RHYTHMS NETCONNECTIONS INC.
(a Delaware corporation)
[__________] Shares of Common Stock
(Par Value $.001 Per Share)
PURCHASE AGREEMENT
[________], 1999
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxxx Xxxxx Barney Inc.
Xxxxxxxxx & Xxxxx LLC
Xxxxxx Xxxxxx Partners LLC
as Representatives of the several Underwriters
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Rhythms NetConnections Inc., a Delaware corporation (the "Company"), and
the persons listed in Schedule B hereto (the "Selling Stockholders"), confirm
their respective agreements with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), Xxxxxxx Xxxxx Xxxxxx Inc.
("Salomon"), Xxxxxxxxx & Xxxxx LLC and Xxxxxx Xxxxxx Partners LLC and each of
the other Underwriters named in Schedule A hereto (collectively, the
"Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Xxxxxxx Lynch, Salomon,
Xxxxxxxxx & Xxxxx LLC and Xxxxxx Xxxxxx Partners LLC are acting as
representatives (in such capacity, the "Representatives"), with respect to
(i) the sale by the Selling Stockholders, acting severally and not jointly,
and the purchase by the Underwriters, acting severally and not jointly, of
the respective numbers of shares of Common Stock, par value $.001 per share,
of the Company ("Common Stock") set forth in Schedules A and B hereto and
(ii) the grant by the Company to the Underwriters, acting severally and not
jointly, of the option described in Section 2(b) hereof to purchase all or
any part of [_________] additional shares of Common Stock to cover
over-allotments, if any. The aforesaid [__________] shares of Common Stock
(the "Initial Securities") to be purchased by the Underwriters and all or any
part of the [_________] shares of Common Stock subject to the option
described in Section 2(b) hereof (the "Option Securities") are hereinafter
called, collectively, the "Securities".
1
The Company and the Selling Stockholders understand that the
Underwriters propose to make a public offering of the Securities as soon as
the Representatives deem advisable after this Agreement has been executed and
delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-82867) covering
the registration of the Securities under the Securities Act of 1933, as
amended (the "1933 Act"), including the related preliminary prospectus or
prospectuses. Promptly after execution and delivery of this Agreement, the
Company will prepare and file a prospectus in accordance with the provisions
of Rule 430A ("Rule 430A") of the rules and regulations of the Commission
under the 1933 Act (the "1933 Act Regulations") and paragraph (b) of Rule 424
("Rule 424(b)") of the 1933 Act Regulations. The information included in
such prospectus that was omitted from such registration statement at the time
it became effective but that is deemed to be part of such registration
statement at the time it became effective pursuant to paragraph (b) of Rule
430A is referred to as "Rule 430A Information." Each prospectus used before
such registration statement became effective, and any prospectus that omitted
the Rule 430A Information that was used after such effectiveness and prior to
the execution and delivery of this Agreement is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such
filing the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The final prospectus in the form first furnished to
the Underwriters for use in connection with the offering of the Securities is
herein called the "Prospectus." For purposes of this Agreement, all
references to the Registration Statement, any preliminary prospectus or the
Prospectus or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system ("XXXXX").
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b) hereof, and agrees with each
Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the
2
Closing Time (and, if any Option Securities are purchased, at the Date of
Delivery), the Registration Statement, the Rule 462(b) Registration
Statement and any amendments and supplements thereto complied and will
comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and did not and will 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. Neither the Prospectus nor any amendments or supplements
thereto, at the time the Prospectus or any such amendment or supplement was
issued and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), included or will include an untrue
statement of a material fact or omitted or will 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. The
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or Prospectus
made in reliance upon and in conformity with information furnished to the
Company in writing by any Underwriter through Xxxxxxx Xxxxx or Salomon
expressly for use in the Registration Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters for
use in connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX,
except to the extent permitted by Regulation S-T.
(ii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(iii) FINANCIAL STATEMENTS. The financial statements included in the
Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly the financial position of the Company
and its consolidated subsidiaries at the dates indicated and the statement
of operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved. The supporting schedules included in the Registration
Statement present fairly in accordance with GAAP the information required
to be stated therein. The selected financial data and the summary
financial information included in the Prospectus present fairly the
information shown therein and have been compiled on a basis consistent with
that of the audited financial statements included in the Registration
Statement.
(iv) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition,
3
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise (a "Material Adverse Effect"), whether or not arising in the
ordinary course of business, (B) there have been no transactions entered
into by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the
Company and its subsidiaries considered as one enterprise, and (C)
there has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock.
(v) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under this Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect.
(vi) GOOD STANDING OF DESIGNATED SUBSIDIARIES. Each of Rhythms
Links Inc. (formerly ACI Corp.) and Rhythms Links Inc.-Virginia (formerly
ACI Corp.-Virginia) (collectively, the "Designated Subsidiaries") has been
duly organized and is validly existing as a corporation (or, in the case of
Rhythms Links Inc.-Virginia, a Virginia public benefit corporation) in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectus and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good standing
would not result in a Material Adverse Effect; except as otherwise
disclosed in the Registration Statement, all of the issued and outstanding
capital stock of each Designated Subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of any Designated Subsidiary was issued
in violation of the preemptive or similar rights arising by operation of
law, or under the charter or by-laws of such Designated Subsidiary or under
any agreement to which the Company or such Designated Subsidiary is a
party. The only subsidiaries of the Company are the subsidiaries listed on
Exhibit 21.1 to the Registration Statement.
(vii) CAPITALIZATION. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus in the column
entitled "Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to employee benefit
or stock option plans referred to in the Prospectus or pursuant to the
exercise of convertible securities or options referred to in the
Prospectus). The shares of issued and outstanding capital stock of the
Company,
4
including the Securities to be purchased by the Underwriters from the
Selling Stockholders, have been duly authorized and validly issued and
are fully paid and non-assessable; none of the outstanding shares of
capital stock of the Company, including the Securities to be purchased
by the Underwriters from the Selling Stockholders, was issued in
violation of the preemptive or other similar rights of any
securityholder of the Company.
(viii) AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Company.
(ix) AUTHORIZATION AND DESCRIPTION OF SECURITIES. The Option
Securities to be purchased by the Underwriters from the Company have been
duly authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set forth herein, will be
validly issued and fully paid and non-assessable; the Common Stock conforms
to all statements relating thereto contained in the Prospectus and such
description conforms to the rights set forth in the instruments defining
the same; no holder of the Securities will be subject to personal liability
by reason of being such a holder; and the issuance of the Securities is not
subject to the preemptive or other similar rights of any securityholder of
the Company.
(x) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor any
of its subsidiaries is in violation of its charter or by-laws or in default
in the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of the
Company or any subsidiary is subject (collectively, "Agreements and
Instruments") except for such defaults that would not result in a Material
Adverse Effect, and the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein and
in the Registration Statement (including the issuance and sale of the
Option Securities and the use of the proceeds from the Option Securities as
described in the Prospectus under "Use of Proceeds") and compliance by the
Company with its obligations hereunder have been duly authorized by all
necessary corporate action and do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any subsidiary
pursuant to, the Agreements and Instruments (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that, singly or in
the aggregate, would not result in a Material Adverse Effect), nor will
such action result in any violation of the provisions of the charter or
by-laws of the Company or any subsidiary or any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any subsidiary or any of their assets,
properties or operations. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note,
5
debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any
of its subsidiaries.
(xi) ABSENCE OF LABOR DISPUTE. No labor dispute with the employees
of the Company or any of its subsidiaries exists or, to the knowledge of
the Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any
subsidiaries' principal suppliers, manufacturers, customers or contractors,
which, in either case, may reasonably be expected to result in a Material
Adverse Effect.
(xii) ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company, threatened, against or affecting the Company or any
subsidiary, which is required to be disclosed in the Registration Statement
(other than as disclosed therein), or which might reasonably be expected to
result in a Material Adverse Effect, or which might reasonably be expected
to materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement or the
performance by the Company of its obligations hereunder. The aggregate of
all pending legal or governmental proceedings to which the Company or any
subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material Adverse
Effect.
(xiii) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto which have not been so
described and filed as required.
(xiv) POSSESSION OF INTELLECTUAL PROPERTY. Except as disclosed in
the Registration Statement, (A) the Company and its subsidiaries own or
possess, or can acquire on reasonable terms, adequate patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade names
or other intellectual property (collectively, "Intellectual Property")
necessary to carry on the business now operated by them except that the
Company and its subsidiaries may fail to so own, possess or have the
ability to acquire on reasonable terms any Intellectual Property if such
failure would not result, singly or in the aggregate, in a Material Adverse
Effect, and (B) neither the Company nor any of its subsidiaries has
received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any of its subsidiaries therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would result in a
Material Adverse Effect.
6
(xv) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale of
the Securities hereunder or the consummation of the transactions
contemplated by this Agreement, except such as have been already obtained
or as may be required under the 1933 Act or the 1933 Act Regulations or
state securities laws.
