeNet Entertainment Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell to the underwriters named in Schedule A
annexed hereto (the "Underwriters"), for whom you are acting as representatives,
an aggregate of 3,950,000 shares (the "Firm Shares") of common stock, $0.01 par
value (the "Common Stock"), of the Company. In addition, solely for the purpose
of covering over-allotments, the Company proposes to grant to the Underwriters
the option to purchase from the Company up to an additional 592,500 shares of
Common Stock (the "Additional Shares"). The Firm Shares and the Additional
Shares are hereinafter collectively sometimes referred to as the "Shares." The
Shares are described in the Prospectus which is referred to below.
The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the "Act") a registration statement on Form S-3 (File No.
333-114199), including a prospectus, relating to the Shares, and the offering
thereof from time to time in accordance with Rule 415 of the Act, which
prospectus incorporates by reference documents which the Company has filed or
will file in accordance with the provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder (collectively, the
"Exchange Act"). The Company has furnished to you, for use by the Underwriters
and by dealers, copies of one or more preliminary prospectus supplements to the
prospectus included in the registration statement referred to above setting
forth the terms of the offering, sale and plan of distribution of the Shares and
additional information concerning the Company and its business and the documents
incorporated by reference therein (each such preliminary prospectus supplement
and the related base prospectus, including the documents incorporated therein by
reference, being herein called a "Preliminary Prospectus") relating to the
Shares. Except where the context otherwise requires, the registration statement,
as amended when it became effective, including all documents filed as a part
thereof or incorporated by reference therein, and including any information
contained in a prospectus subsequently filed with the Securities and Exchange
Commission (the "Commission") pursuant to Rule 424(b) under the Act and deemed
to be part of the registration statement at the time of effectiveness pursuant
to Rule 430(A) under the Act and also including any registration statement filed
pursuant to Rule 462(b) under the Act, is herein called the "Registration
Statement," and the prospectus, as supplemented by the final prospectus
supplement, including all documents incorporated therein by reference, in the
form filed by the Company with the Commission
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pursuant to Rule 424(b) under the Act on or before the second business day after
the date hereof (or such earlier time as may be required under the Act), is
herein called the "Prospectus." As used herein, "business day" shall mean a day
on which the New York Stock Exchange is open for trading.
The Company and the Underwriters agree as follows:
1. Sale and Purchase. Upon the basis of the representations and
warranties and subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to the respective Underwriters and each of the
Underwriters, severally and not jointly, agrees to purchase from the Company the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule A attached hereto, subject to adjustment in accordance with Section 8
hereof, in each case at a purchase price of $15.5925 per Share. The Company is
advised by you that the Underwriters intend (i) to make a public offering of
their respective portions of the Firm Shares as soon after the date hereof as in
your judgment is advisable, and (ii) initially to offer the Firm Shares upon the
terms set forth in the Prospectus. You may from time to time increase or
decrease the public offering price after the initial public offering to such
extent as you may determine.
In addition, the Company hereby grants to the several
Underwriters the option to purchase, and upon the basis of the representations
and warranties and subject to the terms and conditions herein set forth, the
Underwriters shall have the right to purchase, severally and not jointly, from
the Company, ratably as set forth below, all or a portion of the Additional
Shares as may be necessary solely to cover over-allotments made in connection
with the offering of the Firm Shares, at the same purchase price per share to be
paid by the Underwriters to the Company for the Firm Shares. This option may be
exercised by UBS Securities LLC ("UBS") on behalf of the several Underwriters at
any time and from time to time on or before the thirtieth day following the date
of the Prospectus, by written notice to the Company. Such notice shall set forth
the aggregate number of Additional Shares as to which the option is being
exercised, and the date and time when the Additional Shares are to be delivered
(each such date and time being herein referred to as the "additional time of
purchase"); provided, however, that the additional times of purchase shall not
be earlier than the time of purchase (as defined below), nor earlier than the
second business day after the date on which the option shall have been
exercised, nor later than the tenth business day after the date on which the
option shall have been exercised. The number of Additional Shares to be sold to
each Underwriter shall be the number which bears the same proportion to the
aggregate number of Additional Shares being purchased as the number of Firm
Shares set forth opposite the name of such Underwriter on Schedule A hereto
bears to the total number of Firm Shares (subject, in each case, to such
adjustment as you may determine to eliminate fractional shares), and subject to
adjustment in accordance with Section 8 hereof.
2. Payment and Delivery. Payment of the purchase price for the Firm
Shares shall be made to the Company by Federal Funds wire transfer, against
delivery of the certificates for the Firm Shares to you through the facilities
of The Depository Trust Company ("DTC") for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 10:00 A.M., New York
City time, on July 6, 2004 (unless another time shall be agreed to by you and
the Company or unless postponed in accordance with the provisions of Section 8
hereof). The time at which such payment and delivery are to be made is
hereinafter sometimes called "the time of purchase." Electronic transfer of the
Firm Shares shall be made to you at the time of purchase in such names and in
such denominations as you shall specify.
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Payment of the purchase price for the Additional Shares shall be
made at the additional times of purchase in the same manner and at the same
office as the payment for the Firm Shares. Electronic transfer of the Additional
Shares shall be made to you at the additional times of purchase in such names
and in such denominations as you shall specify.
Deliveries of the documents described in Section 6 hereof with
respect to the purchase of the Shares shall be made at the offices of Xxxxxx,
Xxxx & Xxxxxxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx at 10:00
A.M., Los Angeles City time, on the date of the closing of the purchase of the
Firm Shares or the Additional Shares, as the case may be.
3. Representations and Warranties of the Company. The Company represents
and warrants to and agrees with
each of the Underwriters that:
(a) The Registration Statement has been declared effective under
the Act; no stop order of the Commission preventing or suspending the
use of any Preliminary Prospectus or the effectiveness of the
Registration Statement has been issued and no proceedings for such
purpose have been instituted or, to the Company's knowledge after due
inquiry, are contemplated by the Commission; each Preliminary
Prospectus, at the time of filing thereof, complied in all material
respects to the requirements of the Act and the last Preliminary
Prospectus distributed in connection with the offering of the Shares did
not, as of its date, and does not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; the
Registration Statement complied when it became effective, complies and
will comply, at the time of purchase and the additional times of
purchase, in all material respects with the requirements of the Act and
the Prospectus will comply, as of its date and at the time of purchase
and the additional times of purchase, in all material respects with the
requirements of the Act and any statutes, regulations, contracts or
other documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement have been and will be so described or filed; the
conditions to the use of Form S-3 have been satisfied; the Registration
Statement meets the requirements set forth in Rule 415 under the Act and
complies in all material respects with such Rule; the Registration
Statement did not when it became effective, does not and will not, at
the time of purchase and the additional times of purchase, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and the Prospectus will not, as of its date and
at the time of purchase and the additional times of purchase, 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 the Company makes no warranty or
representation with respect to any statement contained in the last
Preliminary Prospectus, the Registration Statement or the Prospectus in
reliance upon and in conformity with information concerning an
Underwriter and furnished in writing by or on behalf of such Underwriter
through you to the Company expressly for use in the last Preliminary
Prospectus, the Registration Statement or the Prospectus; the documents
incorporated by reference in the Preliminary Prospectus, the
Registration Statement and the Prospectus, at the time they became
effective or were filed with the Commission, complied in all material
respects with the requirements of the Exchange Act and
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did not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; and the Company has not distributed and will not
distribute any offering material in connection with the offering or sale
of the Shares other than the Registration Statement, the then most
recent Preliminary Prospectus and the Prospectus;
(b) as of the date of this Agreement, the Company has an
authorized and outstanding capitalization as set forth in the section of
the Registration Statement and the Prospectus entitled "Capitalization"
and, as of the time of purchase and the additional times of purchase, as
the case may be, the Company shall have an authorized and outstanding
capitalization as set forth in the section of the Registration Statement
and the Prospectus entitled "Capitalization" (subject, in each case, to
the issuance of shares of Common Stock upon exercise of stock options
and warrants disclosed as outstanding in the Registration Statement and
the Prospectus and grant of options or restricted stock under existing
equity incentive plans described in the Registration Statement and the
Prospectus); all of the issued and outstanding shares of capital stock,
including the Common Stock, of the Company have been duly authorized and
validly issued and are fully paid and non-assessable, and such issued
and outstanding shares of capital stock, as well as all options,
warrants or other securities convertible into shares of capital stock of
the Company, have been issued, or granted, as applicable, in compliance
with the Company's charter and by-laws and in compliance in all material
respects with all federal and state securities and other applicable laws
and were not issued in violation of any preemptive right, resale right,
right of first refusal or similar right;
(c) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with full corporate power and authority to own, lease and
operate its properties and conduct its business as described in the
Registration Statement and the Prospectus, to execute and deliver this
Agreement and to issue, sell and deliver the Shares as contemplated
herein;
(d) the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the
ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified
and in good standing would not, individually or in the aggregate, have a
material adverse effect on the business, properties, financial
condition, results of operation or prospects of the Company and the
