Exhibit 1.1
Metromedia Fiber Network, Inc.
5,610,000 Shares*
Common Stock
($.01 par value)
Form of U.S. Underwriting Agreement
New York, New York
October [ ], 1997
Salomon Brothers Inc
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Deutsche Xxxxxx Xxxxxxxx Inc.
As U.S. Representatives of the several U.S. Underwriters,
c/o Salomon Brothers Inc
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Metromedia Fiber Network, Inc., a Delaware corporation (the
"Company"), proposes to sell to the underwriters named in Schedule I hereto (the
"U.S. Underwriters"), for whom you (the "U.S. Representatives") are acting as
representatives, 5,610,000 shares of Class A of Common Stock, $.01 par value
("Common Stock"), of the Company (said shares to be issued and sold by the
Company being hereinafter called the "U.S. Underwritten Securities"). The
Company also proposes to grant to the U.S. Underwriters an option to purchase up
to 841,500 additional shares of Common Stock (the "U.S. Option Securities"; the
U.S. Option Securities, together with the U.S. Underwritten Securities, being
hereinafter called the "U.S. Securities"). To the extent there are no
additional U.S. Underwriters listed on Schedule I other than you, the term U.S.
Representatives as used herein shall mean you, as U.S. Underwriters, and the
terms U.S. Representatives and U.S. Underwriters shall mean either the singular
or plural as the context requires.
It is understood that the Company is concurrently entering into an
International Underwriting Agreement dated the date hereof (the "International
Underwriting Agreement") providing for the sale by the Company of an aggregate
of 990,000 shares of Common Stock (said shares to be sold by the Company
pursuant to the International Underwriting Agreement being hereinafter called
the "International Underwritten Securities"), outside the United States and
Canada through arrangements with certain underwriters outside the United States
and Canada (the "International Underwriters"), for whom Salomon Brothers
International Limited, Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation and
Deutsche Xxxxxx Xxxxxxxx Inc. are acting as representatives (the
----------------------
* Plus an option to purchase from Metromedia Fiber Network, Inc., up to
990,000 additional shares.
2
"International Representatives"), and providing for the grant to the
International Underwriters of an option to purchase from the Company up to
148,500 additional shares of Common Stock (the "International Option
Securities"; the International Option Securities, together with the
International Underwritten Securities, being hereinafter called the
"International Securities," and the U.S. Securities, together with the
International Securities, being hereinafter called the "Securities").
It is further understood and agreed that the U.S. Underwriters and the
International Underwriters have entered into an Agreement Between U.S.
Underwriters and International Underwriters dated the date hereof (the
"Agreement Between U.S. Underwriters and International Underwriters"), pursuant
to which, among other things, the International Underwriters may purchase from
the U.S. Underwriters a portion of the U.S. Securities to be sold pursuant to
the U.S. Underwriting Agreement and the U.S. Underwriters may purchase from the
International Underwriters a portion of the International Securities to be sold
pursuant to the International Underwriting Agreement.
In this Agreement, unless otherwise specified, all references to
"dollars" or "$" are to the currency of the United States.
At the request of the Company, the U.S. Underwriters and the
International Underwriters have agreed to reserve up to 330,000 shares of the
U.S. Underwritten Securities and the International Underwritten Securities to be
purchased by the U.S. Underwriters and the International Underwriters for sale
by the U.S. Underwriters and the International Underwriters to directors,
executives and other officers, employees and business associates (collectively,
all such reserved shares being the "Reserve Shares") as part of the distribution
of the U.S. Underwritten Securities by the U.S. Underwriters and the
International Underwritten Securities by the International Underwriters, subject
to the terms of this Agreement, the applicable rules, regulations and
interpretations of the National Association of Securities Dealers, Inc. and all
other applicable laws, rules and regulations. To the extent that such Reserved
Shares are not so purchased by such directors, executives and other officers,
employees and business associates, such Reserved Shares may be offered to the
public as part of the public offering contemplated hereby.
1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to, and agrees with, each U.S. Underwriter as set forth below in this
Section 1. Certain terms used in this Section 1 are defined in Section 17
hereof.
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement (file number 333-33653) on
Form S-1, including related preliminary prospectuses, for the registration
under the Act of the offering and sale of the Securities. The Company may
have filed one or more amendments thereto, including the related
preliminary prospectuses, each of which has previously been furnished to
you. The Company will next file with the Commission either (i) prior to
the Effective Date of such registration statement, a further amendment to
such registration statement (including the form of final prospectuses) or
(ii) after the Effective Date of such registration statement, final
prospectuses in accordance with Rules 430A and 424(b)(1) or (4). In the
case of clause (ii), the Company has included in such registration
statement, as amended at
3
the Effective Date, all information (other than Rule 430A Information)
required by the Act and the rules and regulations thereunder to be included
in such registration statement and the Prospectuses. As filed, such
amendment and form of final prospectuses, or such final prospectuses, shall
contain all Rule 430A Information, together with all other such required
information, and, except to the extent the U.S. Representatives shall agree
in writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest U.S. Preliminary Prospectus) as the Company has advised you, prior
to the Execution Time, will be included or made therein.
It is understood that two forms of prospectus are to be used in
connection with the offering and sale of the Securities: one form of
prospectus relating to the U.S. Securities, which are to be offered and
sold to United States and Canadian Persons which for purposes of
distribution to Canadian Persons shall have a Canadian "wrap-around" (the
"Canadian Offering Memorandum"), and one form of prospectus relating to the
International Securities, which are to be offered and sold to persons other
than United States and Canadian Persons. The two forms of prospectus are
identical except for the outside front cover page, the discussion under the
headings "Underwriting" and "Certain Federal Tax Consequences" and the
outside back cover page. Such form of prospectus relating to the U.S.
Securities as first filed with the Commission pursuant to Rule 424(b) after
the Execution Time or, if no filing pursuant to Rule 424(b) is required,
such form of final prospectus relating to the U.S. Securities included in
the Registration Statement at the Effective Date, is hereinafter called the
"U.S. Prospectus"; such form of prospectus relating to the International
Securities as first filed with the Commission pursuant to Rule 424(b) after
the Execution Time or, if no filing pursuant to Rule 424(b) is required,
such form of final prospectus relating to the International Securities
included in the Registration Statement at the Effective Date, is
hereinafter called the "International Prospectus"; and the U.S. Prospectus
and the International Prospectus are hereinafter collectively called the
"Prospectuses". Insofar as they relate to offers or sales of Securities in
Canada, all references herein to the U.S. Preliminary Prospectus and the
U.S. Prospectus shall include the Canadian Offering Memorandum.