(xvi) POSSESSION OF LICENSES AND PERMITS. Except as disclosed in the
Registration Statement, the Company and its subsidiaries possess such
permits, licenses, approvals, consents and other authorizations issued by
the appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them
(collectively, "Governmental Licenses"); the Company and its subsidiaries
are in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in the
aggregate, have a Material Adverse Effect; all of the Governmental Licenses
are valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect would not have a Material Adverse Effect; and neither
the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect. The Company has not been informed of any fact, event or
circumstance that is reasonably likely to impair the Company's (or its
subsidiaries') ability to obtain any Governmental Licenses necessary or
advisable in order to effectuate the Company's future plans and strategies
described in the Prospectus. Without limiting the generality of this
paragraph:
(A) The Company and each of its subsidiaries hold all
telecommunications regulatory licenses, permits, authorizations,
consents and approvals (the "Telecommunications Licenses") required
from the Federal Communications Commission (the "FCC") for the Company
and its subsidiaries to conduct their business on and as of the date
hereof in the manner described in the Prospectus, except as would not
have, individually or in the aggregate, a Material Adverse Effect; the
Telecommunications Licenses have been duly and validly issued and are
in full force and effect, except where the failure to be in full force
and effect would not have, individually or in the aggregate, a
Material Adverse Effect; no proceedings to revoke or restrict the
Telecommunications Licenses are pending or, to the best of the
Company's knowledge, threatened; neither the Company nor its
subsidiaries are in violation of any of the terms and conditions of
any of the Telecommunications Licenses, are in violation of the
Communications Act of 1934, as amended (the "Communications Act"), or
are in violation of any FCC rules and regulations, except as would not
have, individually or in the aggregate, a Material Adverse Effect; and
the Company and its subsidiaries have in effect with the FCC all
international and domestic service tariffs necessary to conduct their
business on and as of the date hereof in the
7
manner described in the Prospectus except as would not have,
individually or in the aggregate, a Material Adverse Effect;
(B) The Company and its subsidiaries have obtained all
state and municipal Telecommunications Licenses and filed all tariffs
required for the provision of telecommunications services in any state
to conduct their business on and as of the date hereof in the manner
described in the Prospectus, except where the failure to do so would
not have, individually or in the aggregate, a Material Adverse Effect;
(C) There is no outstanding adverse judgment, injunction,
decree or order that has been issued by the FCC or any state utility
commission or similar state agency ("PUC") or municipality against the
Company or its subsidiaries or any action, proceeding or investigation
pending before the FCC or any state PUC or municipality, or, to the
Company's knowledge, threatened by the FCC or any state PUC or
municipality against the Company or its subsidiaries which, if the
subject of any unfavorable decision, ruling or finding, would have a
Material Adverse Effect on the Company or its subsidiaries;
(D) No license, permit, consent, approval, order or
authorization of, or filing with, the FCC or with any state PUC or
municipal authority on the part of the Company or its subsidiaries is
required in connection with the issuance or sale of the Securities;
and
(E) Neither the issuance and sale of the Securities nor the
performance by the Company or its subsidiaries of their obligations
under this Agreement will result in a violation in any material
respect of: (1) the Communications Act or the applicable rules or
regulations, or any order, writ, judgment, injunction, decree or award
of the FCC binding on the Company or its subsidiaries; (2) any state
telecommunications laws or any applicable state PUC rules or
regulations, or any order, writ, judgment, injunction, decree or award
of any state PUC binding on the Company or its subsidiaries; or (3)
any municipal rules or regulations applicable to the Company or its
subsidiaries.
(xvii) TITLE TO PROPERTY. The Company and its subsidiaries have good
and marketable title to all real property owned by the Company and its
subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described in the Prospectus or (b) do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company or any of
its subsidiaries; and all of the leases and subleases material to the
business of the Company and its subsidiaries, considered as one enterprise,
and under which the Company or any of its subsidiaries holds properties
described in the Prospectus, are in full force and effect, and neither the
Company nor any subsidiary has any notice of any material claim of any sort
that has been asserted by anyone adverse to the rights of the Company or
any of its subsidiaries
8
under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or any subsidiary to the continued
possession of the leased or subleased premises under any such lease or
sublease.
(xviii) COMPLIANCE WITH CUBA ACT. The Company has complied with,
and is and will be in compliance with, the provisions of that certain
Florida act relating to disclosure of doing business with Cuba, codified as
Section 517.075 of the Florida statutes, and the rules and regulations
thereunder (collectively, the "Cuba Act") or is exempt therefrom.
(xix) INVESTMENT COMPANY ACT. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
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 "1940 Act").
(xx) ENVIRONMENTAL LAWS. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company and its subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements, (C)
there are no pending or threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its subsidiaries and (D)
there are no events or circumstances that might reasonably be expected to
form the basis of an order for clean-up or remediation, or an action, suit
or proceeding by any private party or governmental body or agency, against
or affecting the Company or any of its subsidiaries relating to Hazardous
Materials or any Environmental Laws.
(xxi) REGISTRATION RIGHTS. There are no persons with registration
rights or other similar rights to have any securities registered pursuant
to the Registration Statement, other than those which have been duly and
validly waived by the holders thereof.
(xxii) TAX RETURNS. The Company and its subsidiaries have filed all
federal, state, local and foreign tax returns that are required to be filed
or have duly requested extensions thereof and have paid all taxes required
to be paid by any of them and any
9
related assessments, fines or penalties, except for any such tax,
assessment, fine or penalty that is being contested in good faith and by
appropriate proceedings, and adequate charges, accruals and reserves
have been provided for in the financial statements referred to in
Section 1(a)(iii) above in respect of all federal, state, local and
foreign taxes for all periods as to which the tax liability of the
Company or any of its subsidiaries has not been finally determined or
remains open to examination by applicable taxing authorities, except for
such failures to file, request extensions, make payments and provide for
adequate charges, accruals and reserves as would not, singly or in the
aggregate, result in a Material Adverse Effect.
(xxiii) INSURANCE. The Company and each of its subsidiaries
maintains insurance covering its properties, operations, personnel and
business. Such insurance insures against such losses and risks as are
adequate in accordance with customary industry practice to protect the
Company, each of its subsidiaries and their businesses. Neither the
Company or any of its subsidiaries has received notice from any insurer or
agent of such insurer that substantial capital improvement or other
expenditures will have to be made in order to continue such insurance. All
such insurance is outstanding and duly in force on the date hereof.
(xxiv) INTERNAL ACCOUNTING CONTROLS. The Company maintains a system
of internal accounting controls sufficient to provide reasonable assurances
that (A) transactions are executed in accordance with management's general
or specific authorization; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(C) access to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(b) REPRESENTATIONS AND WARRANTIES BY, AND COVENANT OF, THE
SELLING STOCKHOLDERS. Each Selling Stockholder severally and not jointly
represents and warrants to each Underwriter as of the date hereof, as of
the Closing Time and agrees with each Underwriter, as follows:
(i) ACCURATE DISCLOSURE. To the extent that any statements or
omissions in the Registration Statement, the Prospectus or any amendment or
supplement thereto are made in reliance upon and in conformity with written
information furnished to the Company by such Selling Stockholder
specifically for use therein, the Registration Statement, the Prospectus
and any amendment or supplement thereto will not, when they become
effective or are filed with the Commission, as the case may be, contain 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; such Selling
Stockholder is not prompted to sell the Securities to be sold by such
Selling Stockholder hereunder by any information concerning the Company or
any subsidiary of the Company which is not set forth in the Prospectus.
10
(ii) AUTHORIZATION OF AGREEMENTS. The Selling Stockholder has the
full right, power and authority to enter into this Agreement and, if
applicable, a Power of Attorney and Custody Agreement (the "Power of
Attorney and Custody Agreement") and to sell, transfer and deliver the
Securities to be sold by such Selling Stockholder hereunder. The execution
and delivery of this Agreement and, if applicable, the Power of Attorney
and Custody Agreement and the sale and delivery of the Securities to be
sold by such Selling Stockholder and the consummation of the transactions
contemplated herein and compliance by such Selling Stockholder with its
obligations hereunder have been duly authorized by such Selling Stockholder
and do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any tax, lien,
charge or encumbrance upon the Securities to be sold by such Selling
Stockholder or any property or assets of such Selling Stockholder pursuant
to any material contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, license, lease or other agreement or instrument to
which such Selling Stockholder is a party or by which such Selling
Stockholder may be bound, or to which any of the property or assets of such
Selling Stockholder is subject, nor will such action result in any
violation of the provisions of the charter or by-laws or other
organizational instrument of such Selling Stockholder, if applicable, or
any applicable treaty, law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over such Selling Stockholder or
any of its properties.