Subsidiary (as hereinafter defined) taken as a whole (a "Material
Adverse Effect");
(e) the Company has no subsidiaries (as defined in the Act)
other than LodgeNet Entertainment (Canada) Corporation (the
"Subsidiary"); the Company owns all of the issued and outstanding
capital stock of the Subsidiary; other than the capital stock of the
Subsidiary, and the Company's equity ownership in PointOne Technologies,
LLC, as described in the Prospectus, the Company does not own, directly
or indirectly, any shares of stock or any other equity or long-term debt
securities of any corporation or have any equity interest in any firm,
partnership, joint venture, association or other entity; complete and
correct copies of the certificates of incorporation and the by-laws of
the Company and the Subsidiary and all amendments thereto have been
delivered to you, and except as set forth in the exhibits to the
Registration Statement, no changes
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therein will be made subsequent to the date hereof and prior to the time
of purchase or, if later, the additional times of purchase; the
Subsidiary has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus; the Subsidiary is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the ownership or leasing of its
properties or the conduct of its business requires such qualification,
except where the failure to be so qualified and in good standing would
not, individually or in the aggregate, have a Material Adverse Effect;
all of the outstanding shares of capital stock of the Subsidiary have
been duly authorized and validly issued, are fully paid and
non-assessable and are owned by the Company subject to no security
interest, other encumbrance or adverse claims; and no options, warrants
or other rights to purchase, agreements or other obligations to issue or
other rights to convert any obligation into shares of capital stock or
ownership interests in the Subsidiary are outstanding;
(f) the Shares have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will
be duly and validly issued, fully paid and non-assessable and free of
statutory and contractual preemptive rights, resale rights, rights of
first refusal and similar rights;
(g) the capital stock of the Company, including the Shares,
conforms in all material respects to the description thereof contained
in the Registration Statement and the Prospectus and the certificates
for the Shares are in due and proper form and the holders of the Shares
will not be subject to personal liability by reason of being such
holders;
(h) this Agreement has been duly authorized, executed and
delivered by the Company;
(i) neither the Company nor the Subsidiary is in breach or
violation of or in default under (nor has any event occurred which with
notice, lapse of time or both would result in any breach or violation
of, constitute a default under or give the holder of any indebtedness
(or a person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a part of such
indebtedness under) its respective charter or by-laws, or any indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence
of indebtedness, or any license, lease, contract or other agreement or
instrument to which the Company or the Subsidiary is a party or by which
any of them or any of their properties may be bound or affected, except,
in each case, where any such breach, violation or default would not
result in a Material Adverse Effect on the Company or the Subsidiary,
and the execution, delivery and performance of this Agreement, the
issuance and sale of the Shares and the consummation of the transactions
contemplated hereby will not conflict with, result in any breach or
violation of or constitute a default under (nor constitute any event
which with notice, lapse of time or both would result in any breach or
violation of or constitute a default under) the charter or by-laws of
the Company or the Subsidiary, or any indenture, mortgage, deed of
trust, bank loan or credit agreement or other evidence of indebtedness,
or any license, lease, contract or other agreement or instrument to
which the Company or the Subsidiary is a party or by which any of them
or any of their respective
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properties may be bound or affected, or any federal, state, local or
foreign law, regulation or rule or any decree, judgment or order
applicable to the Company or any the Subsidiary;
(j) no approval, authorization, consent or order of or filing
with any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency is required in connection
with the issuance and sale of the Shares or the consummation by the
Company of the transactions contemplated hereby, other than registration
of the Shares under the Act, which has been or will be effected, and any
necessary qualification under the securities or blue sky laws of the
various jurisdictions in which the Shares are being offered by the
Underwriters or under the rules and regulations of the NASD;
(k) except as set forth in the Registration Statement and the
Prospectus, (i) no person has the right, contractual or otherwise, to
cause the Company to issue or sell to it any shares of Common Stock or
shares of any other capital stock or other equity interests of the
Company, (ii) no person has any preemptive rights, resale rights, rights
of first refusal or other rights to purchase any shares of Common Stock
or shares of any other capital stock or other equity interests of the
Company, and (iii) no person has the right to act as an underwriter or
as a financial advisor to the Company in connection with the offer and
sale of the Shares, in the case of each of the foregoing clauses (i),
(ii) and (iii), whether as a result of the filing or effectiveness of
the Registration Statement or the sale of the Shares as contemplated
thereby or otherwise; no person has the right, contractual or otherwise,
to cause the Company to register under the Act any shares of Common
Stock or shares of any other capital stock or other equity interests of
the Company, or to include any such shares or interests in the
Registration Statement or the offering contemplated thereby, whether as
a result of the filing or effectiveness of the Registration Statement or
the sale of the Shares as contemplated thereby or otherwise;
(l) each of the Company and the Subsidiary has all necessary
licenses, authorizations, consents and approvals and has made all
necessary filings required under any federal, state, local or foreign
law, regulation or rule, and has obtained all necessary authorizations,
consents and approvals from other persons, in order to conduct its
respective business; neither the Company nor the Subsidiary is in
violation of, or in default under, or has received notice of any
proceedings relating to revocation or modification of, any such license,
authorization, consent or approval or any federal, state, local or
foreign law, regulation or rule or any decree, order or judgment
applicable to the Company or the Subsidiary, except where such
violation, default, revocation or modification would not, individually
or in the aggregate, have a Material Adverse Effect;
(m) all legal or governmental proceedings, affiliate
transactions, off-balance sheet transactions, contracts, licenses,
agreements, leases or documents of a character required to be described
in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement have been so described or filed as
required;
(n) there are no actions, suits, claims, investigations or
proceedings pending or threatened or, to the Company's knowledge after
due inquiry, contemplated to which the Company or the Subsidiary or any
of their respective directors or officers is or would be a party or of
which any of their respective properties is or would be subject at law
or in equity, before or by
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any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency, except any such action,
suit, claim, investigation or proceeding which would not result in a
judgment, decree or order having, individually or in the aggregate, a
Material Adverse Effect or preventing consummation of the transactions
contemplated hereby;
(o) Xxxxxx Xxxxxxxx LLP, which certified certain consolidated
financial statements and supporting schedules of the Company included in
the Registration Statement, were, during the periods in which they
certified such consolidated financial statements and supporting
schedules of the Company, independent public accountants as required by
the Securities Act, the Exchange Act and the respective Rules and
Regulations thereunder;
(p) PricewaterhouseCoopers LLP, who are the current auditors of
the Company and whose report on the consolidated financial statements of
the Company and the Subsidiary is filed with the Commission as part of
the Registration Statement and the Prospectus, are independent public
accountants as required by the Act;
(q) the audited financial statements included in the
Registration Statement and the Prospectus, together with the related
notes and schedules, present fairly the consolidated financial position
of the Company and the Subsidiary as of the dates indicated and the
consolidated results of operations and cash flows of the Company and the
Subsidiary for the periods specified and have been prepared in
compliance with the requirements of the Act and in conformity with
generally accepted accounting principles applied on a consistent basis
during the periods involved; any pro forma financial statements or data
included in the Registration Statement and the Prospectus comply with
the requirements of Regulation S-X of the Act and the assumptions used
in the preparation of such pro forma financial statements and data are
reasonable, the pro forma adjustments used therein are appropriate to
give effect to the transactions or circumstances described therein and
the pro forma adjustments have been properly applied to the historical
amounts in the compilation of those statements and data; the other
financial and statistical data set forth in the Registration Statement
and the Prospectus are accurately presented and prepared on a basis
consistent with the financial statements and books and records of the
Company; there are no financial statements (historical or pro forma)
that are required to be included in the Registration Statement and the
Prospectus that are not included as required; and the Company and the
Subsidiary do not have any material liabilities or obligations, direct
or contingent (including any off-balance sheet obligations), not
disclosed in the Registration Statement and the Prospectus;
(r) subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, there has not
been (i) any material adverse change, or any development involving a
prospective material adverse change, in the business, properties,
management, financial condition or results of operations of the Company
and the Subsidiary taken as a whole, (ii) any transaction which is
material to the Company and the Subsidiary taken as a whole, (iii) any
obligation, direct or contingent (including any off-balance sheet
obligations), incurred by the Company or the Subsidiary, which is
material to the Company and the Subsidiary taken as a whole, (iv) any
change in the capital stock or outstanding indebtedness of the Company
or the Subsidiary or (v) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company;
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(s) the Company has obtained for the benefit of the Underwriters
the agreement (a "Lock-Up Agreement"), in the form set forth as Exhibit
B hereto, of each of its directors and officers and each stockholder
named in Exhibit A hereto;
(t) the Company is not and, after giving effect to the offering
and sale of the Shares, will not be 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"), or a "passive foreign investment company" or a "controlled
foreign corporation," as such terms are defined in the Internal Revenue
Code);
(u) the Company and the Subsidiary each have good and marketable
title to all property (real and personal) described the Registration
Statement and in the Prospectus as being owned by each of them, free and
clear of all liens, claims, security interests or other encumbrances;
all the property described in the Registration Statement and the
