Exhibit 1.4
DRAFT
05/07/98
CUMULUS MEDIA INC.
$100,000,000
___% Senior Subordinated Notes due 2008
UNDERWRITING AGREEMENT
_________, 1998
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇ BROTHERS, INC.
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Cumulus Media Inc., a corporation organized and existing under the
laws of Illinois (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to the several underwriters named in Schedule I
hereto (the "Underwriters") an aggregate of $100,000,000 principal amount of
___% Senior Subordinated Notes due 2008 (the "Notes"), to be issued under an
indenture (the "Indenture") dated , between the Company and ______, as trustee
(the "Trustee").
It is understood by all parties that the Company is concurrently
entering into agreements dated the date hereof, providing for the sale by the
Company of an aggregate of ____ Shares of its Class A Common Stock (including
the over-allotment options thereunder) (the "Equity Underwriting Agreements")
through arrangements with certain underwriters for whom ▇▇▇▇▇▇ Brothers Inc.,
Bear, ▇▇▇▇▇▇▇ & Co. and BT ▇▇▇▇. ▇▇▇▇▇ Incorporated are acting as
representatives and with certain international managers for whom ▇▇▇▇▇▇ Brothers
International (Europe), Bear, ▇▇▇▇▇▇▇ International Limited, BT ▇▇▇▇ ▇▇▇▇▇
International, division of Bankers Trust International PLC and Credit Lyonnais
Securities are acting as lead managers. It is additionally understood by all
parties that the Company is also entering into an agreement (the "Preferred
Stock Underwriting Agreement"), dated the date hereof, providing for the sale by
the Company of $100,000,000 aggregate liquidation preference of its
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__% Series A Cumulative Exchangeable Redeemable Preferred Stock due 2009 to
Bear, ▇▇▇▇▇▇▇ & Co. Inc. and ▇▇▇▇▇▇ Brothers Inc., as underwriters.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and may have filed an
amendment or amendments thereto, on Form S-1 (No. 333-48849), for the
registration of the Notes under the Securities Act of 1933, as amended (the
"Act"). Such registration statement, including the prospectus, financial
statements and schedules, exhibits and all other documents filed as a part
thereof, as amended at the time of effectiveness of the registration statement,
including any information deemed to be a part thereof as of the time of
effectiveness pursuant to paragraph (b) of Rule 430A or Rule 434 of the Rules
and Regulations of the Commission under the Act (the "Regulations"), is herein
called the "Registration Statement" and the prospectus, in the form first filed
with the Commission pursuant to Rule 424(b) of the Regulations or filed as part
of the Registration Statement at the time of effectiveness if no Rule 424(b) or
Rule 434 filing is required, is herein called the "Prospectus". The term
"preliminary prospectus" as used herein means a preliminary prospectus as
described in Rule 430 of the Regulations.
(b) At the time of the effectiveness of the Registration Statement
or the effectiveness of any post-effective amendment to the Registration
Statement, when the Prospectus is first filed with the Commission pursuant to
Rule 424(b) or Rule 434 of the Regulations, when any supplement to or amendment
of the Prospectus is filed with the Commission and at the Closing Date (as
hereinafter defined), the Registration Statement and the Prospectus and any
amendments thereof and supplements thereto complied or will comply in all
material respects with the applicable provisions of the Act and the Regulations
and does not or will not contain an untrue statement of a material fact and does
not or will not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein (i) in the case of the
Registration Statement, not misleading and (ii) in the case of the Prospectus,
in light of the circumstances under which they were made, not misleading. When
any related preliminary prospectus was first filed with the Commission (whether
filed as part of the registration statement for the registration of the Notes or
any amendment thereto or pursuant to Rule 424(a) of the Regulations) and when
any amendment thereof or supplement thereto was first filed with the Commission,
such preliminary prospectus and any amendments thereof and supplements thereto
complied in all material respects with the applicable provisions of the Act and
the Regulations and did not contain an untrue statement of a material fact and
did not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein in light of the circumstances
under which they were made not misleading. No representation and warranty is
made in this subsection (b), however, with respect to any information contained
in or omitted from the Registration Statement or the Prospectus or any related
preliminary prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any
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Underwriter through you as herein stated expressly for use in connection with
the preparation thereof. If Rule 434 is used, the Company will comply with the
requirements of Rule 434.
(c) All of the issued and outstanding shares of capital stock of the
Company and its subsidiaries have been duly authorized, validly issued and are
fully paid and nonassessable, were issued in compliance with federal and state
laws and were not issued in violation of any preemptive or similar rights. All
shares of capital stock of the Company's subsidiaries are owned, directly or
indirectly, by the Company free and clear of any material lien, encumbrance,
claim, security interest, restriction on transfer, stockholders' agreement,
voting trust or other restrictions. The Company's equity capitalization is as
set forth in the Prospectus and any amendment or supplement thereto and on
December 31, 1997, after giving pro forma effect to the issuance and sale of the
Notes pursuant hereto and the other transactions described therein, the Company
would have had an authorized and outstanding capitalization as set forth in the
Prospectus under the caption "Capitalization," subject to the notes and
assumptions included therein.
(d) Except as set forth in the Prospectus, there are not currently
any outstanding material subscriptions, rights, warrants, calls, commitments of
sale or options to acquire, or instruments convertible into or exchangeable for,
capital stock or other equity interests of the Company or any of its
subsidiaries.
(e) Each of Price Waterhouse, LLP, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, McGladrey
& ▇▇▇▇▇▇, LLP, Coopers & ▇▇▇▇▇▇▇, LLP, and Plant & ▇▇▇▇▇, LLP who have certified
the financial statements and supporting schedules included in the Registration
Statement, are independent public accountants as required by the Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
Regulations.