(iii) GOOD AND MARKETABLE TITLE. The Selling Stockholder has and
will at the Closing Time have good and marketable title to the Securities
to be sold by such Selling Stockholder hereunder, free and clear of any
security interest, mortgage, pledge, lien, charge, claim, equity or
encumbrance of any kind, other than pursuant to this Agreement; and upon
delivery of such Securities and payment of the purchase price therefor as
herein contemplated, assuming each such Underwriter has no notice of any
adverse claim, each of the Underwriters will receive good and marketable
title to the Securities purchased by it from such Selling Stockholder, free
and clear of any security interest, mortgage, pledge, lien, charge, claim,
equity or encumbrance of any kind.
(iv) DUE EXECUTION OF POWER OF ATTORNEY AND CUSTODY AGREEMENT. To
the extent applicable, the Selling Stockholder has duly executed and
delivered, in the form heretofore furnished to the Representatives, the
Power of Attorney and Custody Agreement with Xxxxxxxxx X. Xxxxx, the
Chairman and Chief Executive Officer of the Company, and Xxxxx X. Xxxxxxxx,
the Chief Financial Officer of the Company, or any of them, as attorneys-
in-fact (the "Attorneys-in-Fact") and State Street Bank and Trust Company
of California, N.A., as custodian (the "Custodian"); the Custodian is
authorized to deliver the Securities to be sold by such Selling Stockholder
hereunder and to accept payment therefor; and each Attorney-in-Fact is
authorized to execute and deliver this Agreement and the certificate
referred to in Section 5(f) or that may be required pursuant to Section
5(l) on behalf of such Selling Stockholder, to sell, assign and transfer to
the Underwriters the Securities to be sold by such Selling Stockholder
hereunder, to determine the purchase price to be paid by the Underwriters
to such Selling Stockholder, as provided in Section 2(a) hereof, to
authorize the delivery of the Securities to be sold by
11
such Selling Stockholder hereunder, to accept payment therefor, and
otherwise to act on behalf of such Selling Stockholder in connection with
this Agreement.
(v) ABSENCE OF MANIPULATION. The Selling Stockholder has not
taken, and will not take, directly or indirectly, any action which is
designed to or which has constituted or which might reasonably be expected
to cause or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities.
(vi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or consent,
approval, authorization, order, registration, qualification or decree of,
any court or governmental authority or agency, domestic or foreign, is
necessary or required for the performance by the Selling Stockholder of its
obligations hereunder or, if applicable, under the Power of Attorney and
Custody Agreement, or in connection with the sale and delivery of the
Securities hereunder or the consummation of the transactions contemplated
by this Agreement, except such as may have previously been made or obtained
or as may be required under the 1933 Act or the 1933 Act Regulations or
state securities laws.
(vii) RESTRICTION ON SALE OF SECURITIES. During a period of 90 days
from the date of the Prospectus, the Selling Stockholder will not, without
the prior written consent of Xxxxxxx Xxxxx and Salomon, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of, directly or indirectly, any
shares of warrants issued under the Warrant Agreement dated as of May 5,
1998 by and between Rhythms NetConnections Inc. and State Street Bank and
Trust Company of California, N.A., or any Common Stock issued upon exercise
of any of the Warrants or file any registration statement under the 1933
Act with respect to any of the foregoing or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of any Common
Stock issued upon exercise of any of the warrants, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise.
The foregoing sentence shall not apply to the Securities to be sold
hereunder.
(viii) CERTIFICATES SUITABLE FOR TRANSFER. Certificates for all of
the Securities to be sold by the Selling Stockholder pursuant to this
Agreement, in suitable form for transfer by delivery or accompanied by duly
executed instruments of transfer or assignment in blank with signatures
guaranteed, have been placed in custody with the Custodian, if applicable,
with irrevocable conditional instructions to deliver such Securities to the
Underwriters pursuant to this Agreement.
(ix) NO ASSOCIATION WITH NASD. Except as disclosed in writing to
the Underwriters, neither the Selling Stockholder nor any of its affiliates
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, or has any other
association with (within the meaning of Article I,
12
Section 1(m) of the By-laws of the National Association of Securities
Dealers, Inc.), any member firm of the National Association of
Securities Dealers, Inc.
(x) The representations and warranties made in this Section 1(b)
relating to the Power of Attorney and Custody Agreement and the placement
of certificates in custody shall not apply to these Selling Stockholders
who have not executed a Power of Attorney and Custody Agreement and are
listed on Schedule C hereto.
(xi) Each Selling Stockholder will deliver to the Underwriters prior
to the Closing Time a properly completed and executed United States
Treasury Department Form W-8 (if such Selling Stockholder is a non-United
States person) or Form W-9 (if such Selling Stockholder is a United States
person)
(c) OFFICER'S CERTIFICATES. Any certificate signed by any officer
of the Company or any of its subsidiaries delivered to the Representatives
or to counsel for the Underwriters shall be deemed a representation and
warranty by the Company to each Underwriter as to the matters covered
thereby; and any certificate signed by or on behalf of the Selling
Stockholders as such and delivered to the Representatives or to counsel for
the Underwriters pursuant to the terms of this Agreement shall be deemed a
representation and warranty by such Selling Stockholder to the Underwriters
as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.
(a) INITIAL SECURITIES. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein
set forth, each Selling Stockholder, severally and not jointly, agrees to
sell to each Underwriter, severally and not jointly, and each Underwriter,
severally and not jointly, agrees to purchase from each Selling Stockholder,
at the price per share set forth in Schedule D, that proportion of the number
of Initial Securities set forth in Schedule B opposite the name of such
Selling Stockholder which the number of Initial Securities set forth in
Schedule A opposite the name of such Underwriter, plus any additional number
of Initial Securities which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 10 hereof, bears to the total number of
Initial Securities, subject, in each case, to such adjustments among the
Underwriters as the Representatives in their sole discretion shall make to
eliminate any sales or purchases of fractional securities.
(b) OPTION SECURITIES. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase up to an additional
[_________] shares of Common Stock, as set forth in Schedule B, at the price
per share set forth in Schedule D, less an amount per share equal to any
dividends or distributions declared by the Company and payable on the Initial
Securities but not payable on the Option Securities. The option hereby
granted will expire 30 days after the date hereof and may be exercised in
whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Representatives to
the Company setting forth the number of Option Securities as to which the
13
several Underwriters are then exercising the option and the time and date of
payment and delivery for such Option Securities. Any such time and date of
delivery (a "Date of Delivery") shall be determined by the Representatives,
but shall not be later than seven full business days after the exercise of
said option, nor in any event prior to the Closing Time, as hereinafter
defined. If the option is exercised as to all or any portion of the Option
Securities, each of the Underwriters, acting severally and not jointly, will
purchase that proportion of the total number of Option Securities then being
purchased which the number of Initial Securities set forth in Schedule A
opposite the name of such Underwriter bears to the total number of Initial
Securities, subject in each case to such adjustments as the Representatives
in their discretion shall make to eliminate any sales or purchases of
fractional shares.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Xxxxx & XxXxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such
other place as shall be agreed upon by the Representatives and the Company
and the Selling Stockholders, at 9:00 A.M. (Eastern time) on the third
(fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given
day) business day after the date hereof (unless postponed in accordance with
the provisions of Section 10), or such other time not later than ten business
days after such date as shall be agreed upon by the Representatives and the
Company and the Selling Stockholders (such time and date of payment and
delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and
delivery of certificates for, such Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by
the Representatives and the Company, on each Date of Delivery as specified in
the notice from the Representatives to the Company.
Payment shall be made to those Selling Stockholders who have executed a
Power of Attorney and Custody Agreement by wire transfer of immediately
available funds to a bank account designated by the Custodian pursuant to
each such Selling Stockholder's instructions in the Selling Stockholder
Questionnaire against delivery to the Representatives for the respective
accounts of the Underwriters of certificates for the Securities to be
purchased by them. Payment shall be made to those Selling Stockholders listed
on Schedule C who have not executed a Power of Attorney and Custody Agreement
by credit through full fast transfer to their respective accounts at The
Depositary Trust Company. The Initial Securities being sold by the Selling
Stockholders listed on Schedule C shall be held by The Depositary Trust
Company as nominee and shall be transferred to the Underwriters by book entry
upon payment therefor as provided above. In the event that any or all of the
Option Securities are purchased, payment shall be made to the Company by wire
transfer of immediately available funds to a bank account designated by the
Company against delivery to the Representatives for the respective accounts
of the Underwriters of certificates for the Option Securities to be purchased
by them. It is understood that each Underwriter has authorized the
Representatives, for its account, to accept delivery of, receipt for, and
make payment of the purchase price for, the Initial Securities and the Option
Securities, if any, which it has agreed to purchase. Xxxxxxx Xxxxx and/or
Salomon, individually and not as representatives of the Underwriters, may
(but shall not be obligated to) make payment of the purchase price for the
Initial Securities or the Option Securities, if any, to be purchased by
14
any Underwriter whose funds have not been received by the Closing Time or the
relevant Date of Delivery, as the case may be, but such payment shall not
relieve such Underwriter from its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations
and registered in such names as the Representatives may request in writing at
least one full business day before the Closing Time or the relevant Date of
Delivery, as the case may be. The certificates for the Initial Securities
being sold by the Selling Stockholders not listed on Schedule C hereto and
the Option Securities, if any, will be made available for examination and
packaging by the Representatives in The City of New York not later than 10:00
A.M. (Eastern time) on the business day prior to the Closing Time or the
relevant Date of Delivery, as the case may be.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.