(b) On the Effective Date, the Registration Statement did or will,
and when the Prospectuses are first filed (if required) in accordance with
Rule 424(b) and on the Closing Date (as defined) and on any date on which
shares sold in respect of the U.S. Underwriters' over-allotment option are
purchased, if such date is not the Closing Date (a "settlement date"), the
Prospectuses (and any supplements thereto) will comply in all material
respects with the applicable requirements of the Act and the rules and
regulations thereunder; on the Effective Date and at the Execution Time,
the Registration Statement did not or will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, the Prospectuses, if not filed
pursuant to Rule 424(b), will not, and on the date of any filing pursuant
to Rule 424(b) and on the Closing Date and any settlement date, the
Prospectuses (together with any supplement thereto) will not,
4
include any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that the Company makes no representations or warranties as to the
information contained in or omitted from the Registration Statement or the
Prospectuses (or any supplement thereto) in reliance upon and in conformity
with information furnished herein or in writing to the Company by or on
behalf of any U.S. Underwriter through the U.S. Representatives
specifically for inclusion in the Registration Statement or the U.S.
Prospectus (or any supplement thereto).
(c) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or organized
with full corporate power and authority to own its properties and conduct
its business as described in the Prospectuses, and is duly qualified to do
business as a foreign corporation and is in good standing under the laws of
each jurisdiction which requires such qualification wherein it owns or
leases material properties or conducts material business, except where the
failure to be so qualified would not have a material adverse effect on the
Company or any of its subsidiaries.
(d) all the outstanding shares of capital stock of each Subsidiary
(as defined herein) have been duly and validly authorized and issued and
are fully paid and nonassessable, and, except as otherwise set forth in the
Prospectuses, all outstanding shares of capital stock of the Subsidiaries
are owned by the Company either directly or through wholly owned
subsidiaries free and clear of any perfected security interest and, to the
knowledge of the Company, any other security interests, claims, liens or
encumbrances.
(e) The Company's authorized equity capitalization is as set forth in
the Prospectuses; the capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectuses; the
Securities being sold hereunder and under the International Underwriting
Agreement have been duly and validly authorized, and, when issued and
delivered to and paid for by the U.S. Underwriters pursuant to this
Agreement and by the International Underwriters pursuant to the
International Underwriting Agreement, will be fully paid and nonassessable;
the Securities have been duly authorized for listing, subject to official
notice of issuance on the Nasdaq National Market; the certificates for the
Securities are in valid and sufficient form; except for the holders under
that certain agreement dated as of [ ], 1996 between the Company and
[ ], the holders of outstanding shares of capital stock of the
Company are not entitled to preemptive or other rights to subscribe for the
Securities; and, except as set forth in the Prospectuses, no options,
warrants or other rights to purchase, agreements or other obligations to
issue, or rights to convert any obligations into or exchange any securities
for, shares of capital stock of or ownership interests in the Company are
outstanding.
(f) There is no franchise, contract or other document of a character
required to be described in the Registration Statement or Prospectuses, or
to be filed as an
5
exhibit thereto, which is not described or filed as required; and the
statements in the Prospectuses under the headings "Certain Federal Tax
Consequences", and "Business--Regulation" and "Business--Legal Proceedings"
fairly summarize the matters therein described.
(g) This Agreement and the International Underwriting Agreement have
been duly authorized, executed and delivered by the Company and constitute
valid and binding obligations of the Company enforceable in accordance with
their respective terms.
(h) The Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as
described in the Prospectuses, will not be an "investment company" as
defined in the Investment Company Act of 1940, as amended;
(i) No consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection with the
transactions contemplated herein, except such as have been obtained under
the Act and from the City of New York and such as may be required under the
blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated herein, in the International Underwriting Agreement and in the
Prospectuses.
(j) Neither the issue and sale of the Securities nor the consummation
of any other of the transactions contemplated herein or in the
International Underwriting Agreement nor the fulfillment of the terms
hereof or thereof will conflict with, result in a breach or violation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company or any of its subsidiaries pursuant to, (i) the charter or
by-laws of the Company or any of its subsidiaries or (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument
to which the Company or any of its subsidiaries is a party or bound or to
which its or their property is subject (including without limitation, the
Franchise Agreement (as defined)) or (iii) any statute, law, rule,
regulation, judgment, order or decree applicable to the Company or any of
its subsidiaries of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over
the Company or any of its subsidiaries or any of its or their properties,
except in the case of clauses (i), (ii) and (iii), as could not be
reasonably expected to have a material adverse effect on the Company and
its subsidiaries taken as a whole.
(k) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement, except as
disclosed in the Prospectuses under the heading "Description of Capital
Stock--Registration Rights".
(l) The consolidated financial statements and schedules of the
Company and its consolidated subsidiaries included in the Prospectuses and
the Registration Statement present fairly in all material respects the
financial condition, results of
6
operations and cash flows of the Company as of the dates and for the
periods indicated and have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except as otherwise noted therein). The selected
financial data set forth under the caption " Selected Consolidated
Financial and Operating Data" in the Prospectuses and Registration
Statement fairly present, on the basis stated in the Prospectuses and the
Registration Statement, the information included therein.
(m) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property is pending or
threatened that if the subject of an unfavorable decision, ruling or
finding (i) could reasonably be expected to have a material adverse effect
on the performance of this Agreement or the International Underwriting
Agreement or the consummation of any of the transactions contemplated
hereby or thereby or (ii) could reasonably be expected to result in a
material adverse change in the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in
the Prospectuses (exclusive of any supplement thereto); and no labor
disturbance by or dispute with the employees of the Company exists or is
threatened or is imminent that could reasonably be expected to have a
material adverse change in the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in
the Prospectuses (exclusive of any supplement thereto).
(n) Each of the Company and each of its subsidiaries, owns, licenses
or leases all such properties as are necessary to the conduct of its
operations as presently conducted; neither the Company nor any subsidiary
is in violation of any law, rule or regulation of any Federal, state or
local governmental or regulatory authority applicable to it or is not in
non-compliance with any term or condition of, or has failed to obtain and
maintain in effect, any license, certificate, permit or other governmental
authorization required for the ownership or lease of its property or the
conduct of its business, which violation, non-compliance or failure would
individually or in the aggregate have a material adverse change in the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated by the Prospectuses (exclusive of any
supplement thereto); and the Company has not received notice of any
proceedings relating to the revocation or material modification of any such
license, certificate, permit or other authorization which, singularly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding
would result in a material adverse change in the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
its subsidiaries, except as set forth in or contemplated by the Prospectus.
7
(o) Neither the Company nor any subsidiary is in violation or default
of (i) any provision of its charter or bylaws, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument
to which it is a party or bound or to which its property is subject or
(iii) any statute, law, rule, regulation, judgment, order or decree of any
court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or such
subsidiary or any of its properties, as applicable, except in the case of
clauses (i), (ii) and (iii) as could not be reasonably expected to have a
material adverse effect on the Company and its subsidiaries taken as a
whole.