(f) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as set forth in
the Registration Statement and the Prospectus, there has been no material
adverse change or any development involving a prospective material adverse
change in the business, prospects, properties, operations, condition (financial
or other), net worth or results of operations of the Company and its
subsidiaries taken as a whole, whether or not arising from transactions in the
ordinary course of business, and since the date of the latest balance sheet
presented in the Registration Statement and the Prospectus, neither the Company
nor any of its subsidiaries has incurred or undertaken any liabilities or
obligations, direct or contingent, which are material to the Company and its
subsidiaries taken as a whole, except for liabilities or obligations which are
reflected in the Registration Statement and the Prospectus.
(g) This Agreement and the transactions contemplated herein have
been duly and validly authorized by the Company and this Agreement has been duly
and validly executed and delivered by the Company.
(h) The execution, delivery, and performance of this Agreement, the
Indenture and the Notes and the consummation of the transactions contemplated
hereby and thereby do not and will not (i) conflict with or result in a breach
of any of the terms and provisions of,
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or constitute a default (or an event which with notice or lapse of time, or
both, would constitute a default) under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, any agreement, instrument, franchise,
license or permit to which the Company or any of its subsidiaries is a party or
by which any of such corporations or their respective properties or assets may
be bound or (ii) violate or conflict with any provision of the certificate of
incorporation or by-laws of the Company or any of its subsidiaries or any
judgment, decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over the Company
or any of its subsidiaries or any of their respective properties or assets. No
consent, approval, authorization, order, registration, filing, qualification,
license or permit of or with any court or any public, governmental or regulatory
agency or body having jurisdiction over the Company or any of its subsidiaries
or any of their respective properties or assets is required for the execution,
delivery and performance of this Agreement, the Indenture or the Notes or the
consummation of the transactions contemplated hereby or thereby, including the
issuance, sale and delivery of the Notes to be issued, sold and delivered by the
Company hereunder, except the registration under the Act of the Notes and such
consents, approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the Notes
by the Underwriters.
(i) Each of the Company and its subsidiaries has been duly organized
and is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation. Each of the Company and its subsidiaries is duly
qualified and in good standing as a foreign corporation in each jurisdiction in
which the character or location of its properties (owned, leased or licensed) or
the nature or conduct of its business makes such qualification necessary, except
for those failures to be so qualified or in good standing which will not in the
aggregate have a material adverse effect on the Company and its subsidiaries
taken as a whole. Each of the Company and its subsidiaries has all requisite
power and authority, and all necessary consents, approvals, authorizations,
orders, registrations, qualifications, licenses and permits of and from all
public, regulatory or governmental agencies and bodies, to own, lease and
operate its properties and conduct its business as now being conducted and as
described in the Registration Statement and the Prospectus, and no such consent,
approval, authorization, order, registration, qualification, license or permit
contains a materially burdensome restriction not adequately disclosed in the
Registration Statement and the Prospectus.
(j) The Indenture between the Company and the Trustee has been duly
qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement of the Company, enforceable in
accordance with its terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditor's rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability.
(k) The Notes have been duly authorized and, when executed,
authenticated and issued in accordance with the provisions of the Indenture and
delivered to and paid for by
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the purchasers thereof, will be entitled to the benefits of the Indenture and
will be validly issued and free and clear of all liens and restrictions on
transfer and will constitute binding obligations of the Company, enforceable in
accordance with their respective terms except as (i) enforceability thereof may
be limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability.
(l) Except as described in the Prospectus, there is no litigation or
governmental proceeding to which the Company or any of its subsidiaries is a
party or to which any property of the Company or any of its subsidiaries is
subject or which is pending or, to the knowledge of the Company, contemplated
against the Company or any of its subsidiaries which might result in any
material adverse change or any development involving a material adverse change
in the business, prospects, properties, operations, condition (financial or
other), net worth or results of operations of the Company and its subsidiaries
taken as a whole or which is required to be disclosed in the Registration
Statement and the Prospectus.
(m) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which constitutes or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Notes to facilitate the sale or resale of the
Notes.
(n) The financial statements, including the notes thereto, and
supporting schedules included in the Registration Statement and the Prospectus
present fairly the financial position of the Company as of the dates indicated
and the results of its operations for the periods specified; except as otherwise
stated in the Registration Statement, said financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis; and the supporting schedules included in the Registration
Statement and Prospectus present fairly the information required to be stated
therein.
(o) Immediately after the sale of the Notes by the Company
hereunder, the aggregate amount of Notes which shall have been issued and sold
by the Company hereunder and of any debt securities of the Company (other than
the Notes) that shall have been issued and sold pursuant to the Registration
Statement will not exceed the amount of debt securities registered under the
Registration Statement.
(p) Neither the Company, nor any of its subsidiaries, are, nor upon
consummation of the transactions contemplated hereby will be, subject to
registration as an "investment company" under the Investment Company Act of
1940, as amended.
(q) Neither the Company nor any of its subsidiaries nor, to the
Company's knowledge, any other party, is now, or is reasonably expected by the
Company or any of its subsidiaries to be, in violation or breach of, or default
(disregarding any grace or notice provision) with respect to any material
provision of any contract, agreement, instrument, lease, license, policy,
arrangement, or understanding to which the Company or any of its subsidiaries is
a party, which violation, breach or default or violations, breaches or defaults,
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singly or in the aggregate has, or can reasonably be expected in the future to
have, a material adverse effect on the business, prospects, properties, assets,
operations, condition (financial or other), net worth or results of operations
of the Company and its subsidiaries taken as a whole; and each such contract,
agreement, instrument, lease, license, policy, arrangement and understanding is
in full force and is the legal, valid and binding obligation of the Company or
its subsidiaries, as the case may be, and, to the Company's knowledge, the other
parties thereto, and is enforceable as to the Company or its subsidiaries, as
the case may be, and, to the Company's knowledge, the other parties thereto in
accordance with its terms subject, as to enforceability, to applicable
bankruptcy, reorganization, moratorium or other similar laws of general
application affecting the rights of creditors generally, except where such
failure to be in full force or to be a legal, valid and binding obligation or to
be enforceable, as the case may be, has not had, or would not reasonably be
expected in the future to have, a material adverse effect on the business,
prospects, properties, assets, operations, condition (financial or other), net
worth or results of operations of the Company and its subsidiaries taken as a
whole.