The Company, subject to Section 3(b), will comply with the requirements of
Rule 430A and will notify the Representatives and Ropes & Xxxx as special
counsel to the Selling Stockholders set forth on Schedule C immediately,
and confirm the notice in writing, (i) when any post-effective amendment to
the Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information, and (iv) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of
the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for
any of such purposes. The Company will promptly effect the filings
necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted
for filing under Rule 424(b) was received for filing by the Commission and,
in the event that it was not, it will promptly file such prospectus. The
Company will make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting thereof
at the earliest possible moment.
(b) FILING OF AMENDMENTS. The Company will give the
Representatives and Ropes & Xxxx as special counsel to the Selling
Stockholders set forth on Schedule C notice of its intention to file or
prepare any amendment to the Registration Statement (including any filing
under Rule 462(b)) or any amendment, supplement or revision to either the
prospectus included in the Registration Statement at the time it became
effective or to the Prospectus, will furnish the Representatives and Ropes
& Xxxx as special counsel to the Selling Stockholders set forth on Schedule
C with copies of any such documents a reasonable amount of time prior to
such proposed filing or use, as the case may be, and will not file or use
any such document to which the Representatives or counsel for the
Underwriters shall object.
15
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished
or will deliver to the Representatives and counsel for the Underwriters,
without charge, signed copies of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and signed copies of all consents and
certificates of experts, and will also deliver to the Representatives,
without charge, a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (without exhibits) for each
of the Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(d) DELIVERY OF PROSPECTUSES. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter reasonably requested, and the Company hereby consents
to the use of such copies for purposes permitted by the 1933 Act. The
Company will furnish to each Underwriter, without charge, during the period
when the Prospectus is required to be delivered under the 1933 Act or the
Securities Exchange Act of 1934 (the "1934 Act"), such number of copies of
the Prospectus (as amended or supplemented) as such Underwriter may
reasonably request. The Prospectus and any amendments or supplements
thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will
comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Underwriters or
for the Company, to amend the Registration Statement or amend or supplement
the Prospectus in order that the Prospectus will not include any untrue
statements of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to
amend the Registration Statement or amend or supplement the Prospectus in
order to comply with the requirements of the 1933 Act or the 1933 Act
Regulations, the Company will promptly prepare and file with the
Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements, and the Company
will furnish to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request.
(f) BLUE SKY QUALIFICATIONS. The Company will use its best
efforts, in cooperation with the Underwriters, to qualify the Securities
for offering and sale under the applicable securities laws of such states
and other jurisdictions as the Representatives may designate and to
maintain such qualifications in effect for a period of not less than one
year from
16
the later of the effective date of the Registration Statement and any
Rule 462(b) Registration Statement; provided, however, that the Company
shall not be obligated to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in
any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject. In each jurisdiction in which the Securities
have been so qualified, the Company will file such statements and
reports as may be required by the laws of such jurisdiction to continue
such qualification in effect for a period of not less than one year from
the effective date of the Registration Statement and any Rule 462(b)
Registration Statement.
(g) RULE 158. The Company will timely file such reports pursuant
to the 1934 Act as are necessary in order to make generally available to
its securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(h) LISTING. The Company will use its best efforts to effect and
maintain the quotation of the Securities on the Nasdaq National Market and
will file with the Nasdaq National Market all documents and notices
required by the Nasdaq National Market of companies that have securities
that are traded in the over-the-counter market and quotations for which are
reported by the Nasdaq National Market.
(i) RESTRICTION ON SALE OF SECURITIES. During a period of ___ days
from the date of the Prospectus, the Company will not, without the prior
written consent of Xxxxxxx Xxxxx and Salomon, (i) directly or indirectly,
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of any shares of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under the
1933 Act with respect to any of the foregoing or (ii) enter into any swap
or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i)
or (ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the Securities to be sold hereunder, (B) any shares of Common Stock
issued by the Company upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof and referred to in
the Prospectus, (C) any shares of Common Stock issued or options to
purchase Common Stock granted pursuant to existing employee benefit plans
of the Company referred to in the Prospectus or (D) any shares of Common
Stock issued pursuant to any non-employee director stock plan or dividend
reinvestment plan.
(j) REPORTING REQUIREMENTS. The Company, during the period when
the Prospectus is required to be delivered under the 1933 Act or the 1934
Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act
and the rules and regulations of the Commission thereunder.
17
SECTION 4. PAYMENT OF EXPENSES.
(a) EXPENSES. Whether or not any sale of the Securities is
consummated, the Company and the Selling Stockholders will pay or cause to be
paid all expenses incident to the performance of their obligations under this
Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation,
printing and delivery to the Underwriters of this Agreement, any Agreement
among Underwriters and such other documents as may be required in connection
with the offering, purchase, sale, issuance or delivery of the Securities,
(iii) the preparation, issuance and delivery of the certificates for the
Securities to the Underwriters, including any stock or other transfer taxes
and any stamp or other duties payable upon the sale, issuance or delivery of
the Securities to the Underwriters, (iv) the fees and disbursements of the
Company's counsel, accountants and other advisors, (v) the qualification of
the Securities under securities laws in accordance with the provisions of
Section 3(f) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto which amounts shall not exceed $2,500, (vi) the printing and delivery
to the Underwriters of copies of each preliminary prospectus and of the
Prospectus and any amendments or supplements thereto, (vii) the fees and
expenses of any transfer agent or registrar for the Securities and (viii) the
filing fees incident to, and the reasonable fees and disbursements of counsel
to the Underwriters in connection with, the review by the National
Association of Securities Dealers, Inc. (the "NASD") of the terms of the sale
of the Securities and (ix) the fees and expenses incurred in connection with
the inclusion of the Securities in the Nasdaq National Market.
(b) EXPENSES OF THE SELLING STOCKHOLDERS. The Selling Stockholders,
jointly and severally, will pay all expenses incident to the performance of
their respective obligations under, and the consummation of the transactions
contemplated by this Agreement, including (i) any stamp duties, capital
duties and stock transfer taxes, if any, payable upon the sale of the
Securities to the Underwriters, and their transfer between the Underwriters
pursuant to an agreement between such Underwriters, and (ii) the fees and
disbursements of their respective counsel and accountants.
(c) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5, Section
9(a)(i) or Section 11 hereof, the Company and the Selling Stockholders shall
reimburse the Underwriters for all of their out-of-pocket expenses, including
the reasonable fees and disbursements of counsel for the Underwriters.
(d) ALLOCATION OF EXPENSES. The provisions of this Section shall not
affect any agreement that the Company and the Selling Stockholders may make
for the sharing of such costs and expenses.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Selling Stockholders
contained in Section 1 hereof or in certificates of any officer of the
Company or any subsidiary of the Company or on behalf of any Selling
18
Stockholder delivered pursuant to the provisions hereof, to the performance
by the Company of its covenants and other obligations hereunder, and to the
following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the
Underwriters. A prospectus containing the Rule 430A Information shall have
been filed with the Commission in accordance with Rule 424(b) (or a post-
effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A).
(b) OPINIONS OF COUNSEL FOR COMPANY. At the Closing Time, the
Representatives shall have received the favorable opinions, dated as of the
Closing Time, together with signed or reproduced copies of such letters for
each of the other Underwriters, (i) of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP,
counsel for the Company, to the effect set forth in Exhibit A-1 hereto,
(ii) of Xxxx and Xxxx LLP, counsel for the Company, to the effect set forth
in Exhibit A-2 hereto, (iii) of Xxxxxxxxxx & Xxxxx, counsel for the
Company, to the effect set forth in Exhibit A-3 hereto, (iv) of Leboeuf,
Lamb, Xxxxxx & XxxXxx L.L.P., counsel for the Company, to the effect set
forth on Exhibit A-4 hereto, and (v) of Xxxxxxx Xxxxxxxxxx, General Counsel
of the Company, to the effect set forth on Exhibit A-5 hereto. In giving
the opinion described in clause (i) above such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the
State of New York, the federal law of the United States and the General
Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to the Representatives. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and
its subsidiaries and certificates of public officials.
(c) OPINIONS OF COUNSEL FOR THE SELLING STOCKHOLDERS. At Closing
Time, the Representatives shall have received the favorable opinion, dated
as of Closing Time, of counsel for each of the Selling Stockholders, in
form and substance satisfactory to counsel for the Underwriters, together
with signed or reproduced copies of such letter for each of the other
Underwriters to the effect set forth in Exhibit B hereto and to such
further effect as counsel to the Underwriters may reasonably request.