(p) Each of (i) Xxxxxxx X. Xxxxxx & Company, LLP, (ii) X. X. Xxxxxx &
Co. LLP and (iii) Ernst & Young LLP, each of whom have certified certain
financial statements of the Company and its consolidated subsidiaries and
delivered their report with respect to the audited consolidated financial
statements and schedules included in the Prospectuses, are independent
public accountants with respect to the Company within the meaning of the
Act and the applicable published rules and regulations thereunder.
(q) There are no transfer taxes or other similar fees or charges
under Federal law or the laws of any state, or any political subdivision
thereof, required to be paid in connection with the execution and delivery
of this Agreement or the International Underwriting Agreement, or the
issuance by the Company or sale by the Company of the Securities.
(r) The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof
except in any case in which the failure so to file would not have a
material adverse change in the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in
the Prospectuses (exclusive of any supplement thereto) and has paid all
taxes required to be paid by it and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due and
payable, except for any such assessment, fine or penalty that is currently
being contested in good faith or as would not result in a material adverse
change in the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated by the Prospectuses
(exclusive of any supplement thereto).
(s) No labor dispute with the employees of the Company or any of its
subsidiaries exists or is threatened or imminent that could result in a
material adverse change in the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated by
the Prospectuses (exclusive of any supplement thereto).
8
(t) The Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; neither the Company nor any such subsidiary has been refused
any insurance coverage sought or applied for and not obtained similar
customary insurance from alternative insurers of recognized financial
responsibility; and neither the Company nor any such subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business at a
cost that would not have a material adverse change in the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set forth
in or contemplated by the Prospectuses (exclusive of any supplement
thereto).
(u) No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the
Company any loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary's property or assets to the Company or
any other subsidiary of the Company, except as described in or contemplated
by the Prospectuses.
(v) The Company and its subsidiaries possess the certificates,
authorizations, approvals, franchises, licenses, rights-of-way and permits
issued by the appropriate federal, state or foreign regulatory authorities
necessary to conduct their respective businesses, and neither the Company
nor any such subsidiary has received any notice of proceedings relating to
the revocation or modification of any such certificate, authorization,
approval, franchise, license, right-of-way or permit which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a material adverse change in the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set forth
in or contemplated by the Prospectuses (exclusive of any supplement
thereto).
(x) Neither the Company nor any of its subsidiaries is in violation
of any federal or state law or regulation relating to occupational safety
and health or to the storage, handling or transportation of hazardous or
toxic materials and the Company and its subsidiaries have received all
permits, licenses or other approvals required of them under applicable
federal and state occupational safety and health and environmental laws and
regulations to conduct their respective businesses, and the Company and
each such subsidiary is in compliance with all terms and conditions of any
such permit, license or approval, except any such violation of law or
regulation, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals which would not, singly or in the aggregate,
result in a material adverse change in the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
its subsidiaries, taken as a whole, whether or not arising from
9
transactions in the ordinary course of business, except as set forth in or
contemplated by the Prospectuses (exclusive of any supplement thereto).
(y) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(z) The subsidiaries listed on Schedule III attached hereto are the
only significant subsidiaries of the Company as defined by Rule 1-02 of
Regulation S-X (the "Subsidiaries").
(aa) The Company (i) does not have any material lending or other
relationship with any bank or lending affiliate of Salomon Brothers Inc,
and (ii) does not intend to use any of the proceeds from the sale of the
Securities hereunder or under the International Underwriting Agreement to
repay any outstanding debt owed to any affiliate of Salomon Brothers Inc.
Any certificate signed by any officer of the Company and delivered to
the U.S. Representatives or counsel for the U.S. Underwriters in connection with
the offering of the Securities shall be deemed a representation and warranty by
the Company, as to matters covered thereby, to each U.S. Underwriter.
2. PURCHASE AND SALE. (a) Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each U.S. Underwriter, and each U.S. Underwriter
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of $____ per share, the amount of U.S. Underwritten Securities set forth
opposite such U.S. Underwriter's name in Schedule I hereto. It is understood
that the U.S. Underwriters are not obligated to purchase any U.S. Underwritten
Securities unless all the International Underwritten Securities are
contemporaneously purchased by the International Underwriters.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several U.S. Underwriters to purchase, severally and not jointly,
up to 148,500 shares of U.S. Option Securities at the same purchase price per
share as the U.S. Underwriters shall pay for the U.S. Underwritten Securities.
Said option may be exercised only to cover over-allotments in the sale of the
U.S. Underwritten Securities by the U.S. Underwriters. Said option may be
exercised in whole or in part at any time (but not more than once) on or before
the 30th day after the date of the U.S. Prospectus upon written notice by the
U.S. Representatives to the Company setting forth the number of shares of the
U.S. Option Securities as to which the several U.S. Underwriters are exercising
the option and, subject to Section 3 hereof, the settlement date. Delivery of
certificates for the shares of U.S.
10
Option Securities, and payment therefor, shall be made as provided in Section 3
hereof. The number of shares of the U.S. Option Securities to be purchased by
each U.S. Underwriter shall be the same percentage of the total number of shares
of the U.S. Option Securities to be purchased by the several U.S. Underwriters
as such U.S. Underwriter is purchasing of the U.S. Underwritten Securities,
subject to such adjustments as you in your absolute discretion shall make to
eliminate any fractional shares.
3. DELIVERY AND PAYMENT. Delivery of and payment for the
Underwritten Securities and the U.S. Option Securities (if the option provided
for in Section 2(b) hereof shall have been exercised on or before the third
Business Day prior to the Closing Date) shall be made at 10:00 AM, New York City
time, on [ ], 1997, or at such time on such later date [not more than
three Business Days after the foregoing date as the U.S. Representatives and the
International Representatives shall designate,] which date and time may be
postponed by agreement between the U.S. Representatives, the International
Representatives and the Company or as provided in Section 9 hereof (such date
and time of delivery and payment for the U.S. Securities being herein called the
"Closing Date"). Delivery of the U.S. Securities shall be made to the U.S.
Representatives for the respective accounts of the several U.S. Underwriters
against payment by the several U.S. Underwriters through the U.S.
Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to an account specified by
the Company. Delivery of the U.S. Underwritten Securities and the U.S. Option
Securities shall be made through the facilities of The Depository Trust Company
or at such location as the U.S. Representatives shall reasonably designate at
least one business day in advance of the closing date.
If the option provided for in Section 2(b) hereof is exercised after
the third Business Day prior to the Closing Date, the Company will deliver the
U.S. Option Securities (at the expense of the Company) to the U.S.
Representatives on the date specified by the U.S. Representatives (which shall
be within three Business Days after exercise of said option), against payment by
the several U.S. Underwriters through the U.S. Representatives thereof to or
upon the order of the Company by wire transfer payable in same-day funds to an
account specified by the Company. If settlement for the U.S. Option Securities
occurs after the Closing Date, the Company will deliver to the U.S.
Representatives on the settlement date for the U.S. Option Securities, and the
obligation of the U.S. Underwriters to purchase the U.S. Option Securities shall
be conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
4. OFFERING BY U.S. UNDERWRITERS. It is understood that the several
U.S. Underwriters propose to offer the U.S. Securities for sale to the public as
set forth in the U.S. Prospectus.