(r) The Company and its subsidiaries have good and marketable title
to all real property and material assets disclosed in the Registration Statement
and Prospectus as being owned by them, free and clear of all liens, mortgages,
claims, security interests or other encumbrances, except such as are disclosed
in the Registration Statement and Prospectus and except for liens incurred in
the ordinary course of business which do not materially affect the use or value
thereof; property held under lease by the Company or its subsidiaries is held by
them under valid, subsisting and binding leases with only such exceptions with
respect to any particular lease as do not interfere in any material respect with
the conduct of the business of the Company and its subsidiaries taken as a whole
or as do not materially affect the value of such property as used by the Company
or are not material in amount and do not interfere in any material respect with
the use of the property or the conduct of the business of the Company and its
subsidiaries taken as a whole.
(s) The Company and its subsidiaries have filed all necessary
federal, state, local and foreign income, franchise and sales tax returns and
have paid all taxes shown thereon as due, and the Company has no knowledge of
any tax deficiency which has been asserted against the Company or any of its
subsidiaries which would materially and adversely affect the business or
properties of the Company and its subsidiaries, taken as whole. To the Company's
knowledge, tax liabilities in the aggregate are adequately provided for on the
consolidated books of the Company. The Company has not received notice of any
material proposed additional tax assessments against it or any of its
subsidiaries.
(t) Neither the Company nor any of its subsidiaries is in violation
of any law, ordinance, governmental rule or regulation including, without
limitation, federal, state and local rules and regulations relating to the
protection of the environment or concerning the handling, storage, disposal or
discharge of toxic materials (collectively, "Environmental Laws") or court
decree or order to which it or any of its property is subject, except for such
violations which (individually or in the aggregate) do not or will not have a
material adverse effect on the business, prospects, properties, assets,
operations, condition (financial or other), net worth or results of operations
of the Company and its subsidiaries taken as a whole. Each
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of the Company and its subsidiaries has obtained any permits, consents and
authorizations required to be obtained by it under applicable laws, rules,
ordinances or regulations including, without limitation, Environmental Laws and
any such permits, consents and authorizations remain in full force and effect,
except as to any of the foregoing the absence of which (individually or in the
aggregate) will not have a material adverse effect on the business, prospects,
properties, assets, operations, condition (financial or other), net worth or
results of operations of the Company and its subsidiaries taken as a whole.
There is no pending or, to the Company's or any of its subsidiaries' knowledge,
threatened, action or proceeding against the Company or any of its subsidiaries
alleging violations of any applicable laws, rules, ordinances or regulations
including, without limitation, any Environmental Laws, other than any such
actions or proceedings which, individually or in the aggregate, if adversely
determined, is not reasonably likely to have a material adverse effect on the
business, prospects, properties, assets, operations, condition (financial or
other), net worth or results of operations of the Company and its subsidiaries
taken as a whole.
(u) No default or event of default with respect to any Indebtedness
(as such term is defined in the Indenture) entitling the holders thereof to
accelerate the maturity thereof exists or will exist as a result of the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby and each of the Company and its subsidiaries has duly
performed or observed all material obligations, agreements, covenants or
conditions contained in any contract, indenture, mortgage, agreement or
instrument relating to any Indebtedness.
(v) The Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(w) Each of the Company and its subsidiaries maintains insurance of
the types and in amounts generally deemed adequate for its business, including
but not limited to, general liability insurance and insurance covering real and
personal property owned or leased by the Company or any of its subsidiaries
against theft, destruction, damage, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect.
(x) Each of the Company and its subsidiaries owns or possesses
adequate licenses or other rights to use all patents, trademarks, service marks,
trade names, copyrights and know-how necessary to conduct the businesses now or
proposed to be operated by it as described in the Prospectus, and none of the
Company or its subsidiaries has received any notice of infringement of or
conflict with (or knows of any such infringement of or conflict with) asserted
rights of others with respect to any patents, trademarks, service marks, trade
names, copyrights or know-how which, if such assertion of infringement or
conflict were
8
sustained, would, individually or in the aggregate, have a material adverse
effect on the business, prospects, properties, assets, operations, condition
(financial or other), net worth or results of operations of the Company and its
subsidiaries taken as a whole.
(y) Each of the radio stations owned, operated, programmed, or to
which sales and marketing services are provided, by the Company and its
subsidiaries is validly licensed by the Federal Communications Commission (the
"FCC") and no administrative or judicial proceedings are pending before or, to
the knowledge of the Company or its subsidiaries, threatened by the FCC with
respect to such licenses; each of the Company and its subsidiaries are in
compliance in all material respects with the Communications Act of 1934, as
amended, and the rules, regulations and policies of the FCC; each of the Company
and its subsidiaries possesses all licenses, permits, certificates, consents,
orders, approvals and other authorizations from, and has made or will have made
all declarations and filings with, all other federal, state, local and other
governmental authorities, all self-regulatory organizations and all courts and
other tribunals, presently required or necessary to own or lease, as the case
may be, and to operate its respective properties and to carry on its respective
businesses as now or proposed to be conducted as set forth in the Prospectus
("Permits"), except where the failure to obtain such Permits would not,
individually or in the aggregate, have a material adverse effect on the
business, prospects, properties, assets, operations, condition (financial or
other), net worth or results of operations of the Company and its subsidiaries
taken as a whole; each of the Company and its subsidiaries has fulfilled and
performed all of its obligations with respect to such Permits and no event has
occurred which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other material impairment of the rights
of the holder of any such Permit; and none of the Company or its subsidiaries
has received any notice of any proceeding relating to revocation or modification
of any such Permit, except as described in the Prospectus and except where such
revocation or modification would not, individually, or in the aggregate, have a
material adverse effect on the business, prospects, properties, assets,
operations, condition (financial or other), net worth or results of operations
of the Company and its subsidiaries taken as a whole.