Prospectus as being held under lease by the Company or the Subsidiary is
held thereby under valid, subsisting and enforceable leases;
(v) the Company and the Subsidiary each own, or have obtained
valid and enforceable licenses for, or other rights to use, the
inventions, patent applications, patents, trademarks (both registered
and unregistered), tradenames, copyrights, trade secrets and other
proprietary information described in the Registration Statement and the
Prospectus as being owned or licensed by them or which are necessary for
the conduct of their respective businesses, except where the failure to
own, license or have such rights would not, individually or in the
aggregate, have a Material Adverse Effect (collectively, "Intellectual
Property"); (i) there are no third parties who have or, to the Company's
knowledge after due inquiry, will be able to establish rights to any
Intellectual Property, except for the ownership rights of the owners of
the Intellectual Property which is licensed to the Company; (ii) there
is no infringement by third parties of any Intellectual Property; (iii)
there is no pending or threatened action, suit, proceeding or claim by
others challenging the Company's rights in or to any Intellectual
Property, and the Company is unaware of any facts which could form a
reasonable basis for any such claim; (iv) there is no pending or
threatened action, suit, proceeding or claim by others challenging the
validity or scope of any Intellectual Property, and the Company is
unaware of any facts which could form a reasonable basis for any such
claim; (v) there is no pending or threatened action, suit, proceeding or
claim by others that the Company infringes or otherwise violates any
patent, trademark, copyright, trade secret or other proprietary rights
of others, and the Company is unaware of any facts which could form a
reasonable basis for any such claim; (vi) there is no patent or patent
application that contains claims that interfere with the issued or
pending claims of any of the Intellectual Property; and (vii) there is
no prior art that may render any patent application owned by the Company
of the Intellectual Property unpatentable that has not been disclosed to
the U.S. Patent and Trademark Office;
(w) neither the Company nor the Subsidiary is engaged in any
unfair labor practice; except for matters which would not, individually
or in the aggregate, have a Material Adverse Effect, (i) there is (A) no
unfair labor practice complaint pending or, to the Company's knowledge
after due inquiry, threatened against the Company or the Subsidiary
before the National Labor
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Relations Board, and no grievance or arbitration proceeding arising out
of or under collective bargaining agreements is pending or threatened,
(B) no strike, labor dispute, slowdown or stoppage pending or, to the
Company's knowledge after due inquiry, threatened against the Company or
the Subsidiary and (C) no union representation dispute currently
existing concerning the employees of the Company or the Subsidiary, and
(ii) to the Company's knowledge after due inquiry, (A) no union
organizing activities are currently taking place concerning the
employees of the Company or the Subsidiary and (B) there has been no
violation of any federal, state, local or foreign law relating to
discrimination in the hiring, promotion or pay of employees, any
applicable wage or hour laws or any provision of the Employee Retirement
Income Security Act of 1974 ("ERISA") or the rules and regulations
promulgated thereunder concerning the employees of the Company or the
Subsidiary;
(x) the Company and the Subsidiary and their properties, assets
and operations are in compliance with, and hold all permits,
authorizations and approvals required under, Environmental Laws (as
defined below), except to the extent that failure to so comply or to
hold such permits, authorizations or approvals would not, individually
or in the aggregate, have a Material Adverse Effect; there are no past,
present or, to the Company's knowledge after due inquiry, reasonably
anticipated future events, conditions, circumstances, activities,
practices, actions, omissions or plans that could reasonably be expected
to give rise to any material costs or liabilities to the Company or the
Subsidiary under, or to interfere with or prevent compliance by the
Company or the Subsidiary with, Environmental Laws; except as would not,
individually or in the aggregate, have a Material Adverse Effect,
neither the Company nor the Subsidiary (i) is the subject of any
investigation, (ii) has received any notice or claim, (iii) is a party
to or affected by any pending or threatened action, suit or proceeding,
(iv) is bound by any judgment, decree or order or (v) has entered into
any agreement, in each case relating to any alleged violation of any
Environmental Law or any actual or alleged release or threatened release
or cleanup at any location of any Hazardous Materials (as defined below)
(as used herein, "Environmental Law" means any federal, state, local or
foreign law, statute, ordinance, rule, regulation, order, decree,
judgment, injunction, permit, license, authorization or other binding
requirement, or common law, relating to health, safety or the
protection, cleanup or restoration of the environment or natural
resources, including those relating to the distribution, processing,
generation, treatment, storage, disposal, transportation, other handling
or release or threatened release of Hazardous Materials, and "Hazardous
Materials" means any material (including, without limitation,
pollutants, contaminants, hazardous or toxic substances or wastes) that
is regulated by or may give rise to liability under any Environmental
Law);
(y) in the ordinary course of its business, the Company and the
Subsidiary each conducts a periodic review of the effect of the
Environmental Laws on its business, operations and properties, in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for cleanup, closure of properties or compliance
with the Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential
liabilities to third parties);
(z) all tax returns required to be filed by the Company and the
Subsidiary have been filed, and all taxes and other assessments of a
similar nature (whether imposed directly or
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through withholding) including any interest, additions to tax or
penalties applicable thereto due or claimed to be due from such entities
have been paid, other than those being contested in good faith and for
which adequate reserves have been provided;
(aa) the Company and the Subsidiary each maintains insurance
covering its properties, operations, personnel and businesses as the
Company deems adequate; such insurance insures against such losses and
risks to an extent which is adequate in accordance with customary
industry practice to protect the Company and the Subsidiary and their
businesses; all such insurance is fully in force on the date hereof and
will be fully in force at the time of purchase and the additional times
of purchase;
(bb) neither the Company nor the Subsidiary has sustained since
the date of the last audited financial statements included in the
Registration Statement and the Prospectus any loss or interference with
its respective 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; (cc) the Company has not sent
or received any communication regarding termination of, or intent not to
renew, any of the contracts or agreements referred to or described in,
or filed as an exhibit to, the Registration Statement, and no such
termination or non-renewal has been threatened by the Company or, to the
Company's knowledge after due inquiry, any other party to any such
contract or agreement;
(dd) the Company and the Subsidiary each 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;
(ee) the Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-14 and
15d-14 under the Exchange Act); such disclosure controls and procedures
are designed to ensure that material information relating to the
Company, including its Subsidiary, is made known to the Company's Chief
Executive Officer and its Chief Financial Officer by others within those
entities, and such disclosure controls and procedures are effective to
perform the functions for which they were established; the Company's
auditors and the Audit Committee of the Board of Directors have been
advised of: (i) any significant deficiencies in the design or operation
of internal controls which could adversely affect the Company's ability
to record, process, summarize, and report financial data; and (ii) any
fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal controls
over financial reporting; all material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the Company's ability to record,
process, summarize and report financial data have
-11-
been identified to the Company's auditors; the internal controls conform
to the requirements of the above-referenced rules under the Exchange
Act; and since the date of the most recent evaluation of such disclosure
controls and procedures, there have been no significant changes in
internal controls or in other factors that could significantly affect
internal controls, including any corrective actions with regard to
significant deficiencies and material weaknesses;
(ff) the Company has provided you true, correct, and complete
copies of all documentation pertaining to any extension of credit in the
form of a personal loan made, directly or indirectly, by the Company to
any director or executive officer of the Company, or to any family
member or affiliate of any director or executive officer of the Company;
and since July 30, 2002, the Company has not, directly or indirectly,
including through any subsidiary: (i) extended credit, arranged to
extend credit, or renewed any extension of credit, in the form of a
personal loan, to or for any director or executive officer of the
Company, or to or for any family member or affiliate of any director or
executive officer of the Company; or (ii) made any material
modification, including any renewal thereof, to any term of any personal
loan to any director or executive officer of the Company, or any family
member or affiliate of any director or executive officer, which loan was
outstanding on July 30, 2002;
(gg) any statistical and market-related data included in the
Registration Statement and the Prospectus are based on or derived from
sources that the Company believes to be reliable and accurate, and the
Company has obtained the written consent to the use of such data from
such sources to the extent required;
(hh) neither the Company nor the Subsidiary nor, to the
Company's knowledge after due inquiry, any employee or agent of the
Company or the Subsidiary has made any payment of funds of the Company
or the Subsidiary or received or retained any funds in violation of any
law, rule or regulation, which payment, receipt or retention of funds is
of a character required to be disclosed in the Registration Statement or
the Prospectus;
(ii) neither the Company nor the Subsidiary nor any of their
respective directors, officers, affiliates or controlling persons has
taken, directly or indirectly, any action designed, or which has
constituted or might reasonably be expected to cause or result in, under
the Exchange Act or otherwise, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the Shares;
(jj) to the Company's knowledge after due inquiry, there are no
affiliations or associations between any member of the NASD and any of
the Company's officers, directors or 5% or greater securityholders,
except as set forth in the Registration Statement and the Prospectus;
and
(kk) the Company and the Subsidiary have complied in all
material respects with the requirement under applicable federal laws
regulating cable operations that "private cable" operators not use
closed transmission paths to cross public rights-of-way.
-12-
In addition, any certificate signed by any officer of the
Company or the Subsidiary and delivered to the Underwriters or counsel for the
Underwriters in connection with the offering of the Shares shall be deemed to be
a representation and warranty by the Company or Subsidiary, as the case may be,
as to matters covered thereby, to each Underwriter.