5. AGREEMENTS. (a) The Company agrees with the several U.S.
Underwriters that:
(i) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereof, to become effective. Prior to the termination of the offering of
the Securities,
11
the Company will not file any amendment of the Registration Statement,
supplement to the Prospectuses or any Rule 462(b) Registration Statement
unless the Company has furnished you a copy for your review prior to filing
and will not file any such proposed amendment or supplement to which you
reasonably object. Subject to the foregoing sentence, if the Registration
Statement has become or becomes effective pursuant to Rule 430A, or filing
of the Prospectuses is otherwise required under Rule 424(b), the Company
will cause the Prospectuses, properly completed, and any supplement thereto
to be filed with the Commission pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the U.S. Representatives of such timely filing. Upon your
request, the Company will cause the Rule 462(b) Registration Statement,
completed in compliance with the Act and the applicable rules and
regulations thereunder, to be filed with the Commission pursuant to
Rule 462(b) and will provide evidence satisfactory to the U.S.
Representatives of such filing. The Company will promptly advise the U.S.
Representatives (i) when the Registration Statement, if not effective at
the Execution Time, shall have become effective, (ii) when the
Prospectuses, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b) or when any
Rule 462(b) Registration Statement shall have been filed with the
Commission, (iii) when, prior to termination of the offering of the
Securities, any amendment to the Registration Statement shall have been
filed or become effective, (iv) of any request by the Commission or its
staff for any amendment of the Registration Statement, or any Rule 462(b)
Registration Statement, or for any supplement to the Prospectuses or of any
additional information, (v) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (vi) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of
any such stop order or the suspension of any such qualification and, if
issued, to obtain as soon as possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectuses as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to amend
the Registration Statement or supplement either of the Prospectuses to
comply with the Act or the rules and regulations thereunder, the Company
promptly will (x) prepare and file with the Commission, subject to the
second sentence of paragraph (i) of this Section 5(a), an amendment or
supplement which will correct such statement or omission or effect such
compliance and (y) supply any supplemented Prospectuses to you in such
quantities as you may reasonably request.
(iii) As soon as practicable, the Company will make generally
available to its security holders and to the U.S. Representatives an
earnings statement or statements of the Company and its subsidiaries which
will satisfy the provisions of Section 11(a) of the Act and Rule 158 under
the Act.
12
(iv) The Company will furnish to the U.S. Representatives and counsel
for the U.S. Underwriters, without charge, signed copies of the
Registration Statement (including exhibits thereto) and to each other U.S.
Underwriter a copy of the Registration Statement (without exhibits thereto)
and, so long as delivery of a prospectus by a U.S. Underwriter or dealer
may be required by the Act, as many copies of each of the U.S. Preliminary
Prospectus and the U.S. Prospectus and any supplement thereto as the U.S.
Representatives may reasonably request. The Company will pay the expenses
of printing or other production of all documents relating to the offering.
(v) The Company will arrange, if necessary, for the qualification of
the Securities for sale under the laws of such jurisdictions as the U.S.
Representatives may designate, will maintain such qualifications in effect
so long as required for the distribution of the Securities (PROVIDED,
HOWEVER, that the Company shall not be required to qualify as a foreign
corporation, file a general consent to service of process or take any
action that would subject it to taxation in any such jurisdiction as to
matters and transactions relating to the Prospectus, the Registration
Statement or the offering or sale of the U.S. Underwritten Securities) and
will pay any fee of the National Association of Securities Dealers, Inc.,
in connection with its review of the offering.
(vi) The Company will not, and will not permit its directors or
officers listed in Schedule II hereto to, for a period of 180 days
following the Execution Time, without the prior written consent of Salomon
Brothers Inc, offer, sell or contract to sell, pledge or otherwise dispose
of (or enter into any transaction which is designed to, or could be
expected to, result in the disposition (whether by actual disposition or
effective economic disposition due to cash settlement or otherwise) by the
Company or any affiliate of the Company or any person in privity with the
Company or any affiliate of the Company) directly or indirectly, or
announce the offering of, any other shares of Common Stock or any
securities convertible into, or exchangeable for, shares of Common Stock;
PROVIDED, HOWEVER, that the Company may register shares of Common Stock if
required under the terms of registration rights agreements disclosed in the
Prospectus under the heading "Description of Capital Stock--Registration
Rights" and it may issue and sell Common Stock pursuant to any employee
stock option plan, stock ownership plan or dividend reinvestment plan of
the Company in effect at the Execution Time and the Company may issue
Common Stock issuable upon the conversion of securities or the exercise of
warrants or stock options outstanding at the Execution Time.
(b) Each U.S. Underwriter agrees with the Company that (i) it is not
purchasing any of the U.S. Securities for the account of anyone other than a
United States or Canadian Person, (ii) it has not offered or sold, and will not
offer or sell, directly or indirectly, any of the U.S. Securities or distribute
any U.S. Prospectus to any person outside of the United States or Canada, or to
anyone other than a United States or Canadian Person, and (iii) any dealer to
whom it may sell any of the U.S. Securities will represent that it is not
purchasing for the account of anyone other than a United States or Canadian
Person and agree that it will not offer or resell, directly or indirectly, any
of the U.S. Securities outside of the United States or Canada, or to anyone
other than a United States or Canadian Person
13
or to any other dealer who does not so represent and agree; PROVIDED, HOWEVER,
that the foregoing shall not restrict (A) purchases and sales between the U.S.
Underwriters on the one hand and the International Underwriters on the other
hand pursuant to the Agreement Between U.S. Underwriters and International
Underwriters, (B) stabilization transactions contemplated under the Agreement
Between U.S. Underwriters and International Underwriters, conducted through
Salomon Brothers Inc (or through the U.S. Representatives and the International
Representatives) as part of the distribution of the Securities and (C) sales to
or through (or distributions of U.S. Prospectuses or U.S. Preliminary
Prospectuses to) United States or Canadian Persons who are investment advisors,
or who otherwise exercise investment discretion, and who are purchasing for the
account of anyone other than a United States or Canadian Person.
(c) The agreements of the U.S. Underwriters set forth in
paragraph (b) of this Section 5 shall terminate upon the earlier of the
following events:
(i) a mutual agreement of the U.S. Representatives and the
International Representatives to terminate the selling restrictions set
forth in paragraph (b) of this Section 5 and in Section 5(b) of the
International Underwriting Agreement; or
(ii) the expiration of a period of 30 days after the Closing Date,
unless (A) the International Representatives shall have given notice to the
Company and the U.S. Representatives that the distribution of the
International Securities by the International Underwriters has not yet been
completed or (B) the U.S. Representatives shall have given notice to the
Company and the International Underwriters that the distribution of the
U.S. Securities by the U.S. Underwriters has not yet been completed. If
such notice by the U.S. Representatives or the International
Representatives is given, the agreements set forth in such paragraph (b)
shall survive until the earlier of (1) the event referred to in clause (i)
of this subsection (c) or (2) the expiration of an additional period of
30 days from the date of any such notice.