(z) The statistical and market-related data included in the
Prospectus are based or derived from sources which the Company and its
subsidiaries believe to be reliable and accurate.
(aa) None of the Company or its subsidiaries, or any agent acting on
their behalf, has taken or will take any action that might cause this Agreement
or the sale of the Notes to violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System, in each case as in effect, or as the
same may hereafter be in effect, on the Closing Date.
(bb) There is no strike, labor dispute, slowdown or work stoppage
with the employees of the Company or any of its subsidiaries which is pending
or, to the knowledge of the Company or any of its subsidiaries, threatened.
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(cc) None of the Company or its subsidiaries has any liability for
any prohibited transactions or funding deficiency or any complete or partial
withdrawal liability with respect to any pension, profit sharing or other plan
which is subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), to which the Company or any of its subsidiaries makes or ever
has made a contribution and in which any employee of the Company or any of its
subsidiaries is or has ever been a participant. With respect to such plans, the
Company and each of its subsidiaries are in compliance in all material respects
with all applicable provisions of ERISA.
(dd) The Notes and the Indenture will conform, in all material
respects, to the descriptions thereof in the Prospectus.
(ee) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable value
of the assets of the Company will exceed the sum of its stated liabilities and
identified contingent liabilities; the Company is not, nor will the Company be,
after giving effect to the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby, (i) left with
unreasonably small capital with which to carry on its business as it is proposed
to be conducted, (ii) unable to pay its debts (contingent and otherwise) as they
mature or (iii) otherwise insolvent.
(ff) The Company has no reason to believe that, after giving effect
to the Pending Acquisitions (as defined in the Registration Statement), any of
the representations and warranties contained in this Section 1 would not be true
and correct.
2. Purchase, Sale and Delivery of the Notes.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriters and the Underwriters,
severally and not jointly, agree to purchase from the Company, at the
appropriate purchase price set forth in Schedule I hereto, the principal amount
of Notes set forth opposite the respective names of the Underwriters in Schedule
I hereto.
(b) Payment of the purchase price for, and delivery of the Notes
shall be made at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other place as shall be agreed upon
by you and the Company, at 10:00 A.M. on the third or fourth business day (as
permitted under Rule 15c6-1 under the Exchange Act) (unless postponed in
accordance with the provisions of Section 9 hereof) following the date of the
effectiveness of the Registration Statement (or, if the Company has elected to
rely upon Rule 430A of the Regulations, the third or fourth business day (as
permitted under Rule 15c6-1 under the Exchange Act) after the determination of
the public offering price of the Notes), or such other time not later than ten
business days after such date as shall be agreed upon by you and the Company
(such time and date of payment and delivery being herein called the "Closing
Date"). Payment shall be made to the Company by wire transfer in same day funds,
against delivery to you for the respective accounts of the Underwriters of
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certificates for the Notes to be purchased by them. Certificates for the Notes
shall be registered in such name or names and in such authorized denominations
as you may request in writing at least two full business days prior to the
Closing Date. The Company will permit you to examine and package such
certificates for delivery at least one full business day prior to the Closing
Date.
(c) On the Closing Date, one or more of the Notes in definitive
form, registered in such names and in such denominations as specified by the
Underwriters at least two business days prior to such date, having an aggregate
principal amount of $100,000,000 shall be delivered by the Company to the
Underwriters (or as the Underwriters direct), against payment by the
Underwriters of the purchase price therefor by wire transfer of same day funds
to an account or accounts designated by the Company, provided that the Company
shall give at least two business days' prior written notice to the Underwriters
of the information required to effect such wire transfer. The Notes shall be
made available to the Underwriters for inspection not later than 9:30 a.m. New
York City time on the business day immediately preceding the Closing Date.
3. Offering. Upon your authorization of the release of the Notes,
the Underwriters propose to offer the Notes for sale to the public upon the
terms set forth in the Prospectus.
4. Covenants of the Company. The Company covenants and agrees with
the Underwriters that:
(a) If the Registration Statement has not yet been declared
effective the Company will use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
possible, and if Rule 430A is used or the filing of the Prospectus is otherwise
required under Rule 424(b) or Rule 434, the Company will file the Prospectus
(properly completed if Rule 430A has been used) pursuant to Rule 424(b) or Rule
434 within the prescribed time period and will provide evidence satisfactory to
you of such timely filing. If the Company elects to rely on Rule 434, the
Company will prepare and file a term sheet that complies with the requirements
of Rule 434.
The Company will notify you immediately (and, if requested by you,
will confirm such notice in writing) (i) when the Registration Statement and any
amendments thereto become effective, (ii) of any request by the Commission for
any amendment of or supplement to the Registration Statement or the Prospectus
or for any additional information, (iii) of the mailing or the delivery to the
Commission for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of the initiation, or the threatening, of
any proceedings therefor, (v) of the receipt of any comments from the
Commission, and (vi) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Notes for sale in any
jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any time, the
Company will make every reasonable effort to prevent the issuance of any such
stop
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order and, if issued, to obtain the lifting of such order as soon as possible.
The Company will not file any amendment to the Registration Statement or any
amendment of or supplement to the Prospectus (including the prospectus required
to be filed pursuant to Rule 424(b) or Rule 434) that differs from the
prospectus on file at the time of the effectiveness of the Registration
Statement before or after the effective date of the Registration Statement to
which you shall reasonably object in writing after being timely furnished in
advance a copy thereof.
(b) If at any time when a prospectus relating to the Notes is
required to be delivered under the Act any event shall have occurred as a result
of which the Prospectus as then amended or supplemented would, in the judgment
of the Underwriters or the Company include an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it shall be necessary at any
time to amend or supplement the Prospectus or Registration Statement to comply
with the Act or the Regulations, the Company will notify you promptly and
prepare and file with the Commission an appropriate amendment or supplement (in
form and substance satisfactory to you) which will correct such statement or
omission and will use its best efforts to have any amendment to the Registration
Statement declared effective as soon as possible.