(d) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Xxxxx & XxXxxxxx, counsel for the Underwriters, together
with signed or reproduced copies of such letter for each of the other
Underwriters, substantially to the effect set forth in Exhibit A-6 hereto.
In giving such opinion such counsel may rely, as to all matters governed by
the laws of jurisdictions other than the law of the State of New York, the
federal law of the United States and the General Corporation Law of the
State of Delaware, upon the opinions of counsel satisfactory to the
Representatives. Such counsel
19
may also state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon certificates of
officers of the Company and its subsidiaries and certificates of public
officials.
(e) OFFICERS' CERTIFICATE. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and
the Representatives shall have received a certificate of the President or a
Vice President of the Company and of the chief financial or chief
accounting officer of the Company, dated as of Closing Time, to the effect
that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct
with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or
prior to Closing Time, and (iv) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or are contemplated by the
Commission.
(f) CERTIFICATE OF SELLING STOCKHOLDER. At Closing Time, the
Representatives shall have received a certificate of an Attorney-in-Fact on
behalf of each Selling Stockholder, dated as of Closing Time, to the effect
that (i) the representations and warranties of each Selling Stockholder
contained in Section 1(b) hereof are true and correct in all respects with
the same force and effect as though expressly made at and as of Closing
Time and (ii) each Selling Stockholder has complied in all material
respects with all agreements and all conditions on its part to be performed
under this Agreement at or prior to Closing Time.
(g) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of
this Agreement, the Representatives shall have received from
PricewaterhouseCoopers L.L.P. a letter dated such date, in form and
substance satisfactory to the Representatives, together with signed or
reproduced copies of such letter for each of the other Underwriters
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(h) BRING-DOWN COMFORT LETTER. At Closing Time, the
Representatives shall have received from PricewaterhouseCoopers L.L.P. a
letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (g) of this
Section, except that the specified date referred to shall be a date not
more than three business days prior to Closing Time.
(i) APPROVAL OF LISTING. At Closing Time, the Securities shall
have been approved for inclusion in the Nasdaq National Market, subject
only to official notice of issuance.
20
(j) NO OBJECTION. The NASD has confirmed that it has not raised
any objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(k) LOCK-UP AGREEMENTS. At the date of this Agreement, the
Representatives shall have received an agreement substantially in the form
of Exhibit C hereto signed by the persons listed on Schedule E hereto.
(l) CONDITIONS TO PURCHASE OF OPTION SECURITIES. In the event that
the Underwriters exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the representations
and warranties of the Company and the Selling Stockholders contained herein
and the statements in any certificates furnished by the Company, any
subsidiary of the Company and the Selling Stockholders hereunder shall be
true and correct as of each Date of Delivery and, at the relevant Date of
Delivery, the Representatives shall have received:
(i) OFFICERS' CERTIFICATE. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of the
chief financial or chief accounting officer of the Company confirming that
the certificate delivered at the Closing Time pursuant to Section 5(e)
hereof remains true and correct as of such Date of Delivery.
(ii) CERTIFICATE OF SELLING STOCKHOLDERS. A certificate, dated such
Date of Delivery, of an Attorney-in-Fact on behalf of each Selling
Stockholder confirming that the certificate delivered at Closing Time
pursuant to Section 5(f) remains true and correct as of such Date of
Delivery.
(iii) OPINIONS OF COUNSEL FOR COMPANY. The favorable opinions of
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, Xxxx and Xxxx LLP, Xxxxxxxxxx & Xxxxx and
Leboeuf, Lamb, Xxxxxx & XxxXxx L.L.P., each counsel for the Company, and of
Xxxxxxx Xxxxxxxxxx, General Counsel of the Company, each, in form and
substance satisfactory to counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by
Section 5(b) hereof.
(iv) OPINION OF COUNSEL FOR UNDERWRITERS. The favorable opinion of
Xxxxx & XxXxxxxx, counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by
Section 5(d) hereof.
(v) BRING-DOWN COMFORT LETTER. A letter from
PricewaterhouseCoopers L.L.P., in form and substance satisfactory to the
Representatives and dated such Date of Delivery, substantially in the same
form and substance as the letter furnished to the Representatives pursuant
to Section 5(g) hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more than five
days prior to such Date of Delivery.
21
(m) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of
Delivery counsel for the Underwriters shall have been furnished with such
documents and opinions as they may require for the purpose of enabling them
to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company and the Selling
Stockholders in connection with the issuance and sale of the Securities as
herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(n) TERMINATION OF AGREEMENT. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of Option
Securities on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the
Company and to Ropes & Xxxx as special counsel to the Selling Stockholders
set forth on Schedule C at any time at or prior to Closing Time or such
Date of Delivery, as the case may be, and such termination shall be without
liability of any party to any other party except as provided in Section 4
and except that Sections 1, 6, 7 and 8 shall survive any such termination
and remain in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF UNDERWRITERS AND SELLING STOCKHOLDERS BY THE
COMPANY. The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act and each Selling
Stockholder and each person, if any, who controls any Selling Stockholder
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading
or arising out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, provided that (subject to
22
Section 6(e) below) any such settlement is effected with the written
consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Xxxxxxx Xxxxx or Salomon
and the Selling Stockholders), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by either a Selling Stockholder or any Underwriter through Xxxxxxx
Xxxxx or Salomon expressly for use in the Registration Statement (or any
amendment thereto), including the Rule 430A Information or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) and
PROVIDED further that the Company will not be liable to an Underwriter with
respect to any Preliminary Prospectus to the extent that the Company shall
sustain the burden of proof of proving that any such loss, liability, claim,
damage or expense resulted from the fact that such Underwriter, in
contravention of a requirement of this Agreement or applicable law, sold
Shares to a person to whom such Underwriter failed to send or give, at or
prior to the Closing Date, a copy of the Final Prospectus as then amended or
supplemented if (i) the Company has previously furnished copies thereof
(sufficiently in advance of the Closing Date to allow for the distribution by
the Closing Date) to the Underwriter and the loss, liability, claim, damage
or expense of such Underwriter resulted from an untrue statement or omission
or alleged untrue statement or omission of a material fact contained in or
omitted from the Preliminary Prospectus which was corrected in the Final
Prospectus as, if applicable, amended or supplemented prior to the Closing
Date and (ii) giving or sending such Final Prospectus by the Closing Date to
the party or parties asserting such loss, liability, claim, damage or expense
would have constituted a complete defense to the claim asserted by such
person.
(b) INDEMNIFICATION OF UNDERWRITERS BY SELLING STOCKHOLDERS. Each
Selling Stockholder severally, and not jointly, agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading
or arising out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact
23
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, provided that (subject to Section
6(e) below) any such settlement is effected with the written consent of the
Selling Stockholder; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall only apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by such Selling Stockholder expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information or
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); provided that each Selling Stockholder shall be liable in any such
case to the extent but only to the extent that the loss, claim, damage or
liability of the Underwriters results from an untrue statement or omission of
a material fact contained in the preliminary prospectus or preliminary
prospectus supplement which was identified in writing prior to the effective
date of the registration statement to such Underwriter and corrected in the
prospectus or prospectus supplement as then amended, and such correction
would have cured the defect giving rise to such loss, claim, damage or
liability. Notwithstanding the provisions of this Section 6(b), the
aggregate liability of any Selling Stockholder under this Section 6(b) shall
not exceed the proceeds (net of underwriting discounts but before expenses)
received by such Selling Stockholder from the sale of Initial Securities
under this Agreement. The Underwriters and the Company acknowledge that the
statements specifically relating to each Selling Stockholder under the
caption "Principal and Selling Stockholders" in the Prospectus constitute the
only information furnished in writing by or on behalf of such Selling
Stockholder expressly for use in the Registration Statement as originally
filed or in any amendment thereof, any related Preliminary or the Prospectus
or in any amendment thereof or supplement thereto, as the case may be. This
indemnity agreement will be in addition to any liability which the Selling
Stockholders may otherwise have, including under this Agreement; PROVIDED,
however, that in no event shall the aggregate liability of any Selling
Stockholder for any breach of the representations and warranties contained in
Section 1(b) (when combined with any liability under the indemnity above)
exceed the proceeds (net of underwriting discounts but before expenses)
received by such Selling Stockholder from the sale of Shares under this
Agreement.
24
(c) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS AND SELLING
STOCKHOLDERS. Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act, and each Selling Stockholder and each person, if any, who controls any
Selling Stockholder within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information or any preliminary prospectus or the Prospectus (or any amendment
or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through Xxxxxxx
Xxxxx or Salomon expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(d) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of parties indemnified pursuant to
Section 6(a) above, counsel to the indemnified parties shall be selected by
Xxxxxxx Xxxxx or Salomon, in the case of parties indemnified pursuant to
Section 6(b) above, counsel to the indemnified parties shall be selected by
the Selling Stockholders, and, in the case of parties indemnified pursuant to
Section 6(c) above, counsel to the indemnified parties shall be selected by
the Company and the Selling Stockholders. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their
own counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances. No indemnifying party
shall, without the prior written consent of the indemnified parties, settle
or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or
Section 7 hereof (whether or not the indemnified parties re actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim
and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(e) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of
25
the nature contemplated by Section 6(a)(ii) effected without its written
consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement
at least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(f) OTHER AGREEMENTS WITH RESPECT TO INDEMNIFICATION. The provisions
of this Section shall not affect any agreement among the Company and the
Selling Stockholders with respect to indemnification.
SECTION 7. CONTRIBUTION. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, (i) in
such proportion as is appropriate to reflect the relative benefits received
by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other hand from the offering of the Securities pursuant
to this Agreement or (ii) if the allocation provided by clause (i) 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 and the Selling Stockholders on the one hand
and of the Underwriters on the other hand in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any relevant equitable considerations.
The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other hand in
connection with the offering of the Securities pursuant to this Agreement
shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of the Securities pursuant to this Agreement
(before deducting expenses) received by the Company and the Selling
Stockholders and the total underwriting discount received by the
Underwriters, in each case as set forth on the cover of the Prospectus.
The relative fault of the Company and the Selling Stockholders on the
one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the Selling
Stockholders or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 7
were determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to above in
this Section 7. The aggregate amount of losses, liabilities, claims, damages
and expenses incurred by an indemnified party and referred to above in this
Section 7 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in
26
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged
untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, (i) no Underwriter
shall be required to contribute any amount in excess of the amount by which
the total price at which the Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission and (ii)
no Selling Stockholder shall be required to contribute any amount in excess
of the proceeds (net of underwriting discounts but before expenses) received
by such Selling Stockholder for its Initial Securities.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter,
and each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company or
any Selling Stockholder within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Company or such Selling Stockholder, as the case may be. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several
in proportion to the number of Initial Securities set forth opposite their
respective names in Schedule A hereto and not joint. The Selling
Stockholders' respective obligation to contribute pursuant to this Section 7
are several in proportion to the number of Initial Securities set forth
opposite their respective names on Schedule B and not joint.
The provisions of this Section shall not affect any agreement among the
Company and the Selling Stockholders with respect to contribution.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries or the Selling Stockholders submitted pursuant hereto, shall
remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or controlling person,
or by or on behalf of the Company or the Selling Stockholders, and shall
survive delivery of the Securities to the Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Representatives may terminate this
Agreement, by notice to the Company and the Selling Stockholders, at any time
at or prior to Closing Time (i) if there has been, since the time of
execution of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its
27
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material
adverse change in the financial markets in the United States, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change
or development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which
is such as to make it, in the judgment of the Representatives, impracticable
to market the Securities or to enforce contracts for the sale of the
Securities, or (iii) if trading in any securities of the Company has been
suspended or materially limited by the Commission or the Nasdaq National
Market, or if trading generally on the American Stock Exchange or the New
York Stock Exchange or in the Nasdaq National Market has been suspended or
materially limited, or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices have been required, by any of said exchanges or
by such system or by order of the Commission, the National Association of
Securities Dealers, Inc. or any other governmental authority, or (iv) if a
banking moratorium has been declared by either Federal or New York
authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any
other party except as provided in Section 4 hereof, and provided further that
Sections 1, 6, 7 and 8 shall survive such termination and remain in full
force and effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more
of the Underwriters shall fail at Closing Time or a Date of Delivery to
purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of
the non-defaulting Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such
24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number
of Securities to be purchased on such date, this Agreement or, with respect
to any Date of Delivery which occurs after the Closing Time, the obligation
of the Underwriters to purchase and of the Company to sell the Option
Securities to be purchased and sold on such Date of Delivery shall
terminate without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a
28
termination of the obligation of the Underwriters to purchase and the Company
to sell the relevant Option Securities, as the case may be, either the (i)
Representatives or (ii) the Company and the Selling Stockholders shall have
the right to postpone Closing Time or the relevant Date of Delivery, as the
case may be, for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein, the term "Underwriter" includes
any person substituted for an Underwriter under this Section 10.
SECTION 11. DEFAULT BY ONE OR MORE OF THE SELLING STOCKHOLDERS OR THE
COMPANY. (a) If a Selling Stockholder shall fail at Closing Time to sell
and deliver the number of Securities which such Selling Stockholder or
Selling Stockholders are obligated to sell hereunder, and the remaining
Selling Stockholders do not exercise the right hereby granted to increase,
pro rata or otherwise, the number of Securities to be sold by them hereunder
to the total number to be sold by all Selling Stockholders as set forth in
Schedule B hereto, then the Underwriters may, at option of the
Representatives, by notice from the Representatives to the Company and the
non-defaulting Selling Stockholders, either (a) terminate this Agreement
without any liability on the fault of any non-defaulting party except that
the provisions of Sections 1, 4, 6, 7 and 8 shall remain in full force and
effect or (b) elect to purchase the Securities which the non-defaulting
Selling Stockholders have agreed to sell hereunder. No action taken pursuant
to this Section 11 shall relieve any Selling Stockholder so defaulting from
liability, if any, in respect of such default.
In the event of a default by any Selling Stockholder as referred to in
this Section 11, each of the Representatives and the Company shall have the
right to postpone Closing Time for a period not exceeding seven days in order
to effect any required change in the Registration Statement or Prospectus or
in any other documents or arrangements.
(b) If the Company shall fail at the Date of Delivery to sell the
number of Securities that it is obligated to sell hereunder, then this
Agreement shall terminate without any liability on the part of any
nondefaulting party; provided, however, that the provisions of Sections 1, 4,
6, 7 and 8 shall remain in full force and effect. No action taken pursuant
to this Section shall relieve the Company from liability, if any, in respect
of such default.
29
SECTION 12. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at North Tower, World
Financial Center, New York, New York 10281-1201, attention of Xxxx Xxxx;
notices to the Company shall be directed to it at 0000 Xxxxx Xxxxxx Xxxxxxx,
Xxxxxxxxx, Xxxxxxxx 00000, attention of Xxxxx Xxxxxxxx, in each case with
copies to their respective primary outside legal counsel, if known; notices
to the Selling Stockholders who have executed the Power of Attorney and
Custody Agreement shall be directed to State Street Bank and Trust Company of
California, N.A., Corporate Trust, 00 Xxxx 0xx Xxxxxx, 00xx Xxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000; and notices to the other Selling Stockholders who
have not executed the Power of Attorney and Custody Agreement and who are
listed on Schedule C to this Agreement shall be directed to such Selling
Stockholder c/o Ropes & Xxxx, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx, XX 00000,
attention of Xxxxxx X. Xxxx, Esq.
SECTION 13. PARTIES. This Agreement shall inure to the benefit of and
be binding upon each of the Underwriters, the Company and the Selling
Stockholders and their respective successors. Nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any person, firm
or corporation, other than the Underwriters, the Company and the Selling
Stockholders and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters, the Company and the Selling
Stockholders and their respective successors, and said controlling persons
and officers and directors and their heirs and legal representatives, and for
the benefit of no other person, firm or corporation. No purchaser of
Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. EFFECT OF HEADINGS. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
SECTION 16. EXERCISE OF WARRANTS. Subject to, and effective immediately
prior to, the sale and delivery by each Selling Stockholder to the
Underwriters of the Initial Securities, as contemplated by Section 2(a)
hereof, the Company and each of the Representatives waive the restriction on
exercise during the Blackout Period (as defined in the Warrant Agreement) of
the warrants beneficially owned by each Selling Stockholder and issued
pursuant to that certain Warrant Agreement dated as of May 5, 1998 by and
between the Company and State Street Bank and Trust Company of California,
N.A. (the "Warrant Agreement"); PROVIDED, HOWEVER, that such waiver shall
only apply and be effective solely with respect to those warrants
beneficially owned by each Selling Stockholder, the underlying common stock
of which is to be sold by such Selling Stockholder pursuant to this
agreement.
30
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Attorney-in-Fact for
the Selling Stockholders a counterpart hereof, whereupon this instrument,
along with all counterparts, will become a binding agreement among the
Underwriters, the Company and the Selling Stockholders in accordance with its
terms.
Very truly yours,
RHYTHMS NETCONNECTIONS INC.
By
----------------------------
Title:
By
----------------------------
As Attorney-in-Fact acting on behalf of
the Selling Stockholders named in
Schedule B and identified as having
entered into the Power of Attorney and
Custody Agreement
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
XXXXXXX XXXXX BARNEY INC.
XXXXXXXXX & XXXXX LLC
XXXXXX XXXXXX PARTNERS LLC
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By
----------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
31
VARIABLE INSURANCE PRODUCTS FUND:
HIGH INCOME PORTFOLIO
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
FIDELITY ADVISOR SERIES II:FIDELITY
ADVISOR HIGH YIELD FUND
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
FIDELITY PURITAN TRUST: FIDELITY
PURITAN FUND
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
FIDELITY SUMMER STREET TRUST: FIDELITY
CAPITAL & INCOME FUND
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
FIDELITY GLOBAL YIELD TRUST
By:
----------------------------
32
Name:
--------------------------
Title:
-------------------------
FIDELITY ADVISOR SERIES I: FIDELITY
ADVISOR BALANCED FUND
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
FIDELITY ADVISOR SERIES II: FIDELITY
ADVISOR STRATEGIC INCOME FUND
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
VARIABLE INSURANCE PRODUCTS FUND III:
BALANCED PORTFOLIO
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
ILLINOIS MUNICIPAL RETIREMENT FUND
MASTER TRUST
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
33
MANUFACTURERS INVESTMENT TRUST -
LARGE CAP GROWTH
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
XXXXXX ADVISORY COMPANY, INC.
On behalf of the Selling Stockholders
listed under Xxxxxx Advisory Company,
Inc. on Schedule C
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
XXXXXX INVESTMENT MANAGEMENT, INC.
On behalf of the Selling Stockholders
listed under Xxxxxx Investment
Management, Inc. on Schedule C
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
XXXXXX FIDUCIARY TRUST COMPANY
On behalf of the Selling Stockholders
listed under Xxxxxx Fiduciary Trust
Company on Schedule C
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
34
INVESCO HIGH YIELD FUND
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
INVESCO VARIABLE HIGH YIELD FUND
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
XXXXXX XXXXXXXX & XXXXXXXX, LLP
On behalf of the Selling Stockholders
listed in Schedule C
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
XXXXXX XXXXXXX XXXX XXXXXX INVESTMENT
MANAGEMENT, INC.
On behalf of the Selling Stockholders
listed in Schedule C
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
35
SUNAMERICA HIGH INCOME FUND
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
SUNAMERICA SERIES TRUST HIGH YIELD
PORTFOLIO
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
36
SCHEDULE A
Number of
Name of Underwriter Initial Securities
------------------- ------------------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated...................................
Xxxxxxx Xxxxx Barney Inc. .................................
Xxxxxxxxx & Xxxxx LLC......................................
Xxxxxx Xxxxxx Partners LLC.................................
--------------
Total..................................................
Sch A-1
SCHEDULE B
Number of Maximum Number
Initial Securities of Option Securities
to be Sold to Be Sold
------------------ --------------------
Rhythms NetConnections Inc. 0 [__________]
Selling Stockholders who executed Power of Attorney
and Custody Agreement:
The United Bank of Kuwait PLC 102,000 0
THE DREYFUS CORPORATION, ON BEHALF OF: 81,600 0
Dreyfus High Yield Securities Fund
LOEWS CORP., ON BEHALF OF: 543,456 0
Continental Casualty Company
CANYON CAPITAL ADVISORS LLC, ON BEHALF OF:
The Value Realization Fund, L.P. 9,486 0
The Canyon Value Realization Fund (Cayman) Ltd. 22,400 0
Delphi Financial Group, Inc. 714 0
WESTERN ASSET MANAGEMENT COMPANY, ON BEHALF OF:
Xxxx Xxxxx Global Offshore U.S. High Yield Fund 61,200
North Dacota State Investment Board/High Yield 32,640 0
CREDIT SUISSE ASSET MANAGEMENT, ON BEHALF OF:
Warburg Pincus High Yield Fund 12,240 0
General Retirement System of the City of Detroit 8,160 0
SEI Institutional Managed Trust 19,584 0
Credit Suisse Asset Management Guernsey High Yield Fund 3,264 0
Credit Suisse Asset Management Strategic Global Income Fund 8,160 0
Credit Suisse Asset Management Income Fund 24,480 0
The Common Fund 4,080 0
SEI Global High Yield Fixed Income 1,632 0
Fidelity Summer Street Trust: Fidelity Capital & Income Fund 87,965 0
Fidelity Global Yield Trust 32,966 0
Fidelity Advisor Series I: Fidelity Advisor Balanced Fund 22,807 0
Sch B-1
Fidelity Advisor Series II: Fidelity Advisor Strategic Income 5,222 0
Fund
Variable Insurance Products Fund III: Balanced Portfolio 1,632 0
Illinois Municipal Retirement Fund Master Trust 39,168 0
Manufacturers Investment Trust - Large Cap Growth 4,651 0
XXXXXX ADVISORY COMPANY, INC.:
Agway, Inc. Employees Retirement Trust 2,938 0
Xxxxxx Laboratories Annuity Retirement Plan 4,243 0
Mobil Oil Corporation Retirement Plan Trust 3,427 0
Strategic Global Fund - High Yield Fixed Income 4,733 0
(Xxxxxx) Fund
Ameritech Pension Trust 9,955 0
Central Sales, Southeast and Southwest Areas Pension Fund 21,706 0
Southern Farm Bureau Annuity Insurance Company 3,264 0
XXXXXX INVESTMENT MANAGEMENT, INC.:
The Xxxxxx Xxxxxx Fund of Boston 15,014 0
Xxxxxx Income Fund 29,050 0
Xxxxxx Equity Income Fund 816 0
Xxxxxx High Yield Trust 301,920 0
Xxxxxx Balanced Retirement Fund 2,611 0
Xxxxxx High Yield Advantage Fund 330,154 0
Xxxxxx High Income Convertible and Bond Fund 3,672 0
Xxxxxx Variable Trust - Xxxxxx VT High Yield Fund 76,867 0
Xxxxxx Variable Trust - Xxxxxx VT Global Asset 3,264 0
Allocation Fund
Xxxxxx Master Income Trust 14,851 0
Xxxxxx Premier Income Trust 37,373 0
Xxxxxx Master Intermediate Income Trust 22,522 0
Xxxxxx Diversified Income Trust 171,197 0
Xxxxxx Convertible Opportunities and Income Trust 3,427 0
Xxxxxx Asset Allocation Funds - Growth Portfolio 4,570 0
Xxxxxx Asset Allocation Funds - Balanced Portfolio 11,750 0
Xxxxxx Asset Allocation Funds - Conservative Portfolio 3,917 0
Xxxxxx Funds Trust - Xxxxxx High Yield Trust II 40,147 0
Xxxxxx Managed High Yield Trust 7,426 0
Xxxxxx Strategic Income Fund 5,712 0
Xxxxxx Variable Trust - Xxxxxx VT Diversified Income Fund 19,421 0
Lincoln National Global Asset Allocation Fund, Inc. 1,469 0
XXXXXX FIDUCIARY TRUST COMPANY:
Xxxxxx High Yield Managed Trust 28,560 0
Xxxxxx High Yield Fixed Income Fund, LLC 6,528 0
Ameritech Non-Management Umbrella Welfare Benefit Plan 490 0
Sch B-2
INVESCO FUNDS GROUP INC., ON BEHALF OF:
INVESCO High Yield Fund 236,640 0
INVESCO Variable High Yield Fund 16,320 0
Xxxxxx Xxxxxxxx Xxxxxxxx, LLP 369,526 0
Xxxxxx Xxxxxxx Xxxx Xxxxxx Investment Management, Inc. 148,390 0
SUNAMERICA LIFE, ON BEHALF OF:
SunAmerica High Income Fund 12,240 0
SunAmerica Series Trust High Yield Portfolio 16,320 0
Total [_______] [_______]
Sch X-0
XXXXXXXX X
Xxx X-0
FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY
MANAGEMENT TRUST COMPANY:
Variable Insurance Products Fund: High Income Portfolio 365,405
Fidelity Advisor Series II: Fidelity Advisor High Yield Fund 234,682
Fidelity Puritan Trust: Fidelity Puritan Fund 231,132
Fidelity Summer Street Trust: Fidelity Capital & Income Fund 87,965
Fidelity Global Yield Trust 32,966
Fidelity Advisor Series I: Fidelity Advisor Balanced Fund 22,807
Fidelity Advisor Series II: Fidelity Advisor Strategic Income Fund 5,222
Variable Insurance Products Fund III: Balanced Portfolio 1,632
Illinois Municipal Retirement Fund Master Trust 39,168
Manufacturers Investment Trust - Large Cap Growth 4,651
XXXXXX ADVISORY COMPANY, INC.:
Agway, Inc. Employees Retirement Trust 2,938
Xxxxxx Laboratories Annuity Retirement Plan 4,243
Mobil Oil Corporation Retirement Plan Trust 3,427
Strategic Global Fund - High Yield Fixed Income (Xxxxxx) Fund 4,733
Ameritech Pension Trust 9,955
Central Sales, Southeast and Southwest Areas Pension Fund 21,706
Southern Farm Bureau Annuity Insurance Company 3,264
XXXXXX INVESTMENT MANAGEMENT, INC.:
The Xxxxxx Xxxxxx Fund of Boston 15,014
Xxxxxx Income Fund 29,050
Xxxxxx Equity Income Fund 816
Xxxxxx High Yield Trust 301,920
Xxxxxx Balanced Retirement Fund 2,611
Xxxxxx High Yield Advantage Fund 330,154
Xxxxxx High Income Convertible and Bond Fund 3,672
Xxxxxx Variable Trust - Xxxxxx VT High Yield Fund 76,867
Xxxxxx Variable Trust - Xxxxxx VT Global Asset Allocation Fund 3,264
Xxxxxx Master Income Trust 14,851
Xxxxxx Premier Income Trust 37,373
Xxxxxx Master Intermediate Income Trust 22,522
Xxxxxx Diversified Income Trust 171,197
Xxxxxx Convertible Opportunities and Income Trust 3,427
Xxxxxx Asset Allocation Funds - Growth Portfolio 4,570
Xxxxxx Asset Allocation Funds - Balanced Portfolio 11,750
Xxxxxx Asset Allocation Funds - Conservative Portfolio 3,917
Sch X-0
Xxxxxx Xxxxx Xxxxx - Xxxxxx High Yield Trust II 40,147
Xxxxxx Managed High Yield Trust 7,426
Xxxxxx Strategic Income Fund 5,712
Xxxxxx Variable Trust - Xxxxxx VT Diversified Income Fund 19,421
Lincoln National Global Asset Allocation Fund, Inc. 1,469
XXXXXX FIDUCIARY TRUST COMPANY:
Xxxxxx High Yield Managed Trust 28,560
Xxxxxx High Yield Fixed Income Fund, LLC 6,528
Ameritech Non-Management Umbrella Welfare Benefit Plan 490
INVESCO FUNDS GROUP INC., ON BEHALF OF:
INVESCO High Yield Fund 236,640
INVESCO Variable High Yield Fund 16,320
Xxxxxx Xxxxxxxx Xxxxxxxx, LLP 369,526
Xxxxxx Xxxxxxx Xxxx Xxxxxx Investment Management, Inc. 148,390
SUNAMERICA LIFE, ON BEHALF OF:
SunAmerica High Income Fund 12,240
SunAmerica Series Trust High Yield Portfolio 16,320
Sch C-2
SCHEDULE D
RHYTHMS NETCONNECTIONS INC.