6. CONDITIONS TO THE OBLIGATIONS OF THE U.S. UNDERWRITERS. The
obligations of the U.S. Underwriters to purchase the U.S. Underwritten
Securities and the U.S. Option Securities, as the case may be, shall be subject
to the accuracy of the representations and warranties on the part of the Company
contained herein as of the Execution Time, the Closing Date and any settlement
date pursuant to Section 3 hereof, to the accuracy of the statements of the
Company made in any certificates pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the U.S. Representatives agree in writing to a
later time, the Registration Statement will become effective not later than
(i) 6:00 PM New York City time on the date of determination of the public
offering price, if such determination occurred at or prior to 3:00 PM New
York City time on such date or (ii) 9:30 AM on the Business Day following
the day on which the public offering price was determined, if such
determination occurred after 3:00 PM New York City time on such date; if
filing of either of the Prospectuses, or any supplement thereto,
14
is required pursuant to Rule 424(b), the Prospectuses, and any such
supplement, will be filed in the manner and within the time period required
by Rule 424(b); and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.
(b) The Company shall have furnished to the U.S. Representatives the
opinion of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, counsel for the
Company, dated the Closing Date, to the effect that:
(i) each of the Company and the Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own its
properties and conduct its business as described in the Prospectuses;
(ii) all the outstanding shares of capital stock of each Subsidiary
have been duly and validly authorized and issued and are fully paid
and nonassessable, and, except as otherwise set forth in the
Prospectuses, all outstanding shares of capital stock of the
Subsidiaries are owned by the Company either directly or through
wholly owned subsidiaries free and clear of any perfected security
interest and, to the knowledge of such counsel, after due inquiry, any
other security interests, claims, liens or encumbrances;
(iii) the Company's authorized equity capitalization is as set forth
in the Prospectuses; the capital stock of the Company conforms in all
material respects to the description thereof contained in the
Prospectuses; the outstanding shares of Common Stock have been duly
and validly authorized and validly issued and are fully paid and
nonassessable; the Securities have been duly and validly authorized,
and, when issued and delivered to and paid for by the U.S.
Underwriters pursuant to this Agreement and by the International
Underwriters, pursuant to the International Underwriting Agreement,
will be fully paid and nonassessable; the Securities have been duly
authorized for listing, subject to official notice of issuance, on the
Nasdaq National Market; the certificates for the Securities are in
valid and sufficient form; except as set forth in the agreement dated
as of [ ], 1996 between the Company and [ ], the
holders of outstanding shares of capital stock of the Company are not
entitled to preemptive or other rights to subscribe for the
Securities; and, except as set forth in the Prospectuses, to such
counsel's knowledge no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of capital
stock of or ownership interests in the Company are outstanding;
(iv) to the knowledge of such counsel, after due inquiry, there is
no pending or threatened action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries of a character
required to be disclosed in the Registration Statement which is not
adequately disclosed in the
15
Prospectuses, and there is no franchise, contract or other document of
a character required to be described in the Registration Statement or
Prospectuses, or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements in the Prospectuses
under the headings "Certain Federal Tax Consequences", and
"Business--Regulation" and "Business--Legal Matters" fairly summarize
the matters therein described;
(v) the Registration Statement has become effective under the Act;
any required filing of the Prospectuses, and any supplements thereto,
pursuant to Rule 424(b) has been made in the manner and within the
time period required by Rule 424(b); to the knowledge of such counsel
after due inquiry, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for that
purpose have been instituted or threatened by the Commission and the
Registration Statement and the Prospectuses (other than the financial
statements and other financial information contained therein, as to
which such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act and the
rules thereunder; and such counsel has no reason to believe that on
the Effective Date or at the Execution Time the Registration Statement
contained or contains any untrue statement of a material fact or
omitted or omits to state any 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 or that the
Prospectuses as of their dates and on the Closing Date included or
includes any untrue statement of a material fact or omitted or omit to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading
(in each case, other than the financial statements and other financial
information contained therein, as to which such counsel need express
no opinion), except that the matters set forth in this paragraph do
not apply to statements or omissions in the Registration Statement
based upon information furnished to the Company in writing by the U.S.
Underwriters through the U.S. Representatives expressly for use
therein;
(vi) this Agreement and the International Underwriting Agreement
have been duly authorized, executed and delivered by the Company;
(vii) the Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof
as described in the Prospectuses, will not be an "investment company"
as defined in the Investment Company Act of 1940, as amended;
(viii) no consent, approval, authorization, filing with or order of
any court or governmental agency or body is required in connection
with the execution and delivery of this Agreement or the International
Underwriting Agreement or for the offering, issuance, sale or delivery
of the Securities in accordance with this Agreement and the
International Underwriting Agreement except such as have been obtained
under the Act and such as may
16
be required under the blue sky laws of any jurisdiction in connection
with the purchase and distribution of the Securities by the
Underwriters in the manner contemplated in this Agreement, in the
International Underwriting Agreement and in the Prospectuses;
(ix) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions contemplated herein or
in the International Underwriting Agreement nor the fulfillment of the
terms hereof or thereof will conflict with, result in a breach or
violation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or its subsidiaries pursuant to,
(i) the charter or by-laws of the Company or its subsidiaries or
(ii) the terms of any indenture, contract, lease, mortgage, deed of
trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which the Company or its
subsidiaries is a party or bound or to which its property is subject
(including, without limitation, the Franchise Agreement) which is
known to such counsel and which is material to the Company or
(iii) any statute, law, rule, regulation, judgment, order or decree
applicable to the Company or its subsidiaries of any court, regulatory
body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company or its subsidiaries or
any of its or their properties which is known to such counsel; and
(x) to the knowledge of such counsel, no holders of securities of
the Company have rights to the registration of such securities under
the Registration Statement, except as disclosed in the Prospectuses
under the heading "Description of Capital Stock--Registration Rights".
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
State of New York, the Federal laws of the United States or the
General Corporation Law of the State of Delaware, to the extent they
deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the U.S. Underwriters and (B) as to
matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. References
to the Prospectuses in this paragraph (b) include any supplements
thereto at the Closing Date.
(c) The Company shall have furnished to the U.S. Representatives the
opinion of [ ], special regulatory counsel for the Company, dated the
Closing Date, to the effect that:
(i) to the extent they constitute a summary of the regulatory
matters referred to therein, the statements in the Prospectuses under
the captions "Risk Factors--Extensive Regulation" and
"Business--Regulation" fairly summarize the matters referred to
therein; and
17
(ii) to the knowledge of such counsel, after due inquiry, (A) the
Company and the Subsidiaries have in effect all the telecommunications
regulatory licenses, permits, authorizations, consents and approvals
required to conduct their respective businesses as presently
conducted; (B) all such licenses, permits, authorizations, consents
and approvals have been duly and validly issued and are in full force
and effect; (C) the Company and the Subsidiaries are not in violation
of any such licenses, permits, authorizations, consents or approvals;
and (D) no proceedings to revoke or restrict any such licenses,
permits, authorizations, consents or approvals are pending or
threatened.