(c) The Company will promptly deliver to you two signed copies of
the Registration Statement, including exhibits and all amendments thereto, and
the Company will promptly deliver to each of the Underwriters such number of
copies of any preliminary prospectus, the Prospectus, the Registration
Statement, and all amendments of and supplements to such documents, if any, as
you may reasonably request.
(d) The Company will endeavor in good faith, in cooperation with
you, at or prior to the time of effectiveness of the Registration Statement, to
qualify the Notes for offering and sale under the securities laws relating to
the offering or sale of the Notes of such jurisdictions as you may designate and
to maintain such qualification in effect for so long as required for the
distribution thereof; except that in no event shall the Company be obligated in
connection therewith to qualify as a foreign corporation or to execute a general
consent to service of process.
(e) The Company will make generally available (within the meaning of
Section 11(a) of the Act) to its security holders and to you as soon as
practicable, but not later than 45 days after the end of its fiscal quarter in
which the first anniversary date of the effective date of the Registration
Statement occurs, an earning statement (in form complying with the provisions of
Rule 158 of the Regulations) covering a period of at least twelve consecutive
months beginning after the effective date of the Registration Statement.
(f) During the period of 180 days from the date of the Prospectus,
the Company will not, without your prior written consent, issue, sell, offer or
agree to sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, any Notes or any other debt security issued by the
Company (other than a private loan, credit or financing agreement with a bank or
similar financing institution) to be traded or distributed in the
12
public or private securities markets, and the Company will obtain the
undertaking of each of its officers, directors and noteholders not to engage in
any of the aforementioned transactions on their own behalf, other than the
Company's sale of Notes hereunder.
(g) During a period of three years from the effective date of the
Registration Statement, the Company will furnish to you copies of (i) all
reports to its shareholders; and (ii) all reports, financial statements and
proxy or information statements filed by the Company with the Commission or any
national securities exchange.
(h) The Company will apply the proceeds from the sale of the Notes
as set forth under "Use of Proceeds" in the Prospectus.
(i) Not to claim voluntarily, and to resist actively any attempts to
claim, the benefit of any usury laws against the holders of any Notes.
5. Payment of Expenses. Whether or not the transactions contemplated
in this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder, including those in connection with (i)
preparing, printing, duplicating, filing and distributing the Registration
Statement, as originally filed and all amendments thereof (including all
exhibits thereto), any preliminary prospectus, the Prospectus and any amendments
or supplements thereto (including, without limitation, fees and expenses of the
Company's accountants and counsel), the underwriting documents (including this
Agreement, the Agreement Among Underwriters and the Selling Agreement) and all
other documents related to the public offering of the Notes (including those
supplied to the Underwriters in quantities as hereinabove stated), (ii) the
issuance, transfer and delivery of the Notes to the Underwriters, including any
transfer or other taxes payable thereon, (iii) the qualification of the Notes
under state or foreign securities or Blue Sky laws, including the costs of
printing and mailing a preliminary and final "Blue Sky Survey" and the fees of
counsel for the Underwriters and such counsel's disbursements in relation
thereto, (iv) filing fees of the Commission and the National Association of
Securities Dealers, Inc.; (v) the cost of printing certificates representing the
Notes and (vi) the cost and charges of any transfer agent or registrar.
6. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Notes as provided herein, shall be
subject to the accuracy of the representations and warranties of the Company
herein contained, as of the date hereof and as of the Closing Date, to the
absence from any certificates, opinions, written statements or letters furnished
to you or to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ("Underwriters' Counsel") pursuant to
this Section 6 of any misstatement or omission, to the performance by the
Company of its obligations hereunder, and to the following additional
conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M., New York time, on the date of this Agreement, or at such later
time and date as shall have been consented to in writing by you; if the Company
shall have elected to rely upon Rule 430A or Rule 434 of the Regulations, the
Prospectus shall have been filed with the
13
Commission in a timely fashion in accordance with Section 4(a) hereof; and, at
or prior to the Closing Date no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereof shall have been
issued and no proceedings therefor shall have been initiated or threatened by
the Commission.
(b) At the Closing Date you shall have received the opinion of ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel for the Company, dated the Closing Date
addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(i) Each of the Company and its subsidiaries has been duly
organized and is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation. Each of the Company and its
subsidiaries is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its
business makes such qualification necessary, except for those failures to
be so qualified or in good standing which will not in the aggregate have a
material adverse effect on the Company and its subsidiaries taken as a
whole. Each of the Company and its subsidiaries has all requisite
corporate authority to own, lease and license its respective properties
and conduct its business as now being conducted and as described in the
Registration Statement and the Prospectus. All of the issued and
outstanding capital stock of each subsidiary of the Company has been duly
and validly issued and is fully paid and nonassessable and were not issued
in violation of preemptive rights and, is owned directly or indirectly by
the Company, free and clear of any lien, encumbrance, claim, security
interest, restriction on transfer, shareholders' agreement, voting trust
or other defect of title whatsoever.
(ii) The Company has authorized capital stock as set forth in
the Registration Statement and the Prospectus. All of the outstanding
shares of capital stock are duly and validly authorized and issued, are
fully paid and nonassessable and were not issued in violation of or
subject to any preemptive rights.
(iii) The Notes to be delivered on the Closing Date have been
duly and validly authorized and, when delivered by the Company in
accordance with this Agreement, will be duly and validly issued, fully
paid and nonassessable, will not have been issued in violation of or
subject to any preemptive rights and will constitute the valid and legally
binding obligations of the Company in accordance with their terms, except
as (i) enforceability thereof may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited
by equitable principles of general applicability.