4. Certain Covenants of the Company. The Company hereby agrees:
(a) to furnish such information as may be required and otherwise
to cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states or other jurisdictions as you
may designate and to maintain such qualifications in effect so long as
you may request for the distribution of the Shares; provided that the
Company shall not be required to qualify as a foreign corporation or to
consent to the service of process under the laws of any such
jurisdiction (except service of process with respect to the offering and
sale of the Shares); and to promptly advise you of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose;
(b) to make available to the Underwriters in New York City, as
soon as practicable after the Registration Statement becomes effective,
and thereafter from time to time to furnish to the Underwriters, as many
copies of the Prospectus (or of the Prospectus as amended or
supplemented if the Company shall have made any amendments or
supplements thereto after the effective date of the Registration
Statement) as the Underwriters may request for the purposes contemplated
by the Act; in case any Underwriter is required to deliver a prospectus
after the nine-month period referred to in Section 10(a)(3) of the Act
in connection with the sale of the Shares, the Company will prepare, at
its expense, promptly upon request such amendment or amendments to the
Registration Statement and the Prospectus as may be necessary to permit
compliance with the requirements of Section 10(a)(3) of the Act;
(c) if, at the time this Agreement is executed and delivered, it
is necessary for the Registration Statement or any post-effective
amendment thereto to be declared effective before the Shares maybe sold,
the Company will endeavor to cause the Registration Statement or such
post-effective amendment to become effective as soon as possible and the
Company will advise you promptly and, if requested by you, will confirm
such advice in writing, (i) when the Registration Statement and any such
post-effective amendment thereto has become effective, and (ii) if Rule
430A under the Act is used, when the Prospectus is filed with the
Commission pursuant to Rule 424(b) under the Act (which the Company
agrees to file in a timely manner under such Rule);
(d) to advise you promptly, confirming such advice in writing,
of any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information
with respect thereto, or of notice of institution of proceedings for, or
the entry of a stop order, suspending the effectiveness of the
Registration Statement and, if the Commission should enter a stop order
suspending the effectiveness of the Registration Statement, to use its
best efforts to obtain the lifting or removal of such order as soon as
possible; to advise you promptly of any proposal to amend or supplement
the Registration Statement or the
-13-
Prospectus, including by filing any documents that would be incorporated
therein by reference, and to provide you and Underwriters' counsel
copies of any such documents for review and comment a reasonable amount
of time prior to any proposed filing and to file no such amendment or
supplement to which you shall object in writing;
(e) subject to Section 4(d) hereof, to file promptly all reports
and any definitive proxy or information statement required to be filed
by the Company with the Commission in order to comply with the Exchange
Act 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 Shares; and to provide you with a copy of such reports and
statements and other documents to be filed by the Company pursuant to
Section 13, 14 or 15(d) of the Exchange Act during such period a
reasonable amount of time prior to any proposed filing, and to promptly
notify you of such filing;
(f) if necessary or appropriate, to file a registration
statement pursuant to Rule 462(b) under the Act;
(g) to advise the Underwriters promptly of the happening of any
event within the time during which a prospectus relating to the Shares
is required to be delivered under the Act which could require the making
of any change in the Prospectus then being used so that the Prospectus
would not include an untrue statement of material fact or omit to state
a material fact necessary to make the statements therein, in the light
of the circumstances under which they are made, not misleading, and,
during such time, subject to Section 4(d) hereof, to prepare and
furnish, at the Company's expense, to the Underwriters promptly such
amendments or supplements to such Prospectus as may be necessary to
reflect any such change;
(h) to make generally available to its security holders, and to
deliver to you, an earnings statement of the Company (which will satisfy
the provisions of Section 11(a) of the Act) covering a period of twelve
months beginning after the effective date of the Registration Statement
(as defined in Rule 158(c) under the Act) as soon as is reasonably
practicable after the termination of such twelve-month period but not
later than September 30, 2005;
(i) to furnish to its shareholders as soon as practicable after
the end of each fiscal year an annual report (including a consolidated
balance sheet and statements of income, shareholders' equity and cash
flow of the Company and the Subsidiary for such fiscal year, accompanied
by a copy of the certificate or report thereon of nationally recognized
independent certified public accountants);
(j) to furnish to you three copies of the Registration
Statement, as initially filed with the Commission, and of all amendments
thereto (including all exhibits thereto and documents incorporated by
reference therein) and sufficient copies of the foregoing (other than
exhibits) for distribution of a copy to each of the other Underwriters;
(k) to furnish to you promptly and, upon request, to each of the
other Underwriters for a period of five years from the date of this
Agreement (i) copies of any reports, proxy statements, or other
communications which the Company shall send
to its stockholders or shall from
-14-
time to time publish or publicly disseminate, (ii) copies of all annual,
quarterly and current reports filed with the Commission on Forms 10-K,
10-Q and 8-K, or such other similar forms as may be designated by the
Commission and (iii) copies of documents or reports filed with any
national securities exchange on which any class of securities of the
Company is listed;
(l) to furnish to you as early as practicable prior to the time
of purchase and the additional times of purchase, as the case may be,
but not later than two business days prior thereto, a copy of the latest
available unaudited interim and monthly consolidated financial
statements, if any, of the Company and the Subsidiary which have been
read by the Company's independent certified public accountants, as
stated in their letter to be furnished pursuant to Section 6(d) hereof;
(m) to apply the net proceeds from the sale of the Shares in the
manner set forth under the caption "Use of Proceeds" in the Prospectus;
(n) to pay all costs, expenses, fees and taxes in connection
with (i) the preparation and filing of the Registration Statement, each
Preliminary Prospectus, the Prospectus, and any amendments or
supplements thereto, and the printing and furnishing of copies of each
thereof to the Underwriters and to dealers (including costs of mailing
and shipment), (ii) the registration, issue, sale and delivery of the
Shares, including any stock or transfer taxes and stamp or similar
duties payable upon the sale, issuance or delivery of the Shares to the
Underwriters, (iii) the producing, word processing and/or printing of
this Agreement, any Agreement Among Underwriters, any dealer agreements,
any Powers of Attorney and any closing documents (including compilations
thereof) and the reproduction and/or printing and furnishing of copies
of each thereof to the Underwriters and (except closing documents) to
dealers (including costs of mailing and shipment), (iv) the
qualification of the Shares for offering and sale under state or foreign
laws and the determination of their eligibility for investment under
state or foreign law as aforesaid (including the legal fees and filing
fees and other disbursements of counsel for the Underwriters) and the
printing and furnishing of copies of any blue sky surveys or legal
investment surveys to the Underwriters and to dealers, (v) any listing
of the Shares on any securities exchange or qualification of the Shares
for quotation on NASDAQ and any registration thereof under the Exchange
Act, (vi) any filing for review of the public offering of the Shares by
the NASD, including the legal fees and filing fees and other
disbursements of counsel to the Underwriters in connection therewith,
(vii) the fees and disbursements of any transfer agent or registrar for
the Shares, (viii) the costs and expenses of the Company relating to
presentations or meetings undertaken in connection with the marketing of
the offering and sale of the Shares to prospective investors and the
Underwriters' sales forces, 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, travel, lodging and other expenses incurred by the
officers of the Company and any such consultants, and the cost of any
aircraft chartered in connection with the road show, and (ix) the
performance of the Company's other obligations hereunder;
(o) not to sell, offer to sell, contract or agree to sell,
hypothecate, pledge, grant any option to purchase or otherwise dispose
of or agree to dispose of, directly or indirectly, any Common Stock or
securities convertible into or exchangeable or exercisable for Common
Stock
-15-
or warrants or other rights to purchase Common Stock or any other
securities of the Company that are substantially similar to Common
Stock, or file or cause to be declared effective a registration
statement under the Act relating to the offer and sale of any shares of
Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock or other rights to purchase Common Stock
or any other securities of the Company that are substantially similar to
Common Stock for a period of 90 days after the date hereof (the "Lock-Up
Period"), without the prior written consent of UBS, except for (i) the
registration of the Shares and the sales to the Underwriters pursuant to
this Agreement, (ii) issuances of Common Stock upon the exercise of
options or warrants disclosed as outstanding in the Registration
Statement and the Prospectus, and (iii) the issuance of employee stock
options or restricted stock or similar awards not exercisable (with
respect to options) or vested (with respect to restricted stock awards)
during the Lock-Up Period pursuant to equity incentive plans described
in the Registration Statement and the Prospectus;
(p) to use its best efforts to cause the Common Stock to be
listed for quotation on the National Association of Securities Dealers
Automated Quotation National Market System ("NASDAQ"); and
(q) to maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company, a registrar for the Common
Stock.
5. Reimbursement of Underwriters' Expenses. If the Shares are not
delivered for any reason other than the termination of this Agreement pursuant
to the fifth paragraph of Section 8 hereof or the default by one or more of the
Underwriters in its or their respective obligations hereunder, the Company
shall, in addition to paying the amounts described in Section 4(n) hereof,
reimburse the Underwriters for all of their out-of-pocket expenses, including
the fees and disbursements of their counsel.
6. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters hereunder are subject to the accuracy of the representations
and warranties on the part of the Company on the date hereof, at the time of
purchase and, if applicable, at the additional times of purchase, the
performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
(a) The Company shall furnish to you at the time of purchase
and, if applicable, at the additional times of purchase:
(i) an opinion of Xxxxxxx, Street and Deinard
Professional Association, counsel for the Company, addressed to the
Underwriters, and dated the time of purchase or the additional times of
purchase, as the case may be, with reproduced copies for each of the
other Underwriters and in form and substance satisfactory to Xxxxxx,
Xxxx & Xxxxxxxx LLP, counsel for the Underwriters, as set forth in
attached Annex I.
(ii) an opinion of Xxxxxxx, Street and Deinard
Professional Association, special regulatory counsel for the Company,
addressed to the Underwriters,
-16-
and dated the time of purchase or the additional times of purchase, as
the case may be, with reproduced copies for each of the other
Underwriters and in form and substance satisfactory to Xxxxxx, Xxxx &
Xxxxxxxx LLP, counsel for the Underwriters, as set forth in attached
Annex II.
(b) The Company shall furnish to you at the time of purchase
and, if applicable, at the additional times of purchase, an opinion of
Xxxxxx X. Xxxxxxx, general counsel for the Company, addressed to the
Underwriters, and dated the time of purchase or the additional times of
purchase, as the case may be, with reproduced copies for each of the
other Underwriters and in form and substance satisfactory to Xxxxxx,
Xxxx & Xxxxxxxx LLP, counsel for the Underwriters, as set forth in
attached Annex III.
(c) The Company shall furnish to you at the time of purchase
and, if applicable, at the additional times of purchase, an opinion of
Xxxxx & Company, counsel for the Subsidiary, addressed to the
Underwriters, and dated the time of purchase or the additional times of
purchase, as the case may be, with reproduced copies for each of the
other Underwriters and in form and substance satisfactory to Xxxxxx,
Xxxx & Xxxxxxxx LLP, counsel for the Underwriters, as set forth in
attached Annex IV.
(d) You shall have received from PricewaterhouseCoopers LLP
letters dated, respectively, the date of this Agreement, the time of
purchase and, if applicable, the additional times of purchase, and
addressed to the Underwriters (with reproduced copies for each of the
Underwriters) in the forms heretofore approved by UBS.
(e) You shall have received at the time of purchase and, if
applicable, at the additional times of purchase, the favorable opinion
of Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel for the Underwriters, dated the
time of purchase or the additional times of purchase, as the case may
be, as to the matters referred to in subparagraphs (iii), (iv) and (vii)
(with respect to the Shares only), the first sentence of subparagraph
(viii), subparagraph (ix) and the last subparagraph of Annex I.
(f) No Prospectus or amendment or supplement to the Registration
Statement or the Prospectus, including documents deemed to be
incorporated by reference therein, shall have been filed to which you
object in writing.
(g) The Registration Statement shall remain effective through,
5:30 P.M. New York City time, on the date of this Agreement and, if Rule
430A under the Act is used, the Prospectus shall have been filed with
the Commission pursuant to Rule 424(b) under the Act at or before 5:30
P.M., New York City time, on the second full business day after the date
of this Agreement and any registration statement pursuant to Rule 462(b)
under the Act required in connection with the offering and sale of the
Shares shall have been filed and become effective no later than 10:00
P.M., New York City time, on the date of this Agreement.
(h) Prior to the time of purchase, and, if applicable, the
additional times of purchase, (i) no stop order with respect to the
effectiveness of the Registration Statement shall have been issued under
the Act or proceedings initiated under Section 8(d) or 8(e) of the Act;
(ii) the
-17-
Registration Statement and all amendments thereto shall not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and (iii) the Prospectus and all amendments or
supplements thereto shall not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
(i) Between the time of execution of this Agreement and the time
of purchase or the additional times of purchase, as the case may be, no
material adverse change or any development involving a prospective
material adverse change in the business, properties, management,
financial condition or results of operations of the Company and the
Subsidiary taken as a whole shall occur or become known.
(j) The Company will, at the time of purchase and, if
applicable, at the additional times of purchase, deliver to you a
certificate of its Chief Executive Officer and its Chief Financial
Officer in the form attached as Exhibit C hereto.
(k) You shall have received signed Lock-up Agreements referred
to in Section 3(s) hereof.
(l) The Company shall have furnished to you such other documents
and certificates as to the accuracy and completeness of any statement in
the Registration Statement and the Prospectus as of the time of purchase
and, if applicable, the additional times of purchase, as you may
reasonably request.
(m) The Shares shall have been approved for quotation on NASDAQ,
subject only to notice of issuance at or prior to the time of purchase
or the additional times of purchase, as the case may be.
7. Effective Date of Agreement; Termination. This Agreement shall become
effective when the parties hereto have executed and delivered this Agreement.
The obligations of the several Underwriters hereunder shall be
subject to termination in the absolute discretion of UBS or any group of
Underwriters (which may include UBS) which has agreed to purchase in the
aggregate at least 50% of the Firm Shares, if (x) since the time of execution of
this Agreement or the earlier respective dates as of which information is given
in the Registration Statement and the Prospectus, there has been any material
adverse change or any development involving a prospective material adverse
change in the business, properties, management, financial condition or results
of operations of the Company and the Subsidiary taken as a whole, which would,
in UBS' judgment or in the judgment of such group of Underwriters, make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares on the terms and in the manner contemplated in the Registration
Statement and the Prospectus, or (y) since of execution of this Agreement, there
shall have occurred: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange, the American Stock Exchange
or the NASDAQ; (ii) a suspension or material limitation in trading in the
Company's securities on NASDAQ; (iii) a general moratorium on commercial banking
activities declared
-18-
by either federal or New York State authorities or a material disruption in
commercial banking or securities settlement or clearance services in the United
States; (iv) a further outbreak or escalation of hostilities or acts of
terrorism involving the United States or a declaration by the United States of a
national emergency or war; or (v) any other calamity or crisis or any change in
financial, political or economic conditions in the United States or elsewhere,
if the effect of any such event specified in clause (iv) or (v) in UBS' judgment
or in the judgment of such group of Underwriters makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares on
the terms and in the manner contemplated in the Registration Statement and the
Prospectus, or (z) since the time of execution of this Agreement, there shall
have occurred any downgrading, or any notice or announcement shall have been
given or made of (i) any intended or potential downgrading or (ii) any watch,
review or possible change that does not indicate an affirmation or improvement
in the rating accorded any securities of or guaranteed by the Company or the
Subsidiary by any "nationally recognized statistical rating organization," as
that term is defined in Rule 436(g)(2) under the Act.
If UBS or any group of Underwriters elects to terminate this
Agreement as provided in this Section 7, the Company and each other Underwriter
shall be notified promptly in writing.
If the sale to the Underwriters of the Shares, as contemplated
by this Agreement, is not carried out by the Underwriters for any reason
permitted under this Agreement or if such sale is not carried out because the
Company shall be unable to comply with any of the terms of this Agreement, the
Company shall not be under any obligation or liability under this Agreement
(except to the extent provided in Sections 4(n), 5 and 9 hereof), and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 9 hereof) or to one another
hereunder.
8. Increase in Underwriters' Commitments. Subject to Sections 6 and 7
hereof, if any Underwriter shall default in its obligation to take up and pay
for the Firm Shares to be purchased by it hereunder (otherwise than for a
failure of a condition set forth in Section 6 hereof or a reason sufficient to
justify the termination of this Agreement under the provisions of Section 7
hereof) and if the number of Firm Shares which all Underwriters so defaulting
shall have agreed but failed to take up and pay for does not exceed 10% of the
total number of Firm Shares, the non-defaulting Underwriters shall take up and
pay for (in addition to the aggregate number of Firm Shares they are obligated
to purchase pursuant to Section 1 hereof) the number of Firm Shares agreed to be
purchased by all such defaulting Underwriters, as hereinafter provided. Such
Shares shall be taken up and paid for by such non-defaulting Underwriters in
such amount or amounts as you may designate with the consent of each Underwriter
so designated or, in the event no such designation is made, such Shares shall be
taken up and paid for by all non-defaulting Underwriters pro rata in proportion
to the aggregate number of Firm Shares set opposite the names of such
non-defaulting Underwriters in Schedule A.
Without relieving any defaulting Underwriter from its
obligations hereunder, the Company agrees with the non-defaulting Underwriters
that it will not sell any Firm Shares hereunder unless all of the Firm Shares
are purchased by the Underwriters (or by substituted Underwriters selected by
you with the approval of the Company or selected by the Company with your
approval).
-19-
If a new Underwriter or Underwriters are substituted by the
Underwriters or by the Company for a defaulting Underwriter or Underwriters in
accordance with the foregoing provision, the Company or you shall have the right
to postpone the time of purchase for a period not exceeding five business days
in order that any necessary changes in the Registration Statement and the
Prospectus and other documents may be effected.
The term Underwriter as used in this Agreement shall refer to
and include any Underwriter substituted under this Section 8 with like effect as
if such substituted Underwriter had originally been named in Schedule A.
If the aggregate number of Firm Shares which the defaulting
Underwriter or Underwriters agreed to purchase exceeds 10% of the total number
of Firm Shares which all Underwriters agreed to purchase hereunder, and if
neither the non-defaulting Underwriters nor the Company shall make arrangements
within the five business day period stated above for the purchase of all the
Firm Shares which the defaulting Underwriter or Underwriters agreed to purchase
hereunder, this Agreement shall terminate without further act or deed and
without any liability on the part of the Company to any non-defaulting
Underwriter and without any liability on the part of any non-defaulting
Underwriter to the Company. Nothing in this paragraph, and no action taken
hereunder, shall relieve any defaulting Underwriter from liability in respect of
any default of such Underwriter under this Agreement.
9. Indemnity and Contribution.
(a) The Company agrees to indemnify, defend and hold harmless
each Underwriter, its partners, directors and officers, and any person who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, and the successors and assigns of all of the foregoing
persons, from and against any loss, damage, expense, liability or claim
(including the reasonable cost of investigation) which, jointly or severally,
any such Underwriter or any such person may incur under the Act, the Exchange
Act, the common law or otherwise, insofar as such loss, damage, expense,
liability or claim arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or in a Prospectus (the term Prospectus for
the purpose of this Section 9 being deemed to include any Preliminary
Prospectus, the Prospectus and the Prospectus as amended or supplemented by the
Company), or arises out of or is based upon any omission or alleged omission to
state a material fact required to be stated in either such Registration
Statement or such Prospectus or necessary to make the statements made therein
not misleading, except insofar as any such loss, damage, expense, liability or
claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in and in conformity with information
concerning such Underwriter furnished in writing by or on behalf of such
Underwriter through you to the Company expressly for use in such Registration
Statement or such Prospectus or arises out of or is based upon any omission or
alleged omission to state a material fact in connection with such information
required to be stated in such Registration Statement or such Prospectus or
necessary to make such information not misleading.
-20-
If any action, suit or proceeding (each, a "Proceeding") is
brought against an Underwriter or any such person in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
Underwriter or such person shall promptly notify the Company in writing of the
institution of such Proceeding and the Company shall assume the defense of such
Proceeding, including the employment of counsel reasonably satisfactory to such
indemnified party and payment of all fees and expenses; provided, however, that
the omission to so notify the Company shall not relieve the Company from any
liability which the Company may have to any Underwriter or any such person or
otherwise, except to the extent the Company shall not have otherwise learned of
such Proceeding and such failure results in the forfeiture by the Company of
substantial rights and defenses. Such Underwriter or such person shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or of such
person unless the employment of such counsel shall have been authorized in
writing by the Company in connection with the defense of such Proceeding or the
Company shall not have, within a reasonable period of time in light of the
circumstances, employed counsel to have charge of the defense of such Proceeding
or such indemnified party or parties shall have reasonably concluded that there
may be defenses available to it or them which are different from, additional to
or in conflict with those available to the Company (in which case the Company
shall not have the right to direct the defense of such Proceeding on behalf of
the indemnified party or parties), in any of which events such fees and expenses
shall be borne by the Company and paid as incurred (it being understood,
however, that the Company shall not be liable for the expenses of more than one
separate counsel (in addition to any local counsel) in any one Proceeding or
series of related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). The Company shall not
be liable for any settlement of any Proceeding effected without its written
consent but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Underwriter and any such person from
and against any loss or liability by reason of such settlement. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second sentence of this paragraph, then 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 60 business days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have fully
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement and (iii) such indemnified party shall have given the
indemnifying party at least 30 days' prior notice of its intention to settle. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened Proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such Proceeding and does not include an
admission of fault, culpability or a failure to act, by or on behalf of such
indemnified party.
(b) Each Underwriter severally agrees to indemnify, defend and
hold harmless the Company, its directors and officers, and any person who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, and the successors and assigns of all of the foregoing
persons, from and against any loss, damage, expense, liability or claim
(including the reasonable cost of investigation) which, jointly or severally,
the Company or any such person may incur under the Act, the Exchange Act, the
common law or otherwise, insofar as such loss, damage, expense, liability
-21-
or claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in and in conformity with information
concerning such Underwriter furnished in writing by or on behalf of such
Underwriter through you to the Company expressly for use in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or in a Prospectus, or arises out of or is
based upon any omission or alleged omission to state a material fact in
connection with such information required to be stated in such Registration
Statement or such Prospectus or necessary to make such information not
misleading.
If any Proceeding is brought against the Company or any such
person in respect of which indemnity may be sought against any Underwriter
pursuant to the foregoing paragraph, the Company or such person shall promptly
notify such Underwriter in writing of the institution of such Proceeding and
such Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; provided, however, that the omission to so
notify such Underwriter shall not relieve such Underwriter from any liability
which such Underwriter may have to the Company or any such person or otherwise.
The Company or such person shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
the Company or such person unless the employment of such counsel shall have been
authorized in writing by such Underwriter in connection with the defense of such
Proceeding or such Underwriter shall not have, within a reasonable period of
time in light of the circumstances, employed counsel to defend such Proceeding
or such indemnified party or parties shall have reasonably concluded that there
may be defenses available to it or them which are different from or additional
to or in conflict with those available to such Underwriter (in which case such
Underwriter shall not have the right to direct the defense of such Proceeding on
behalf of the indemnified party or parties, but such Underwriter may employ
counsel and participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such Underwriter), in any of which events
such fees and expenses shall be borne by such Underwriter and paid as incurred
(it being understood, however, that such Underwriter shall not be liable for the
expenses of more than one separate counsel (in addition to any local counsel) in
any one Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such Proceeding). No
Underwriter shall be liable for any settlement of any such Proceeding effected
without the written consent of such Underwriter but if settled with the written
consent of such Underwriter, such Underwriter agrees to indemnify and hold
harmless the Company and any such person from and against any loss or liability
by reason of such settlement. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second sentence of this paragraph, then 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 60 business
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement and (iii) such
indemnified party shall have given the indemnifying party at least 30 days'
prior notice of its intention to settle. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened Proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such Proceeding.
-22-
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 9 or insufficient to hold an indemnified party harmless in respect of
any losses, damages, expenses, liabilities or claims referred to therein, then
each applicable indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, damages, expenses,
liabilities or claims (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and of the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, damages, expenses, liabilities or
claims, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Underwriters on the
other shall be deemed to be in the same respective proportions as the total
proceeds from the offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, bear to the aggregate
public offering price of the Shares. The relative fault of the Company on the
one hand and of the Underwriters on the other shall be determined by reference
to, among other things, whether the untrue statement or alleged untrue statement
of a material fact or omission or alleged omission relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, damages, expenses, liabilities and claims referred to in this subsection
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating, preparing to defend or
defending any Proceeding.
(d) The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in subsection (c) above.
Notwithstanding the provisions of this Section 9, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by such Underwriter and distributed to
the public were offered to the public exceeds the amount of any damage which
such Underwriter has otherwise been required to pay by reason of such untrue
statement 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 to contribute
pursuant to this Section 9 are several in proportion to their respective
underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this
Section 9 and the covenants, warranties and representations of the Company
contained in this Agreement shall remain in full force and effect regardless of
any investigation made by or on behalf of any Underwriter, its partners,
directors or officers or any person (including each partner, officer or director
of such person) who controls any Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, or by or on behalf of the Company,
its directors or officers or any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, and shall
survive any termination of this Agreement or the issuance and delivery of the
Shares. The Company and each Underwriter
-23-
agree promptly to notify each other of the commencement of any Proceeding
against it and, in the case of the Company, against any of the Company's
officers or directors in connection with the issuance and sale of the Shares, or
in connection with the Registration Statement or the Prospectus.
10. Information Furnished by the Underwriters. The statements set forth
in the last paragraph on the cover page of the Prospectus and the statements set
forth in the seventh, thirteenth, fourteenth, fifteenth, sixteenth, seventeenth
and eighteenth paragraphs under the caption "Underwriting" in the Prospectus,
insofar as such statements relate to (i) amounts of selling concession and
reallowance, (ii) over-allotment and stabilization and (iii) price stabilization
and short positions constitute the only information furnished by or on behalf of
the Underwriters as such information is referred to in Sections 3 and 9 hereof.
11. Notices. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriters, shall be sufficient in all respects if delivered or sent to
UBS Securities LLC, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attention:
Syndicate Department, with a copy to Xxxxxx, Xxxx & Xxxxxxxx LLP, 000 Xxxxx
Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000, Attention: Xxxxx X. Xxxxxxx,
Esq.; and, if to the Company, shall be sufficient in all respects if delivered
or sent to the Company at the offices of the Company at the address set forth in
the Registration Statement, Attention: Xxxxx X. Xxxxxxxx, with a copy to
Xxxxxxx, Street and Deinard Professional Association, 000 Xxxxx Xxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: Xxxx X. Xxxxx, Esq.
12. Governing Law; Construction. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
13. Submission to Jurisdiction. Except as set forth below, no Claim may
be commenced, prosecuted or continued in any court other than the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such matters, and the Company
consents to the jurisdiction of such courts and personal service with respect
thereto. The Company hereby consents to personal jurisdiction, service and venue
in any court in which any Claim arising out of or in any way relating to this
Agreement is brought by any third party against UBS or any indemnified party.
Each of UBS and the Company (on its behalf and, to the extent permitted by
applicable law, on behalf of its stockholders and affiliates) waives all right
to trial by jury in any action, proceeding or counterclaim (whether based upon
contract, tort or otherwise) in any way arising out of or relating to this
Agreement. The Company agrees that a final judgment in any such action,
proceeding or counterclaim brought in any such court shall be conclusive and
binding upon the Company and may be enforced in any other courts to the
jurisdiction of which the Company is or may be subject, by suit upon such
judgment.
14. Parties at Interest. The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters and the Company and to the
extent provided in Section 9 hereof the controlling persons, partners, directors
and officers referred to in such section, and their respective successors,
assigns, heirs, personal representatives and executors and administrators. No
other person, partnership, association or corporation (including a purchaser, as
such purchaser, from any of the Underwriters) shall acquire or have any right
under or by virtue of this Agreement.
15. Counterparts. This Agreement may be signed by the parties in one or
more counterparts which together shall constitute one and the same agreement
among the parties.
16. Successors and Assigns. This Agreement shall be binding upon the
Underwriters and the Company and their successors and assigns and any successor
or assign of any substantial portion of the Company's and any of the
Underwriters' respective businesses and/or assets.
17. Miscellaneous. UBS, an indirect, wholly owned subsidiary of UBS AG,
is not a bank and is separate from any affiliated bank, including any U.S.
branch or agency of UBS AG. Because UBS is a separately incorporated entity, it
is solely responsible for its own contractual obligations and commitments,
including obligations with respect to sales and purchases of securities.
Securities sold, offered or recommended by UBS are not deposits, are not insured
by the Federal Deposit Insurance Corporation, are not guaranteed by a branch or
agency, and are not otherwise an obligation or responsibility of a branch or
agency.
[signature page follows]
If the foregoing correctly sets forth the understanding between the
Company and the several Underwriters, please so indicate in the space provided
below for that purpose, whereupon this agreement and your acceptance shall
constitute a binding agreement between the Company and the Underwriters,
severally.
Very truly yours,
LODGENET ENTERTAINMENT CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President and Chief
Executive Officer
Accepted and agreed to as of the
date first above written, on
behalf of themselves and the other several Underwriters
named in Schedule A
UBS SECURITIES LLC
BEAR, XXXXXXX & CO. INC.
CIBC WORLD MARKETS CORP.
By: UBS SECURITIES LLC
By: /s/ Ankur Kamalia
--------------------------
Name: Ankur Kamalia
Title: Director
By: /s/ Xxxx Xxxx
--------------------------
Name: Xxxx Xxxx
Title: Associate Director
SCHEDULE A
Number of
Underwriter Firm Shares
----------- -----------
UBS SECURITIES LLC 2,032,275
BEAR, XXXXXXX & CO. INC 1,161,300
CIBC WORLD MARKETS CORP 677,425
XXXXXXX BROS., L.P. 39,500
X.X. XXXXXXXXX, TOWBIN 39,500
---------
Total........................ 3,950,000
=========
EXHIBIT A
Stockholders Subject to Lock-Up:
Xxxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxxx
Xxxxx X. Bankers
Xxxxxxx X. XxXxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxxxxxxx
R. Xxxxxxx Xxxxxxxx
Xxxxxxx X. Xxxxxxx
X. X. Xxxxxxxxxxx
Xxxx Xxxx
Xxxxx Xxxxxxxx
Xxxxxxxx Xxxxx, Xx.
EXHIBIT B
LodgeNet Entertainment Corporation
Common Stock
($0.01 Par Value)
June __, 2004
UBS Securities LLC
Bear, Xxxxxxx & Co. Inc.
CIBC World Markets Corp.
As Representative of the several Underwriters
c/o UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This Lock-Up Letter Agreement is being delivered to you in
connection with the proposed
Underwriting Agreement (the "
Underwriting
Agreement") to be entered into by
LodgeNet Entertainment Corporation, a Delaware
corporation (the "Company"), and you, as Representatives of the several
Underwriters named therein, with respect to the public offering (the "Offering")
of Common Stock, par value $0.01 per share, of the Company (the "Common Stock").
In order to induce you to enter into the
Underwriting
Agreement, the undersigned agrees that for a period of 90 days after the date of
the final prospectus relating to the Offering the undersigned will not, without
the prior written consent of UBS, (i) sell, offer to sell, contract or agree to
sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of
or agree to dispose of, directly or indirectly, or file (or participate in the
filing of) a registration statement with the Securities and Exchange Commission
(the "Commission") in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the meaning
of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Commission promulgated thereunder with respect to, any
Common Stock of the Company or any securities convertible into or exercisable or
exchangeable for Common Stock, or warrants or other rights to purchase Common
Stock, (ii) enter into any swap or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, or warrants or other rights to purchase Common Stock, whether any
such transaction is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise, or (iii) publicly announce an intention to
effect any transaction specified in clause (i) or (ii). The foregoing sentence
shall not apply to (a) the registration of or sale to the Underwriters of any
Common Stock pursuant to the Offering and the
Underwriting Agreement, (b) bona
fide gifts, provided the recipient thereof agrees in writing with the
Underwriters to be bound by the terms of this Lock-Up Letter Agreement or (c)
dispositions to any trust for the di-
A-2
rect or indirect benefit of the undersigned and/or the immediate family of the
undersigned, provided that such trust agrees in writing with the Underwriters to
be bound by the terms of this Lock-Up Letter Agreement.
If:
(1) during the period that begins on the date that is
15 calendar days plus 3 business days before the last day of the
90-day restricted period and ends on the last day of the 90-day
restricted period, the Company issues a earnings release or
material news or a material event relating to the Company occurs;
or
(2) prior to the expiration of the 90-day restricted
period, the Company announces that it will release earnings results
during the 16-day period beginning on the last day of the 90-day
period,
the restrictions imposed by this Lock-Up Letter Agreement
shall continue to apply until the expiration of the date that is 15 calendar
days plus 3 business days after the date on which the issuance of the earnings
release or the material news or material event occurs; provided, however, this
paragraph will not apply if, within 3 days of the termination of the 90-day
restricted period, the Company delivers to UBS a certificate, signed by the
Chief Financial Officer or Chief Executive Officer of the Company, certifying on
behalf of the Company that the Company's shares of Common Stock are, as of the
date of delivery of such certificate, "actively traded securities," as defined
in Regulation M, 17 CFR 242.101(c)(1).
In addition, the undersigned hereby waives any rights the
undersigned may have to require registration of Common Stock in connection with
the filing of a registration statement relating to the Offering. The undersigned
further agrees that, for a period of 90 days after the date of the final
prospectus relating to the Offering, the undersigned will not, without the prior
written consent of UBS, make any demand for, or exercise any right with respect
to, the registration of Common Stock of the Company or any securities
convertible into or exercisable or exchangeable for Common Stock, or warrants or
other rights to purchase Common Stock.
If (i) the Company notifies you in writing that it does not
intend to proceed with the Offering, (ii) the registration statement filed with
the Securities and Exchange Commission with respect to the Offering is withdrawn
or (iii) for any reason the
Underwriting Agreement shall be terminated prior to
the time of purchase (as defined in the
Underwriting Agreement), this Lock-Up
Letter Agreement shall be terminated and the undersigned shall be released from
its obligations hereunder.
Yours very truly,
-----------------------------
Name:
EXHIBIT C
Officers' Certificate
We, Xxxxx X. Xxxxxxxx, Chairman of the Board, President, and Chief
Executive Officer, and Xxxx X. Xxxxxxxxx, Senior Vice President, and Chief
Financial Officer, of
LodgeNet Entertainment Corporation, a Delaware corporation
(the "Company"), do hereby certify pursuant to Section 6(j) of the
Underwriting
Agreement dated June 29, 2004 (the "
Underwriting Agreement"), among the Company,
UBS Securities LLC, Bear, Xxxxxxx & Co. Inc. and CIBC World Markets Corp., as
the representatives on behalf of the several underwriters named therein, that we
have carefully examined the Registration Statement on Form S-3 (file number
333-114199) and all amendments thereto, or modifications thereof, if any (the
"Registration Statement"), the Prospectus and all amendments or supplements
thereto, or modifications thereof, if any (the "Prospectus") and that
(capitalized terms used but not otherwise defined herein shall have the meanings
given them in the Underwriting Agreement):
(i) The representations and warranties of the Company as set forth in
the Underwriting Agreement are true and correct as of the time of
purchase and, if applicable, the additional times of purchase;
(ii) The Company has performed all of its obligations under the
Underwriting Agreement as are to be performed at or before the time of
purchase and at or before the additional times of purchase, as the case
may be;
(iii) The conditions set forth in paragraphs (h) and (i) of Section 6
of the Underwriting Agreement have been met; and
(iv) The financial statements and other financial information included
in the Registration Statement and the Prospectus fairly present in all
material respects the financial condition, results of operations, and
cash flows of the Company as of, and for, the periods presented in the
Registration Statement.
Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel to the Underwriters, and Xxxxxxx, Street
and Deinard Professional Association, counsel to the Company, are entitled to
rely on the representations and warranties of the Company contained in this
certificate in rendering their opinions delivered to the Underwriters and the
Company in connection with this transaction.