(d) The U.S. Representatives shall have received from Cravath,
Swaine & Xxxxx, counsel for the U.S. Underwriters, such opinion or
opinions, dated the Closing Date, with respect to the issuance and sale of
the Securities, the Registration Statement, the Prospectuses (together with
any supplement thereto) and other related matters as the U.S.
Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(e) The Company shall have furnished to the U.S. Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the Company,
dated the Closing Date, to the effect that the signers of such certificate
have carefully examined the Registration Statement, the Prospectuses, any
supplements to the Prospectuses, this Agreement and the International
Underwriting Agreement and that:
(i) the representations and warranties of the Company in this
Agreement and the International Underwriting Agreement are true and
correct in all material respects on and as of the Closing Date with
the same effect as if made on the Closing Date and the Company has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have
been instituted or, to the Company's knowledge, threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectuses (exclusive of any supplement thereto),
there has been no material adverse change in the condition (financial
or otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectuses (exclusive of any
supplement thereto).
(f) At the Execution Time and at the Closing Date, Ernst & Young LLP
shall have furnished to the U.S. Representatives letters, dated
respectively as of the Execution Time and as of the Closing Date, in form
and substance satisfactory to the
18
U.S. Representatives, confirming that they are independent accountants
within the meaning of the Act and the applicable published rules and
regulations thereunder and that they have performed a review of the
unaudited interim financial information of the Company for the six-month
period ended June 30, 1997, and as at June 30, 1997, in accordance with
Statement on Accounting Standards No. 71 and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration Statement
and the Prospectuses and reported on by them comply in form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries; their
review, in accordance with standards established under Statement on
Auditing Standards No. 71, of the unaudited interim financial
information for the six-month period ended June 30, 1997, and as at
June 30, 1997, as indicated in their report dated ____________, 1997;
carrying out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of the
meetings of the stockholders, directors and committees of the Company
and the Subsidiaries; and inquiries of certain officials of the
Company who have responsibility for financial and accounting matters
of the Company and its subsidiaries as to transactions and events
subsequent to December 31, 1996, nothing came to their attention which
caused them to believe that:
(1) any unaudited financial statements included in the
Registration Statement and the Prospectuses do not comply in form
in all material respects with applicable accounting requirements
of the Act and with the published rules and regulations of the
Commission with respect to registration statements on Form S-1;
and said unaudited financial statements are not in conformity
with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included in the Registration Statement and the
Prospectuses;
(2) with respect to the period subsequent to June 30,
1997, there were any changes, at a specified date not more than
five days prior to the date of the letter, in the long-term
liabilities of the Company and its subsidiaries or capital stock
of the Company or decreases in the stockholders' equity of the
Company as compared with the amounts shown on the June 30, 1997
consolidated balance sheet included in the Registration Statement
and the Prospectuses, or for the period from July 1, 1997 to such
specified date there were any decreases, as compared with the
corresponding period in the
19
preceding year, in revenues or in total or per share amounts of
net loss of the Company and its subsidiaries, except in all
instances for changes or decreases set forth in such letter, in
which case the letter shall be accompanied by an explanation by
the Company as to the significance thereof unless said
explanation is not deemed necessary by the U.S. Representatives;
or
(3) the information included in the Registration Statement
and Prospectuses in response to Regulation S-K, Item 301
(Selected Financial Data), Item 302 (Supplementary Financial
Information), Item 402 (Executive Compensation) and Item 503(d)
(Ratio of Earnings to Fixed Charges) is not in conformity with
the applicable disclosure requirements of Regulation S-K; and
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Registration Statement and the Prospectuses including the
information set forth under the captions "Prospectus Summary", "Risk
Factors", "Use of Proceeds", "Dilution", "Capitalization", "Selected
Consolidated Financial and Operating Data", "Management's Discussion
and Analysis of Financial Condition and Results of Operations",
"Business", "Management", and "Certain Relationships and Related
Transactions" in the Prospectuses, agrees with the accounting records
of the Company and its subsidiaries, excluding any questions of legal
interpretation.
References to the Prospectuses in this paragraph (f) include any
supplement thereto at the date of the letter.
(g) The U.S. Representatives shall have also received from Ernst &
Young LLP a letter stating that the Company's system of internal accounting
controls taken as a whole is sufficient to meet the broad objectives of
internal accounting control insofar as those objectives pertain to the
prevention or detection of errors or irregularities in amounts that would
be material in relation to the financial statements of the Company and its
subsidiaries.
(h) At the Execution Time and at the Closing Date, X. X. Xxxxxx & Co.
LLP shall have furnished to the U.S. Representatives letters, dated
respectively as of the Execution Time and as of the Closing Date, in form
and substance satisfactory to the U.S. Representatives, confirming that
they are independent accountants within the meaning of the Act and the
applicable rules and regulations thereunder, and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration Statement
and the Prospectuses and reported on by them comply in form in all
material respects
20
with the applicable accounting requirements of the Act and the related
published rules and regulations; and
(ii) they have performed certain other specified procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Registration Statement and the Prospectuses agrees with
the accounting records of the Company and its subsidiaries, excluding
any questions of legal interpretation.
References to the Prospectuses in this paragraph (h) include any
supplement thereto at the date of the letter.
(i) At the Execution Time and at the Closing Date, Xxxxxxx X. Xxxxxx &
Company, LLP shall have furnished to the U.S. Representatives a letter or
letters, dated respectively as of the Execution Time and as of the Closing
Date, in form and substance satisfactory to the U.S. Representatives,
confirming that they are independent accountants within the meaning of the
Act and the applicable rules and regulations thereunder, and stating in
effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration Statement
and the Prospectuses and reported on by them comply in form in all
material respects with the accounting requirements of the Act and the
related published rules and regulations; and
(ii) they have performed certain other specified procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Registration Statement and the Prospectuses agrees with
the accounting records of the Company and its subsidiaries, excluding
any questions of legal interpretation.
References to the Prospectuses in this paragraph (i) include any
supplement thereto at the date of the letter.
(j) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectuses (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified in
the letter or letters referred to in paragraph (f) of this Section 6 or
(ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), earnings, business or
properties of the Company and its subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectuses (exclusive of any
supplement thereto) the effect of which, in any case referred to in
clause (i) or (ii) above, is, in the sole
21
judgment of the U.S. Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Registration Statement (exclusive of any
amendment thereof) and the Prospectuses (exclusive of any supplement
thereto).
(k) At the Execution Time, the Company shall have furnished to the
U.S. Representatives a letter substantially in the form of Exhibit A hereto
from each officer and director of the Company and major shareholders listed
in Schedule II hereto addressed to the U.S. Representatives.