(iv) The Notes conform to the descriptions thereof contained
in the Registration Statement, the Prospectus and the Indenture. The
Indenture conforms to the description thereof in the Registration
Statement and the Prospectus.
14
(v) This Agreement has been duly and validly authorized,
executed and delivered by the Company and the Company has all the
requisite power to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby.
(vi) The Indenture has been duly and validly authorized,
executed and delivered by the Company and the Trustee and duly qualified
under the Trust Indenture Act and the Company has all the requisite power
to execute, deliver and perform its obligations under the Indenture and to
consummate the transactions contemplated thereby.
(vii) There is no litigation or governmental or other action,
suit, proceeding or investigation before any court or before or by any
public, regulatory or governmental agency or body pending or to the best
of such counsel's knowledge, threatened against, or involving the
properties or business of, the Company or any of its subsidiaries, which
is of a character required to be disclosed in the Registration Statement
and the Prospectus which has not been properly disclosed therein.
(viii) The execution, delivery, and performance of this
Agreement, the Indenture and the Notes and the consummation of the
transactions contemplated hereby and thereby by the Company do not and
will not (i) conflict with or result in a breach of any of the terms and
provisions of, or constitute a default (or an event which with notice or
lapse of time, or both, would constitute a default) under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to,
any agreement, instrument, franchise, license or permit known to such
counsel to which the Company or any of its subsidiaries is a party or by
which any of such corporations or their respective properties or assets
may be bound or (ii) violate or conflict with any provision of the
certificate of incorporation or by-laws of the Company or any of its
subsidiaries, or, to the best knowledge of such counsel, any judgment,
decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their respective properties
or assets. No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any
public, governmental, or regulatory agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their respective
properties or assets is required for the execution, delivery and
performance of this Agreement, the Indenture or the Notes or the
consummation of the transactions contemplated hereby and thereby, except
for (1) such as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Notes by the
Underwriters (as to which such counsel need express no opinion) and (2)
such as have been made or obtained under the Act.
(ix) The Registration Statement and the Prospectus and any
amendments thereof or supplements thereto (other than the financial
statements and schedules and other financial data included or incorporated
by reference therein, as to which no
15
opinion need be rendered) comply as to form in all material respects with
the requirements of the Act and the Regulations.
(x) The Registration Statement is effective under the Act,
and, to the best knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereof has been issued and no proceedings therefor have been
initiated or threatened by the Commission and all filings required by Rule
424(b) of the Regulations have been made.
(xi) In addition, such opinion shall also contain a statement
that such counsel has participated in conferences with officers and
representatives of the Company, representatives of the independent public
accountants for the Company and the Underwriters at which the contents and
the Prospectus and related matters were discussed and, no facts have come
to the attention of such counsel which would lead such counsel to believe
that either the Registration Statement at the time it became effective
(including the information deemed to be part of the Registration Statement
at the time of effectiveness pursuant to Rule 430A(b) or Rule 434, if
applicable), or any amendment thereof made prior to the Closing Date as of
the date of such amendment, contained an untrue statement of a material
fact or omitted to state any material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus as of its date (or any amendment thereof or supplement thereto
made prior to the Closing Date as of the date of such amendment or
supplement) and as of the Closing Date contained or contains an untrue
statement of a material fact or omitted or omits to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no belief
or opinion with respect to the financial statements and schedules and
other financial data included therein).
In rendering such opinion, such counsel may rely (i) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to Underwriters'
Counsel) of other counsel reasonably acceptable to Underwriters' Counsel,
familiar with the applicable laws; (ii) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the Company and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company and its subsidiaries, provided that copies of any
such statements or certificates shall be delivered to Underwriters' Counsel. The
opinion of such counsel for the Company shall state that the opinion of any such
other counsel is in form satisfactory to such counsel and, in their opinion, you
and they are justified in relying thereon.
(c) All proceedings taken in connection with the sale of the Notes
as herein contemplated shall be satisfactory in form and substance to you and to
Underwriters' Counsel, and the Underwriters shall have received from said
Underwriters' Counsel a favorable
16
opinion, dated as of the Closing Date with respect to the issuance and sale of
the Notes, the Registration Statement and the Prospectus and such other related
matters as you may reasonably require, and the Company shall have furnished to
Underwriters' Counsel such documents as they request for the purpose of enabling
them to pass upon such matters.
(d) At the Closing Date you shall have received a certificate of the
Chief Executive Officer and Chief Financial Officer of the Company, dated the
Closing Date to the effect that (i) the condition set forth in subsection (a) of
this Section 6 has been satisfied, (ii) as of the date hereof and as of the
Closing Date the representations and warranties of the Company set forth in
Section 1 hereof are accurate, (iii) as of the Closing Date the obligations of
the Company to be performed hereunder on or prior thereto have been duly
performed and (iv) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, the Company and its
subsidiaries have not sustained any material loss or interference with their
respective businesses or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding, and there has not been any material
adverse change, or any development involving a material adverse change, in the
business prospects, properties, operations, condition (financial or otherwise),
net worth or results of operations of the Company and its subsidiaries taken as
a whole, except in each case as described in or contemplated by the Prospectus.