ANNEX I
Form of Opinion of Company's Counsel
(i) the Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement and the
Prospectus, to execute and deliver this Agreement and to issue, sell and deliver
the Shares as contemplated herein;
(ii) the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified and in good standing
would not, individually or in the aggregate, have a Material Adverse Effect;
(iii) this Agreement has been duly authorized, executed and delivered
by the Company;
(iv) the Shares have been duly authorized and validly issued and are
fully paid and non-assessable;
(v) based on a review of the Company's charter, transfer agent records
and board minutes, the Company has an authorized and outstanding capitalization
as set forth in the Registration Statement and the Prospectus; all of the issued
and outstanding shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and non-assessable, and such issued and
outstanding shares of capital stock, as well as all options, warrants or other
securities convertible into shares of capital stock of the Company, have been
issued, or granted, as applicable, in compliance with the Company's charter and
by-laws and in compliance in all material respects with applicable laws, are
free of statutory preemptive rights and, to our knowledge, contractual
preemptive rights, resale rights, rights of first refusal and similar rights;
the Shares are free of statutory preemptive rights and, to our knowledge,
contractual preemptive rights, resale rights, rights of first refusal and
similar rights; the certificates for the Shares are in due and proper form and
the holders of the Shares will not be subject to personal liability by reason of
being such holders;
(vi) based solely on a review of the Subsidiary's charter, stock
records and board minutes and such other facts that have come to our attention
resulting from our representation of the Company, all of the outstanding shares
of capital stock of the Subsidiary are owned by the Company, subject to no
security interest, or, to our knowledge, any other encumbrance or adverse claim;
and to our knowledge, no options, warrants or other rights to purchase,
agree-
A-2
ments or other obligations to issue or other rights to convert any obligation
into shares of capital stock or ownership interests in the Subsidiary are
outstanding;
(vii) the capital stock of the Company, including the Shares, conforms
to the description thereof contained in the Registration Statement and the
Prospectus;
(viii) The Registration Statement, at the Effective Date, and the
Prospectus, as of the date it was filed with the Commission pursuant to Rule
424(b) under the Act (other than the financial statements and other financial
data included or incorporated by reference therein, and the statement of
eligibility and qualification of the trustee filed on Form T-1 relating to the
Registration Statement as to which we express no opinion), complied as to form
in all material respects with the requirements of the Act, the Exchange Act and
the rules and regulations promulgated thereunder. Each of the documents filed
under the Exchange Act and incorporated by reference in the Registration
Statement and the Prospectus or any amendment thereof or supplement thereto
prior to the date hereof (other than the financial statements and schedules and
other financial data included or incorporated by reference therein, as to which
we express no opinion) when they were filed with the Commission, appeared on its
face to comply as to form in all material respects with the requirements of the
Act and the applicable instructions, rules and regulations thereunder; and all
filings required by Rule 424(b) and Rule 430A under the Act have been made. We
express no opinion with respect to the antifraud provisions of the Act or the
Exchange Act, provided that this statement is not intended to limit or modify
the statements specifically made in the paragraph following paragraph xvi.
(ix) the Registration Statement has become effective under the Act and,
to our knowledge, no stop order proceedings with respect thereto are pending or
threatened under the Act and any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424 under the Act has been made in the
manner and within the time period required by such Rule 424;
(x) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the issuance and sale of the
Shares and consummation by the Company of the transactions contemplated hereby
pursuant to any law, rule or regulation or, to our knowledge, pursuant to any
order, judgment, decree, agreement or other instrument, other than registration
of the Shares under the Act (except that we express no opinion as to any
necessary qualification under the state securities or blue sky laws of the
various jurisdictions in which the Shares are being offered by the
Underwriters);
(xi) the execution, delivery and performance of this Agreement by the
Company, the issuance and sale of the Shares by the Company and the consummation
by the Company of the transactions contemplated hereby do not and will not
conflict with, result in any breach or violation of or constitute a default
under (nor constitute any event which with notice, lapse of time or both would
result in any breach or
A-3
violation of or constitute a default under) (a) the charter or by-laws of the
Company or (b) (i) any indenture, mortgage, deed of trust, bank loan or credit
agreement or other evidence of indebtedness for borrowed money described in and
related to the indebtedness described in footnote 9 to the Company's audited
financial statements included in the Registration Statement, (ii) any contract
filed by the Company as an exhibit to the 2003 Form 10-K or Q1 2004 10-Q
pursuant to Item 6.01(b)(4) or (10) of Regulation S-K or (iii) any other
material contract, license, loan or other agreement or instrument known to us
after due inquiry to which the Company or the Subsidiary is a party or by which
either of them or any of their respective properties may be bound or affected;
or (c) any federal law, the laws of the State of Minnesota, the Delaware General
Corporation Law, or, to our knowledge, the laws of any other state, local law or
foreign law, regulation or rule or, to our knowledge, any decree, judgment or
order applicable to the Company (except we express no opinion as to any
necessary qualification under the state securities or blue sky laws of the
various jurisdictions in which the Shares are being offered by the
Underwriters);
(xii) to our knowledge, there are no related party transactions,
off-balance sheet transactions, contracts, licenses, agreements, leases or
documents of a character which are required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the Registration
Statement which have not been so described or filed;
(xiii) to our knowledge, there are no actions, suits, claims,
investigations or proceedings pending, threatened or contemplated to which the
Company or the Subsidiary or any of their respective directors or officers is or
would be a party or to which any of their respective properties is or would be
subject at law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority or agency which
are required to be described in the Registration Statement or the Prospectus but
are not so described;
(xiv) the Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act or a "passive foreign investment company" or a
"controlled foreign corporation" as such terms are defined in the Internal
Revenue Code;
(xv) the information in the Registration Statement and the Prospectus
(including documents incorporated by reference in the Registration Statement and
the Prospectus) under the heading "Description of Capital Stock" and Item 15 in
the Registration Statement, insofar as such statements constitute a summary of
matters of law, and those statements in the Registration Statement and the
Prospectus that are descriptions of contracts, agreements or other legal
documents or of legal proceedings, or refer to statements of law or legal
conclusions, or
A-4
include descriptions of requirements that are or may be imposed on the Company
under certain provisions of statutes, rules, regulations or statements of law,
are accurate in all material respects and present fairly the information
required to be shown; and
(xvi) to our knowledge, no person has the right, pursuant to the terms
of any contract, agreement or other instrument described in or filed as an
exhibit to the Registration Statement or otherwise known to us, to cause the
Company to register under the Act any shares of Common Stock or shares of any
other capital stock or other equity interest of the Company, or to include any
such shares or interest in the Registration Statement or the offering
contemplated thereby, whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Shares as contemplated thereby or
otherwise which has not been waived.
We also advise you that we have participated in conferences with officers and
other representatives of the Company, representatives of the independent public
accountants of the Company and representatives of the Underwriters and
Underwriters' counsel at which the contents of the Registration Statement and
the Prospectus were discussed and, although we are not passing upon and do not
assume responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus (except as
and to the extent stated in the subparagraphs above), on the basis of the
foregoing nothing has come to our attention that causes us to believe that the
Registration Statement or any amendment thereto at the time such Registration
Statement or amendment became effective contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus or any supplement thereto at the date of such Prospectus or such
supplement and at the time of purchase 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 (it being understood that we give no such
assurance with respect to the financial statements and schedules and other
financial or data included in the Registration Statement or the Prospectus).
ANNEX II
Form of Opinion of Company's Special Regulatory Counsel
(i) the information in the Registration Statement and the Prospectus
(including documents incorporated by reference in the Registration Statement and
the Prospectus) under the headings "Business--Regulation," and "Risk
Factors--Federal, state, local and foreign legislation and regulation may
negatively impact our business and growth," insofar as such statements
constitute a summary of matters of law, are accurate in all material respects
and present fairly the information required to be shown; and
(ii) no consent or approval of, or notice to or filing with, the United
States Federal Communications Commission under any provision of the Applicable
Laws is required by the Company in connection with the execution and delivery of
the Underwriting Agreement or the offer, sale and issuance of the Shares
pursuant to the Registration Statement.
ANNEX III
Form of Opinion of General Counsel of the Company
(i) neither the Company nor the Subsidiary is in breach or violation of
or in default under (nor has any event occurred which with notice, lapse of
time, or both would result in any breach or violation of, or constitute a
default under or give the holder of any indebtedness (or a person acting on such
holder's behalf) the right to require the repurchase, redemption or repayment of
all or a part of such indebtedness under) its respective charter or by-laws, or
any law, regulation or rule of the State of South Dakota or any decree, judgment
or order applicable to the Company or the Subsidiary, or to my knowledge, any
federal, state (other than the State of South Dakota), local or foreign law,
regulation or rule or any decree, judgment or order applicable to the Company or
the Subsidiary, or, to my knowledge, any material indenture, mortgage, deed of
trust, bank loan or credit agreement or other evidence of indebtedness, or any
license, lease, contract or other agreement or instrument to which the Company
or the Subsidiary is a party or by which either of them or any of their
respective properties may be bound or affected; and
(ii) to my knowledge, neither the Company nor the Subsidiary has
violated any environmental law, any provisions of the Employee Retirement Income
Security Act of 1974, as amended, or any provisions of the Foreign Corrupt
Practices Act, or the rules and regulations promulgated thereunder, except for
such violations which, singly or in the aggregate, would not have a Material
Adverse Effect.
ANNEX IV
Form of Opinion of Canadian Local Counsel of the Company
(i) the Subsidiary has been duly organized and is validly existing and
in good standing under the laws of Canada, its jurisdiction of organization and
has all the necessary corporate power and authority to own, lease and operate
its property and to conduct its business as described or incorporated by
reference in the Registration Statement. The Company owns all of the issued and
outstanding shares of the Subsidiary. The Subsidiary is duly qualified to do
business and in good standing as a foreign corporation in each jurisdiction in
which the character or location of its properties (owned, leased or licensed) or
the nature or conduct of its business makes such qualification necessary, except
for those failures to be so qualified or in good standing which could not
reasonably be expected to (individually or when aggregated with other such
instances) have a material adverse effect on (i) the business, assets,
properties, financial condition or results of operations of the Company and its
subsidiaries taken as a whole or (ii) the sale of the Shares as contemplated by
the Registration Statement and the Prospectus or the consummation of any of the
other transactions contemplated by the Underwriting Agreement;
(ii) the execution, delivery and performance by the Company of the
Underwriting Agreement and the consummation of the transactions contemplated
thereby do not and will not result in any violation of the articles of
incorporation, bylaws or other governing instruments of the Subsidiary, or to
such counsel's knowledge, conflict with any material order, judgment or decree
applicable to the Subsidiary; and
(iii) all of the outstanding shares of capital stock of each of the
Subsidiary have been duly authorized and validly issued, are fully paid and
non-assessable.