(l) On or prior to the Closing Date, the Company shall have received
an approval from the City of New York, pursuant to the Franchise Agreement
between the Company and the City of New York dated December 20, 1993, of
the transactions contemplated hereby, by the International Underwriting
Agreement and by the Prospectuses.
(m) The Company shall have caused the Securities to be eligible for
trading on the Nasdaq National Market upon issuance.
(n) The closing of the purchase of the International Underwritten
Securities to be issued and sold by the Company pursuant to the
International Underwriting Agreement shall occur concurrently with the
closing described herein.
(o) Prior to the Closing Date, the Company shall have furnished to the
U. S. Representatives such further information, certificates and documents
as the U. S. Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the U.S. Representatives and counsel for the U.S. Underwriters,
this Agreement and all obligations of the U.S. Underwriters hereunder may be
canceled at, or at any time prior to, the Closing Date by the U.S.
Representatives. Notice of such cancelation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Cravath, Swaine & Xxxxx, counsel for the U.S.
Underwriters, at Worldwide Plaza, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx the
Closing Date.
7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the U.S. Underwriters set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 10 hereof or because
of any refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the U.S. Underwriters, the Company will reimburse the U.S.
Underwriters severally through Salomon Brothers Inc on demand for all
out-of-pocket
22
expenses (including reasonable fees and disbursements of counsel) that shall
have been incurred by them in connection with the proposed purchase and sale of
the Securities.
8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each U.S. Underwriter, the directors, officers,
employees and agents of each U. S. Underwriter and each person who controls any
U.S. Underwriter within the meaning of either the Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement for the
registration of the Securities as originally filed or in any amendment thereof,
or in any U.S. Preliminary Prospectus or International Preliminary Prospectus or
in either of the Prospectuses, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; PROVIDED, HOWEVER, that (i) the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any U.S. Underwriter through the U.S. Representatives specifically for
inclusion therein and (ii) with respect to any untrue statement or omission of
material fact made in any U.S. Preliminary Prospectus, the indemnity agreement
contained in this Section 8(a) shall not inure to the benefit of any U.S.
Underwriter (or any of the directors, officers, employees and agents of such
U.S. Underwriter or any controlling person of such U.S. Underwriter) from whom
the person asserting any such loss, claim, damage or liability purchased the
Securities concerned, to the extent that any such loss, claim, damage or
liability of such U.S. Underwriter occurs under the circumstances where it shall
have been determined by a court of competent jurisdiction by final and
nonappealable judgment that (w) the Company had previously furnished copies of
the U.S. Prospectus to the U.S. Underwriters, (x) delivery of the U.S.
Prospectus was required by the Act to be made to such person, (y) the untrue
statement or omission of material fact contained in the U.S. Preliminary
Prospectus was corrected in the U.S. Prospectus and (z) there was not sent or
given to such person, at or prior to the written confirmation of the sale of
such Securities to such person, a copy of the U.S. Prospectus. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.
(b) Each U.S. Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each U.S. Underwriter, but only with
reference to written information relating to such U.S. Underwriter furnished to
the Company by or on behalf of such U.S. Underwriter through the U.S.
Representatives specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which
23
any U.S. Underwriter may otherwise have. The Company acknowledges that the
statements set forth in the last paragraph of the cover page regarding delivery
of the Securities, the stabilization legend in block capital letters on page 2
and, under the heading "Underwriting", (i) the sentences related to concessions
and reallowances and (ii) the paragraph related to stabilization in any U.S.
Preliminary Prospectus or International Preliminary Prospectus and the
Prospectuses constitute the only information furnished in writing by or on
behalf of the several U.S. Underwriters for inclusion in any U.S. Preliminary
Prospectus or International Preliminary Prospectus or the Prospectuses.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party
(i) will not relieve it from liability under paragraph (a) or (b) above unless
and to the extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial rights and
defenses and (ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. The indemnifying party shall
be entitled to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
PROVIDED, HOWEVER, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the U.S. Underwriters agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in
24
connection with investigating or defending same) (collectively "Losses") to
which the Company and one or more of the U.S. Underwriters may be subject in
such proportion as is appropriate to reflect the relative benefits received by
the Company and by the U.S. Underwriters from the offering of the U.S.
Securities; PROVIDED, HOWEVER, that in no case shall any U.S. Underwriter
(except as may be provided in any agreement among underwriters relating to the
offering of the U.S. Securities) be responsible for any amount in excess of the
underwriting discount or commission applicable to the Securities purchased by
such U.S. Underwriter hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company and the U.S.
Underwriters shall contribute in such proportion as is appropriate to reflect
not only such relative benefits but also the relative fault of the Company and
of the U.S. Underwriters in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the total net
proceeds from the offering (before deducting expenses) received by it, and
benefits received by the U.S. Underwriters shall be deemed to be equal to the
total underwriting discounts and commissions, in each case as set forth on the
cover page of the U.S. Prospectus. Relative fault shall be determined by
reference to, among other things, whether any untrue or any alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information provided by the Company on the one hand or
the U.S. Underwriters on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the U.S. Underwriters agree that
it would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), 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. For purposes of
this Section 8, each person who controls a U.S. Underwriter within the meaning
of either the Act or the Exchange Act and each director, officer, employee and
agent of a U.S. Underwriter shall have the same rights to contribution as such
U.S. Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
9. DEFAULT BY A U.S. UNDERWRITER. If any one or more U.S.
Underwriters shall fail to purchase and pay for any of the Securities agreed to
be purchased by such U.S. Underwriter or U.S. Underwriters hereunder and such
failure to purchase shall constitute a default in the performance of its or
their obligations under this Agreement, the remaining U.S. Underwriters shall be
obligated severally to take up and pay for (in the respective proportions which
the amount of U.S. Securities set forth opposite their names in Schedule I
hereto bears to the aggregate amount of U.S. Securities set forth opposite the
names of all the remaining U.S. Underwriters) the U.S. Securities which the
defaulting U.S. Underwriter or U.S. Underwriters agreed but failed to purchase;
PROVIDED, HOWEVER, that in the event that the aggregate amount of U.S.
Securities which the defaulting U.S. Underwriter or U.S. Underwriters agreed but
failed to purchase shall exceed 10% of the aggregate amount of U.S. Securities
set forth in Schedule I hereto, the remaining U.S. Underwriters shall have
25
the right to purchase all, but shall not be under any obligation to purchase
any, of the U.S. Securities, and if such nondefaulting U.S. Underwriters do not
purchase all the U.S. Securities, this Agreement will terminate without
liability to any nondefaulting U.S. Underwriter or the Company. In the event of
a default by any U.S. Underwriter as set forth in this Section 9, the Closing
Date shall be postponed for such period, not exceeding five Business Days, as
the U.S. Representatives shall determine in order that the required changes in
the Registration Statement and the Prospectuses or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting U.S. Underwriter of its liability, if any, to the Company and any
nondefaulting U.S. Underwriter for damages occasioned by its default hereunder.