(e) At the time this Agreement is executed and at the Closing Date,
you shall have received a letter, from Price Waterhouse, LLP, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
LLP, McGladrey & ▇▇▇▇▇▇, LLP, Coopers & ▇▇▇▇▇▇▇, LLP, and Plant & ▇▇▇▇▇, LLP,
independent public accountants for the Company, dated, respectively, as of the
date of this Agreement and as of the Closing Date addressed to the Underwriters
and in form and substance satisfactory to you, to the effect that: (i) they are
independent certified public accountants with respect to the Company within the
meaning of the Act and the Regulations and stating that the answer to Item 10 of
the Registration Statement is correct insofar as it relates to them; (ii)
stating that, in their opinion, the financial statements and schedules of the
Company included in the Registration Statement and the Prospectus and covered by
their opinion therein comply as to form in all material respects with the
applicable accounting requirements of the Act and the applicable published rules
and regulations of the Commission thereunder. The letter from Price Waterhouse,
LLP shall additionally state that (i) on the basis of procedures consisting of a
reading of the latest available unaudited interim consolidated financial
statements of the Company, and its subsidiaries, a reading of the minutes of
meetings and consents of the shareholders and boards of directors of the Company
and its subsidiaries and the committees of such boards subsequent to December
31, 1997, inquiries of officers and other employees of the Company and its
subsidiaries who have responsibility for financial and accounting matters of the
Company and its subsidiaries with respect to transactions and events subsequent
to December 31, 1997 and other specified procedures and inquiries to a date not
more than five days prior to the date of such letter, nothing has come to their
attention that would cause them to believe that: (A) the unaudited consolidated
financial statements and schedules of the Company presented in the Registration
Statement and the Prospectus do not comply as to form in all material respects
with the applicable accounting requirements of the Act and, if applicable, the
Exchange Act and the applicable published rules and regulations of the
17
Commission thereunder or that such unaudited consolidated financial statements
are not fairly presented in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the audited
consolidated financial statements included in the Registration Statement and the
Prospectus; (B) with respect to the period subsequent to March 31, 1998 there
were, as of the date of the most recent available monthly consolidated financial
statements of the Company and its subsidiaries, if any, and as of a specified
date not more than five days prior to the date of such letter, any changes in
the capital stock or long-term indebtedness of the Company or any decrease in
the net current assets or stockholders' equity of the Company, in each case as
compared with the amounts shown in the most recent balance sheet presented in
the Registration Statement and the Prospectus, except for changes or decreases
which the Registration Statement and the Prospectus disclose have occurred or
may occur or which are set forth in such letter or (C) that during the period
from April 1, 1998, to the date of the most recent available monthly
consolidated financial statements of the Company and its subsidiaries, if any,
and to a specified date not more than five days prior to the date of such
letter, there was any decrease, as compared with the corresponding period in the
prior fiscal year, in total revenues, or total or per share net income, or
EBITDA (as defined in the Registration Statement) except for decreases which the
Registration Statement and the Prospectus disclose have occurred or may occur or
which are set forth in such letter; and (ii) stating that they have compared
specific dollar amounts, numbers of shares, percentages of revenues and
earnings, and other financial information pertaining to the Company and its
subsidiaries set forth in the Registration Statement and the Prospectus, which
have been specified by you prior to the date of this Agreement, to the extent
that such amounts, numbers, percentages, and information may be derived from the
general accounting and financial records of the Company and its subsidiaries or
from schedules furnished by the Company, and excluding any questions requiring
an interpretation by legal counsel, with the results obtained from the
application of specified readings, inquiries, and other appropriate procedures
specified by you set forth in such letter, and found them to be in agreement.
(f) Prior to the Closing Date the Company shall have furnished to
you such further information, certificates and documents as you may reasonably
request.
(g) You shall have received from each person who is a director,
officer or noteholder of the Company an agreement to the effect that such person
will not, directly or indirectly, without your prior written consent, offer,
sell, offer or agree to sell, grant any option to purchase or otherwise dispose
(or announce any offer, sale, grant of an option to purchase or other
disposition) of any Notes or any other debt security issued by the Company
(other than a private loan, credit or financing agreement with a bank or similar
financing institution) or any security convertible into or exchangeable or
exercisable for any such debt security for a period of 180 days after the date
of the Prospectus.
(h) The closings under the Equity Underwriting Agreements and the
Preferred Stock Underwriting Agreement shall have occurred concurrently with the
closing hereunder on the Closing Date.
18
(i) The Reorganization (as defined in the Registration Statement)
shall have been consummated prior to the Closing Date.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 6 shall not be in all material
respects reasonably satisfactory in form and substance to you and to
Underwriters' Counsel, all obligations of the Underwriters hereunder may be
canceled by you at, or at any time prior to, the Closing Date. Notice of such
cancellation shall be given to the Company in writing, or by telephone, telex or
telegraph, confirmed in writing.
7. Indemnification.
(a) 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 Act or Section 20(a) of the Exchange Act, against
any and all losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the registration
statement for the registration of the Shares, as originally filed or any
amendment thereof, or any related preliminary prospectus or the Prospectus, or
in any supplement thereto or amendment thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company will not be liable in any such case to the
extent but only to the extent that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter through you expressly for use therein. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have including under this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to indemnify
and hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed the Registration Statement, and
each other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), jointly or several, to which they or any of them
may become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or
19
alleged untrue statement of a material fact contained in the registration
statement for the registration of the Notes, as originally filed or any
amendment thereof, or any related preliminary prospectus or the Prospectus, or
in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter through you
expressly for use therein; provided, however, that in no case shall any
Underwriter be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares purchased by such Underwriter
hereunder. This indemnity will be in addition to any liability which any
Underwriter may otherwise have including under this Agreement. The Company
acknowledges that the statements set forth in the last paragraph of the cover
page and in the third, fourth and fifth paragraphs under the caption
"Underwriting" in the Prospectus constitute the only information furnished in
writing by or on behalf of any Underwriter expressly for use in the registration
statement relating to the Shares as originally filed or in any amendment
thereof, any related preliminary prospectus or the Prospectus or in any
amendment thereof or supplement thereto, as the case may be.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by one of the indemnifying parties in connection
with the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. Anything in
this subsection to the contrary notwithstanding, an indemnifying party shall not
be liable for any settlement of any claim or action effected without its written
consent; provided, however, that such consent was not unreasonably withheld.
20
8. Contribution. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 7 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company and
the Underwriters shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company any
contribution received by the Company from persons, other than the Underwriters,
who may also be liable for contribution, including persons who control the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, officers of the Company who signed the Registration Statement and
directors of the Company) as incurred to which the Company and one or more of
the Underwriters may be subject, in such proportions as is appropriate to
reflect the relative benefits received by the Company and the Underwriters from
the offering of the Notes or, if such allocation is not permitted by applicable
law or indemnification is not available as a result of the indemnifying party
not having received notice as provided in Section 7 hereof, in such proportion
as is appropriate to reflect not only the relative benefits referred to above
but also the relative fault of the Company and the Underwriters in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Underwriters shall be
deemed to be in the same proportion as (x) the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Company and (y) the underwriting discounts and commissions
received by the Underwriters, respectively, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company and
of the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 8 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. Notwithstanding the
provisions of this Section 8, (i) in no case shall any Underwriter be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Shares purchased by such Underwriter hereunder, and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Notwithstanding the provisions of this Section 8
and the preceding sentence, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Notes
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. For purposes of this Section 8, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act shall have the same
21
rights to contribution as such Underwriter, and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i) and
(ii) of this Section 8. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties, notify each party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have under this Section 8 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its consent;
provided, however, that such consent was not unreasonably withheld.
9. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Notes hereunder, and if the Notes with respect to which
such default relates do not (after giving effect to arrangements, if any, made
by you pursuant to subsection (b) below) exceed in the aggregate 10% of the
aggregate principal amount of the Notes, the Notes to which the default relates
shall be purchased by the non-defaulting Underwriters as their respective
proportions, set forth opposite their respective names in Schedule I hereto,
bear to the aggregate principal amount of Notes.
(b) In the event that such default relates to more than 10% of the
aggregate principal amount of Notes, you may in your discretion arrange for
yourself or for another party or parties (including any non-defaulting
Underwriter or Underwriters who so agree) to purchase such Notes to which such
default relates on the terms contained herein. In the event that within 5
calendar days after such a default you do not arrange for the purchase of the
Notes to which such default relates as provided in this Section 9, this
Agreement shall thereupon terminate, without liability on the part of the
Company with respect thereto (except in each case as provided in Section 5, 7(a)
and 8 hereof) or the Underwriters, but nothing in this Agreement shall relieve a
defaulting Underwriter or Underwriters of its or their liability, if any, to the
other Underwriters and the Company for damages occasioned by its or their
default hereunder.
(c) In the event that the principal amount of Notes to which the
default relates are to be purchased by the non-defaulting Underwriters, or are
to be purchased by another party or parties as aforesaid, you or the Company
shall have the right to postpone the Closing Date for a period, not exceeding
five business days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment or supplement to the Registration Statement or the Prospectus which,
in the opinion of Underwriters' Counsel, may thereby be made necessary or
advisable. The term "Underwriter" as used in this Agreement shall include any
party substituted under this Section 9 with like effect as if it had originally
been a party to this Agreement with respect to such Notes.
22
10. Survival of Representations and Agreements. All representations
and warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 7 and the contribution agreements
contained in Section 8, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Notes to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8 and 11(d) hereof shall survive the termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective, upon the later of when
(i) you and the Company shall have received notification of the effectiveness of
the Registration Statement or (ii) the execution of this Agreement. If either
the initial public offering price or the purchase price has not been agreed upon
prior to 5:00 P.M., New York time, on the fifth full business day after the
Registration Statement shall have become effective, this Agreement shall
thereupon terminate without liability to the Company or the Underwriters except
as herein expressly provided. Until this Agreement becomes effective as
aforesaid, it may be terminated by the Company by notifying you or by you
notifying the Company. Notwithstanding the foregoing, the provisions of this
Section 11 and of Sections 1, 5, 7 and 8 hereof shall at all times be in full
force and effect.
(b) You shall have the right to terminate this Agreement at any time
prior to the Closing Date if (A) any domestic or international event or act or
occurrence has materially disrupted, or in your opinion will in the immediate
future materially disrupt, the market for the Company's securities or securities
in general; or (B) if trading on the New York or American Stock Exchanges shall
have been suspended, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required, on
the New York or American Stock Exchanges by the New York or American Stock
Exchanges or by order of the Commission or any other governmental authority
having jurisdiction; or (C) if a banking moratorium has been declared by a state
or federal authority or if any new restriction materially adversely affecting
the distribution of the Notes shall have become effective; (D) if any
downgrading in the rating of the Company's debt securities or preferred stock by
any "nationally recognized statistical rating-organization" (as defined for
purposes of Rule 436(g) under the Act; or (E) (i) if the United States becomes
engaged in hostilities or there is an escalation of hostilities involving the
United States or there is a declaration of a national emergency or war by the
United States or (ii) if there shall have been such change in political,
financial or economic conditions, if the effect of any such event in (i) or (ii)
as in your judgment makes it impracticable or inadvisable to proceed with the
offering, sale and delivery of the Notes on the terms contemplated by the
Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall be
by telephone, telex, or telegraph, confirmed in writing by letter.
23
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 11(a) hereof or (ii) Section 9(b) or 11(b) hereof), or if
the sale of the Notes provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by you, reimburse the Underwriters for all
out-of-pocket expenses (including the fees and expenses of their counsel),
incurred by the Underwriters in connection herewith.
12. Notice. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
in writing, to such Underwriter c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇.▇. 10167, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇; if sent to the Company, shall
be mailed, delivered, or telegraphed and confirmed in writing to the Company,
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇.
13. Parties. This Agreement shall inure solely to the benefit of,
and shall be binding upon, the Underwriters and the Company and the controlling
persons, directors, officers, employees and agents referred to in Section 7 and
8, and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Notes from any of the Underwriters.
14. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, but without regard to
principles of conflicts of law.
24
If the foregoing correctly sets forth the understanding between you
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
CUMULUS MEDIA INC.
By_______________________
Accepted as of the date first above written
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇ BROTHERS, INC.
By: BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By_______________________________
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
25
SCHEDULE I
Principal Amount of
Name of Underwriter Notes to be Purchased
------------------- ---------------------
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇ Brothers Inc.
Aggregate Principal Amount..................................._________________
$100,000,000
------------