[__________] Shares of Common Stock
(Par Value $.001 Per Share)
1 The public offering price per share for the Securities,
determined as provided in said Section 2, shall be $_______.
2 The purchase price per share for the Securities to be paid by
the several Underwriters shall be $______, being an amount equal to the
initial public offering price set forth above less $______ per share;
provided that the purchase price per share for any Option Securities
purchased upon the exercise of the over-allotment option described in Section
2(b) shall be reduced by an amount per share equal to any dividends or
distributions declared by the Company and payable on the Initial Securities
but not payable on the Option Securities.
Sch D-1
[SCHEDULE E]
Enterprise Partners III, L.P.
Enterprise Partners IV, L.P.
Enterprise Partners III Associates, L.P.
Brentwood Associates VII, L.P.
Brentwood Affiliates Fund, L.P.
Sprout Capital VII, L.P.
DLJ First ESC L.L.C.
DLJ Capital Corporation
First Union Trust Company N.A. as Voting Trustee
The Sprout CEO Fund, L.P.
Enron Communications Group, Inc.
Xxxxxxx Xxxxxxx Xxxxxxxxx & Xxxxx VIII
KPCB VIII Founders Fund
KPCB VIII Information Sciences Zaibatsu Fund II
MCI WorldCom Investment Fund
Xxxxxxxxx Xxxxx
Xxxxxxxxx X. Xxxxxx 1999 Trust
Xxxxxxxxxxx X. Xxxxxx 1999 Trust
Xxxxxxxxx X. Xxxxxx
Xxxxxxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxxx
GATX Capital Corporation
Xxxxxxx Xxxxxxxxxx
Xxxxxxx Xxxxxxxxx
Xxxxx Xxxxx
Xxxxx Xxxxx
Xxxxx Xxxxxxxx
Xxxxx Xxxxxxxx
Xxxxxxx Xxxxxx
Xxxx Xxxx
B. P. Xxxx Xxxxx
Cisco Systems, Inc.
Microsoft Corporation
Qwest Communications Corporation (U.S. Telesource)
Sch E-1
Exhibit A-1
[Form of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP Opinion]
X-0
Xxxxxxx X-0
[Form of Xxxx and Xxxx LLP Opinion]
X-0
Xxxxxxx X-0
[Form of Xxxxxxxxxx & Xxxxx Opinion]
X-0
Xxxxxxx X-0
[Form of Leboeuf, Lamb, Xxxxxx & XxxXxx L.L.P. Opinion]
X-0
Xxxxxxx X-0
[Form of General Counsel Opinion]
X-0
Xxxxxxx X-0
[Form of Xxxxx & XxXxxxxx Opinion]
A-6
Exhibit B
FORM OF OPINION OF COUNSEL FOR THE SELLING STOCKHOLDERS
TO BE DELIVERED PURSUANT TO SECTION 5(c)
(i) No filing with, or consent, approval, authorization,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign, (other than the
issuance of the order of the Commission declaring the Registration Statement
effective and such authorizations, approvals or consents as may be necessary
under state securities laws, as to which [I][we] need express no opinion) is
necessary or required to be obtained by the Selling Stockholder for the
performance by the Selling Stockholder of its obligations under the Purchase
Agreement or in the Power of Attorney and Custody Agreement, or in connection
with the offer, sale or delivery of the Securities.
The Power of Attorney and Custody Agreement has been duly executed
and delivered by the Selling Stockholder named therein and constitutes the
legal, valid and binding agreement of such Selling Stockholder.
The Purchase Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder.
Each Attorney-in-Fact has been duly authorized by the Selling
Stockholder to deliver the Securities on behalf of the Selling Stockholder in
accordance with the terms of the Purchase Agreement.
(v) The execution, delivery and performance of the Purchase
Agreement and the Power of Attorney and Custody Agreement and the sale and
delivery of the Securities and the consummation of the transactions
contemplated in the Purchase Agreement and in the Registration Statement and
compliance by the Selling Stockholder with its obligations under the Purchase
Agreement have been duly authorized by all necessary action on the part of
the Selling Stockholder and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or constitute a
breach of, or default under or result in the creation or imposition of any
tax, lien, charge or encumbrance upon the Securities or any property or
assets of the Selling Stockholder pursuant to, any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, license, lease or
other instrument or agreement to which the Selling Stockholder is a party or
by which it may be bound, or to which any of the property or assets of the
Selling Stockholder may be subject nor will such action result in any
violation of the provisions of the charter or by-laws of the Selling
Stockholder, if applicable, or any law, administrative regulation, judgment
or order of any governmental agency or body or any administrative or court
decree having jurisdiction over such Selling Stockholder or any of its
properties.
To the best of [our][my] knowledge, the Selling Stockholder has
valid and marketable title to the Securities to be sold by the Selling
Stockholder pursuant to the Purchase Agreement, free and clear of any pledge,
lien, security interest, charge, claim, equity or encumbrance of any
B-1
kind, and has full right, power and authority to sell, transfer and deliver
such Securities pursuant to the Purchase Agreement. By delivery of a
certificate or certificates therefor such Selling Stockholder will transfer
to the Underwriters who have purchased such Securities pursuant to the
Purchase Agreement (without notice of any defect in the title of the Selling
Stockholder and who are otherwise bona fide purchasers for purposes of the
Uniform Commercial Code) valid and marketable title to such Securities, free
and clear of any pledge, lien, security interest, charge, claim, equity or
encumbrance of any kind.
B-2
Exhibit C
_______________, 1999
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxxx Xxxxx Barney Inc.
as Representatives of the several
Underwriters to be named in the
within-mentioned Purchase Agreement
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
and
Xxxxxxx Xxxxx Barney Inc.
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: PROPOSED PUBLIC OFFERING BY RHYTHMS NETCONNECTIONS INC.
Dear Sirs:
The undersigned, a stockholder and an officer and/or director of
Rhythms NetConnections Inc., a Delaware corporation corporation (the
"Company"), understands that Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") and Xxxxxxx Xxxxx Xxxxxx Inc.
("Salomon"), propose to enter into a Purchase Agreement (the "Purchase
Agreement") with the Company and the Selling Stockholders providing for the
public offering of shares (the "Securities") of the Company's common stock,
par value $.001 per share (the "Common Stock"). In recognition of the benefit
that such an offering will confer upon the undersigned as a stockholder
[and an officer and/or director] of the Company, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees with each underwriter to be named in the
Purchase Agreement that, during a period of 90 days from the date of the
Purchase Agreement, the undersigned will not, without the prior written
consent of Xxxxxxx Xxxxx and Salomon, directly or indirectly, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant
for the sale of, or otherwise dispose of or transfer any shares of the
Company's Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock, whether now owned or hereafter acquired by the
undersigned or with respect to which the undersigned has or hereafter
acquires the power of disposition, or file any registration statement under
the Securities Act of 1933, as amended, with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction is to be settled by delivery of Common Stock or other securities,
in cash or otherwise.
Very truly yours,
Signature:
-------------------------
Print Name:
------------------------
C-1