10. TERMINATION. This Agreement shall be subject to termination in
the absolute discretion of the U.S. Representatives, by notice given to the
Company prior to delivery of and payment for the U.S. Securities, if at any time
prior to such time (i) trading in the Company's Common Stock shall have been
suspended by the Commission or the Nasdaq National Market or trading in
securities generally on the New York Stock Exchange or the Nasdaq National
Market shall have been suspended or limited or minimum prices shall have been
established on such Exchange or National Market, (ii) a banking moratorium shall
have been declared either by Federal or New York State authorities or
(iii) there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war or other
calamity or crisis the effect of which on financial markets is such as to make
it, in the sole judgment of the U.S. Representatives, impractical or inadvisable
to proceed with the offering or delivery of the Securities as contemplated by
the U.S. Prospectus (exclusive of any supplement thereto).
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the U.S. Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any U.S. Underwriter or the Company or
any of the officers, directors or controlling persons referred to in Section 8
hereof, and will survive delivery of and payment for the U.S. Securities. The
provisions of Sections 7 and 8 hereof shall survive the termination or
cancelation of this Agreement.
12. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the U.S. Representatives, will be
mailed, delivered or telefaxed to the Salomon Brothers Inc General Counsel (fax
no.: (000) 000-0000) and confirmed to the General Counsel, care of Salomon
Brothers Inc, at Seven Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention:
General Counsel; or, if sent to the Company, will be mailed, delivered or
telefaxed to Xxxxxx X. Xxxxxxxxxxx (fax no.: (000) 000-0000) and confirmed to it
at 000 Xxxx 00xx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, attention of
Xxxxxx X. Xxxxxxxxxxx.
13. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
26
14. APPLICABLE LAW. This Agreement will be governed by and construed
in accordance with the laws of the State of New York, without regard to the
conflict of law provisions thereof.
15. COUNTERPARTS. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. HEADINGS. The section headings used herein are for convenience
only and shall not affect the construction hereof.
17. DEFINITIONS. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any
Rule 462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"International Preliminary Prospectus" shall mean any preliminary
prospectus with respect to the offering of the International Securities
referred to in paragraph 1(a) above and any preliminary prospectus with
respect to the offering of the International Securities included in the
Registration Statement at the Effective Date that omits Rule 430A
Information.
"Preliminary Prospectus" shall mean the U.S. Preliminary Prospectus or
the International Preliminary Prospectus, as the case may be.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto or any Rule 462(b) Registration
Statement becomes effective prior to the Closing Date shall also mean such
registration statement as so amended or such Rule 462(b) Registration
Statement, as the case may be. Such term shall include any Rule 430A
Information deemed to be included therein at the Effective Date as provided
by Rule 430A.
27
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the
Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating
to the offering covered by the initial registration statement.
"United States or Canadian Person" shall mean any person who is a
national or resident of the United States of Canada, any corporation,
partnership or other entity created or organized in or under the laws of
the United States or Canada or of any political subdivision thereof, or any
estate or trust the income of which is subject to United States or Canadian
Federal income taxation, regardless of its source (other than any
non-United States or non-Canadian branch of any United States or Canadian
Person), and shall include any United States or Canadian branch of a person
other than a United States or Canadian Person.
"U.S." or "United States" shall mean shall mean the United States of
America (including the states thereof and the District of Columbia), its
territories, its possessions and other areas subject to its jurisdiction.
"U.S. Preliminary Prospectus" shall mean any preliminary prospectus
with respect to the offering of the U.S. Securities referred to in
paragraph 1(a) above and any preliminary prospectus with respect to the
offering of the U.S. Securities included in the Registration Statement at
the Effective Date that omits Rule 430A Information.
28
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several U.S. Underwriters.
METROMEDIA FIBER NETWORK, INC.,
By:
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: President and Chief Operating
Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
SALOMON BROTHERS INC
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
DEUTSCHE XXXXXX XXXXXXXX INC.,
By: SALOMON BROTHERS INC
By:
-------------------------
Name:
Title:
For themselves and the other several U.S.
Underwriters named in Schedule I to the
foregoing Agreement.
SCHEDULE I
----------
Number of Shares
U.S. Underwriters to be Purchased
Salomon Brothers Inc...................................
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation....
Deutsche Xxxxxx Xxxxxxxx Inc...........................
------------
Total............................................
------------
------------
SCHEDULE II
-----------
OFFICERS AND DIRECTORS AND MAJOR SHAREHOLDERS
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxx Xxxxxx
Xxxx X. Xxxxx
Xxxx X. Xxxxx
Xxxx XxXxxx
Metromedia Company
Xxxxx Xxxxxxxxxxx
Xxxxx Xxxxxxx
Xxxxxx Xxxxxxxxx
Xxxxxxxx X. Xxxxx
Xxxxx Xxxxxxx
Xxxxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxx Xxxxx
SCHEDULE III
SUBSIDIARY
----------
1. Metromedia Fiber Network NYC, Inc.
2. Metromedia Fiber Network of New Jersey, Inc.
EXHIBIT A
[Letterhead of officer, director or major shareholder of
Metromedia Fiber Network, Inc.]
METROMEDIA FIBER NETWORK, INC.
PUBLIC OFFERING OF COMMON STOCK
October [ ], 1997
Salomon Brothers Inc
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Deutsche Xxxxxx Xxxxxxxx Inc.
As U.S. Representatives of the several U.S. Underwriters,
c/o Salomon Brothers Inc
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed U.S. Underwriting Agreement (the "U.S. Underwriting Agreement"),
between Metromedia Fiber Network, Inc., a Delaware corporation (the
"Company"), and each of you as representatives of a group of U.S.
Underwriters named therein, relating to an underwritten public offering of
Class A Common Stock, $.01 par value, of the Company.
In order to induce you and the other U.S. Underwriters to enter into
the U.S. Underwriting Agreement, the undersigned will not, without the prior
written consent of Salomon Brothers Inc, offer, sell, contract to sell,
pledge or otherwise dispose of, or file a registration statement with 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 Exchange Act with respect to, any shares of capital stock
of the Company or any securities convertible into or exercisable or
exchangeable for such capital stock, or publicly announce an intention to
effect any such transaction, for a period of 180 days after the date of this
Agreement, other than (i) any option or warrant or the conversion of a
security outstanding on the date hereof and referred to in the Prospectuses
to which this Agreement and the International Underwriting Agreement relate
and (ii) shares of capital stock of the Company disposed of as bona fide
gifts approved by Salomon Brothers Inc.
If for any reason the U.S. Underwriting Agreement shall be
terminated prior to the Closing Date (as defined in the U.S. Underwriting
Agreement), the agreement set forth above shall likewise be terminated.
Yours very truly,
By:
----------------------------
Name:
Address:
