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EXHIBIT 1.2
MINDSPRING ENTERPRISES, INC.
___% CONVERTIBLE SUBORDINATED NOTES DUE 2006
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UNDERWRITING AGREEMENT
April ____, 1999
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.,
ING Baring ▇▇▇▇▇▇ ▇▇▇▇, LLC,
▇.▇. ▇▇▇▇▇▇▇▇ & Co.,
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇
Securities Corporation,
First Union Capital Markets Corp.,
▇▇▇▇▇▇▇▇▇ & Company, Inc.
c/o Goldman, ▇▇▇▇▇ & Co.,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
Ladies and Gentlemen:
MindSpring Enterprises, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of $155,000,000 principal amount of the ___% Convertible Subordinated Notes due
2006, convertible into Common Stock, par value $0.01 per share ("Stock"), of the
Company, specified above (the "Firm Securities") and, at the election of the
Underwriters, up to an aggregate of $23,250,000 additional aggregate principal
amount (the "Optional Securities") (the Firm Securities and the Optional
Securities which the Underwriters elect to purchase pursuant to Section 2 hereof
are herein collectively called the "Securities").
1. The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-74151) (the
"Initial Registration Statement") in respect of the Firm Securities and
the Optional Securities and the shares of Stock issuable upon conversion
thereof has been filed with the Securities and Exchange Commission (the
"Commission"); the Initial Registration Statement and any post-effective
amendment thereto, each in the form heretofore delivered to you, and,
excluding exhibits
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thereto but including all documents incorporated by reference in
the prospectus contained therein, to you for each of the other
Underwriters, have been declared effective by the Commission in
such form; other than a registration statement, if any, increasing
the size of the offering (a "Rule 462(b) Registration Statement"),
filed pursuant to Rule 462(b) under the Securities Act of 1933, as
amended (the "Act"), which became effective upon filing, no other
document with respect to the Initial Registration Statement or
document incorporated by reference therein has heretofore been
filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission (any
preliminary prospectus included in the Initial Registration
Statement or filed with the Commission pursuant to Rule 424(a) of
the rules and regulations of the Commission under the Act, is
hereinafter called a "Preliminary Prospectus"; the various parts
of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and
including (i) the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b) under
the Act in accordance with Section 5(a) hereof and deemed by
virtue of Rule 430A under the Act to be part of the Initial
Registration Statement at the time it was declared effective and
(ii) the documents incorporated by reference in the prospectus
contained in the Initial Registration Statement at the time such
part of the Initial Registration Statement became effective, each
as amended at the time such part of the Initial Registration
Statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes
effective, are hereinafter collectively called the "Registration
Statement"; such final prospectus, in the form first filed
pursuant to Rule 424(b) under the Act, is hereinafter called the
"Prospectus"; and any reference herein to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Act, as of the date of such
Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment or supplement to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and
include any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; and any reference to any amendment
to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section
13(a) or 15(d) of the Exchange Act after the effective date of the
Initial Registration Statement that is incorporated by reference
in the Registration Statement;
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed
in all material respects to the requirements of the Act and the
Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), and the rules and regulations of the Commission thereunder,
and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
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circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by
an Underwriter through ▇▇▇▇▇▇▇, Sachs & Co. expressly for use
therein;
(c) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects
to the requirements of the Act or the Exchange Act , as
applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents become
effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the
Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not 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; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use in the Prospectus as
amended or supplemented relating to the Securities;
(d) The Registration Statement and the Prospectus conform
and any further amendments or supplements to the Registration
Statement or the Prospectus will conform, in all material respects
to the requirements of the Act and the Trust Indenture Act and the
rules and regulations of the Commission thereunder and do not and
will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the
applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by
an Underwriter through ▇▇▇▇▇▇▇, Sachs & Co. expressly for use in
the Prospectus as amended or supplemented relating to the
Securities;
(e) The Company has not sustained since the date of the
latest audited financial statements included or incorporated by
reference in the Prospectus any material loss or material
interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Registration
Statement and the Prospectus; and, since the respective dates as
of which information is given in the Registration Statement and
the Prospectus, there has not been any change in the capital stock
(other than exercises of stock options granted as of the date
hereof in the ordinary course of business) or
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long-term debt of the Company or any material adverse change, or
any development involving a prospective material adverse change,
in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the
Company, otherwise than as set forth or contemplated in the
Prospectus;
(f) The Company has good and marketable title in fee simple
to all real property and good and marketable title to all personal
property owned by it, in each case free and clear of all liens,
encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be
made of such property by the Company; and any real property and
buildings held under lease by the Company are held by it under
valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company,
in each case, except as described in the Prospectus;
(g) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, with corporate power and authority to own its
properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any such
jurisdiction;
(h) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued and outstanding
shares of Stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable; the
Company has no shares of Stock held in treasury; and the shares of
Stock initially issuable upon conversion of the Securities have
been duly and validly authorized and reserved for issuance and,
when issued and delivered in accordance with the provisions of the
Securities and the Indenture referred to below, will be duly and
validly issued, fully paid and non-assessable and will conform to
the description of the Stock contained in the Prospectus;
(i) The Securities have been duly authorized and, when
issued and delivered pursuant to this Agreement, will have been
duly executed, authenticated, issued and delivered and will
constitute valid and legally binding obligations of the Company
entitled to the benefits provided by the indenture to be dated as
of April ___, 1999, as supplemented (the "Indenture"), between the
Company and United States Trust Company of New York, as Trustee
(the "Trustee"), under which they are to be issued, which will be
substantially in the form filed as an exhibit to the Registration
Statement; the Indenture has been duly authorized and duly
qualified under the Trust Indenture Act and, when executed and
delivered by the Company and the Trustee, will constitute a valid
and legally binding instrument, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws
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of general applicability relating to or affecting creditors'
rights and to general equity principles; and the Securities and
the Indenture will conform to the descriptions thereof in the
Prospectus;
(j) The Company has reviewed its operations and has made
reasonable inquiry of any third parties with which the Company has
a material relationship to evaluate the extent to which the
business or operations of the Company will be affected by the Year
2000 Problem. As a result of such review, except as otherwise
disclosed in the Prospectus, the Company has no reason to believe,
and does not believe, that the Year 2000 Problem will have a
material adverse effect on the general affairs, management, the
current or future consolidated financial position, business
prospects, stockholders' equity or results of operations of the
Company or result in any material loss or interference with the
Company's business or operations. The "Year 2000 Problem" as used
herein means any significant risk that computer hardware or
software used in the receipt, transmission, processing,
manipulation, storage, retrieval, retransmission or other
utilization of data or in the operation of mechanical or
electrical systems of any kind will not, in the case of dates or
time periods occurring after December 31, 1999, function at least
as effectively as in the case of dates or time periods occurring
prior to January 1, 2000;
(k) Except as disclosed in the Prospectus, the issue and
sale of the Securities and the compliance by the Company with all
of the provisions of the Securities, the Indenture and this
Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is
a party or by which the Company is bound or to which any of the
property or assets of the Company is subject, nor will such action
result in any violation of the provisions of the Amended and
Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), or the Amended and Restated
By-laws (the "Bylaws") of the Company or any statute or any order,
rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of properties; and no
consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or
body is required for the issue and sale of the Securities or the
consummation by the Company of the transactions contemplated by
this Agreement or the Indenture, except the registration under the
Act of the Securities and the shares of Stock issuable upon
conversion thereof, such as have been obtained under the Trust
Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Underwriters;
(l) The Company is not in violation of its Certificate of
Incorporation or By-laws or in default in the performance or
observance of any material obligation, covenant or condition
contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound and
that is material to it;
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(m) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company is
a party or of which any property of the Company is the subject
which, if determined adversely to the Company, would individually
or in the aggregate have a material adverse effect on the current
or future consolidated financial position, stockholders' equity or
results of operations of the Company; and, to the best of the
Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(n) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the
proceeds thereof as described in the Prospectus, will not be an
"investment company", as such terms are defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act");
(o) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP who have certified certain
financial statements of the Company, and who have certified
certain financial statements of ▇▇▇▇, Inc. and NETCOM On-Line
Communication Services, Inc. Domestic Subscriber Operations, are
independent public accountants as required by the Act and the
rules and regulations of the Commission thereunder;
(p) There are no outstanding subscriptions, rights,
warrants, options, calls, convertible securities, commitments of
sale or liens granted or issued by the Company relating to or
entitling any person to purchase or otherwise to acquire any
shares of the capital stock of the Company, except as otherwise
disclosed in the Prospectus;
(q) Except as described in the Prospectus and except for
investments in connection with cash management activities in the
ordinary course of business, the Company does not own, and at a
Time of Delivery (as defined below) will not own, directly or
indirectly, any shares of stock or any other equity or debt
securities of any entity or have any other equity interest in any
entity;
(r) The Company has complied in all material respects with
all material laws, regulations and orders applicable to it or its
business;
(s) The Company has such permits, licenses, consents,
exemptions, franchises, authorizations and other approvals (each,
an "Authorization") of, and has made all filings with and notices
to, all governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals as are necessary
to own, lease, license and operate its properties and to conduct
its business, except where the failure to have any such
Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a material adverse effect on the
business, prospects, financial condition or results of operations
of the Company. Each such Authorization is valid and in full force
and effect and the Company is in compliance with all the material
terms and conditions thereof and with the rules and regulations of
the authorities and governing bodies having jurisdiction with
respect thereto; and no event has occurred (including, without
limitation, the receipt of any notice from any authority or
governing body)
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which allows or, after notice or lapse of time or both, would
allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or
both, would result in any other impairment of the rights of the
holder of any such Authorization; and such Authorizations contain
no restrictions that are burdensome to the Company; except where
such failure to be valid and in full force and effect or to be in
compliance, the occurrence of any such event or the presence of
any such restriction would not, singly or in the aggregate, have a
material adverse effect on the business, prospects, financial
condition or results of operations of the Company;
(t) This Agreement has been duly authorized, executed and
delivered by the Company;
(u) The financial statements included in the Prospectus
(and any amendment or supplement thereto), together with related
schedules and notes, present fairly the financial position,
results of operations and changes in financial position of the
Company on the basis stated therein at the respective dates or for
the respective periods to which they apply; such statements and
related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; the
supporting schedules, if any, included in the Prospectus present
fairly in accordance with generally accepted accounting principles
the information required to be stated therein; and the other
financial and statistical information and data set forth in the
Prospectus (and any amendment or supplement thereto) are, in all
material respects, accurately presented and prepared on a basis
consistent with such financial statements and the books and
records of the Company;
The pro forma financial statements and related notes
thereto included in the Prospectus (and any amendment or
supplement thereto) present fairly, in all material respects, the
information shown therein, have been prepared in accordance with
the Act and the Commission's rules and guidelines with respect to
pro forma financial statements, have been prepared on a basis
consistent with the historical financial statements of the
Company, have been compiled on the pro forma bases described
therein, and (x) the assumptions underlying the pro forma
adjustments are reasonable, (y) such adjustments are appropriate
to give effect to the transactions or circumstances referred to
therein and have been properly applied to the historical amounts
in the compilation of such statements and (z) such statements
fairly present, in all material respects, the pro forma financial
position and results of operations and other information purported
to be shown therein at the respective dates or for the respective
periods therein specified;
The historical and pro forma financial information included
in the Prospectus (and any amendment or supplement thereto)
constitute all of the financial statements that are required to be
included in the Prospectus by the Act and the Commission's rules
and guidelines with respect thereto;
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(v) The Company owns or possesses, or can acquire on
reasonable terms, all patents, patent rights, licenses,
inventions, rights of inventorship, copyrights, rights of
authorship, rights of attribution and integrity, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, certification marks, collective marks,
trade dress, trade names and all other intellectual property
rights ("intellectual property") currently employed by it in
connection with the business now operated by it except where the
failure to own or possess or otherwise be able to acquire such
intellectual property would not, singly or in the aggregate, have
a material adverse effect on the business, prospects, financial
condition or results of operation of the Company; and the Company
has not received any notice of infringement or dilution of or
conflict with asserted rights of others with respect to any of
such intellectual property which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would
have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company;
(w) The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which it
is engaged; and the Company (i) has not received notice from any
insurer or agent of such insurer that substantial capital
improvements or other material expenditures will have to be made
in order to continue such insurance or (ii) has no reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers at a cost that would not have a
material adverse effect on the business, prospects, financial
conditions or results of operations of the Company;
(x) No relationship, direct or indirect, exists between or
among the Company on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company on the other
hand, which is required by the Act to be described in the
Prospectus which is not so described;
(y) There is no (i) significant unfair labor practice
complaint, grievance or arbitration proceeding pending or
threatened against the Company before the National Labor Relations
Board or any state or local labor relations board, (ii) strike,
labor dispute, slowdown or stoppage pending or threatened against
the Company or (iii) union representation question existing with
respect to the employees of the Company, except for such actions
specified in clause (i), (ii) or (iii) above, which, singly or in
the aggregate, would not have a material adverse effect on the
business, prospects, financial condition or results of operations
of the Company. To the best of the Company's knowledge, no
collective bargaining organizing activities are taking place with
respect to the Company;
(z) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with generally accepted accounting
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principles and to maintain asset accountability; and (iii) assets
are properly accounted for and safeguarded against loss or
unauthorized use;
(aa) All material tax returns required to be filed by the
Company in any jurisdiction have been filed, other than those
filings being contested in good faith, and all material taxes,
including withholding taxes, penalties and interest, assessments,
fees and other charges due pursuant to such returns or pursuant to
any assessment received by the Company have been paid, other than
those being contested in good faith and for which adequate
reserves have been provided;
(bb) The statistical and market-related data included in
the Prospectus are based on or derived from independent sources
which the Company believes to be reliable and accurate in all
material respects or represents the Company's good faith estimates
that are made on the basis of data derived from such sources;
(cc) There are no contracts, agreements or understandings
between the Company and any person granting such person the right
to require the Company to file a registration statement under the
Act with respect to any securities of the Company or to require
the Company to include such securities with the Shares registered
pursuant to the Prospectus ;
(dd) Since the respective dates as of which information is
given in the Prospectus other than as set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to
the date of this Agreement), (i) there has not occurred any
material adverse change or any development involving a prospective
material adverse change in the condition, financial or otherwise,
or the earnings, business, management or operations of the
Company, (ii) there has not been any material adverse change or
any development involving a prospective material adverse change in
the capital stock or in the long-term debt of the Company and
(iii) the Company has not incurred any material liability or
obligation, direct or contingent; and
(ee) Each certificate signed by any officer of the Company
and delivered to the Underwriters or counsel for the Underwriters
shall be deemed to be a representation and warranty by the Company
to the Underwriters as to the matters covered thereby.
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to issue and sell to each of the Underwriters, and each of
the Underwriters agrees, severally and not jointly, to purchase from the
Company, at a purchase price of _____% of the principal amount thereof,
plus accrued interest, if any, from ____________, 1999 to the Time of
Delivery hereunder, the principal amount of Securities set forth opposite
the name of such Underwriter in Schedule I hereto, and (b) in the event
and to the extent that the Underwriters shall exercise the election to
purchase Optional Securities as provided below, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, as the
same purchase price set forth in clause (a) of this Section 2, that
portion of the aggregate principal amount of the Optional Securities as
to which such election shall have been exercised (to be adjusted by you
so as
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to eliminate fractions of $_______) determined by multiplying such aggregate
principal amount of Optional Securities by a fraction, the numerator of which is
the maximum aggregate principal amount of Optional Securities which such
Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
aggregate principal amount of Optional Securities which all of the Underwriters
are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to $23,250,000 aggregate principal amount of Optional
Securities, at the same purchase price set forth in clause (a) of the first
paragraph of this Section 2, for the sole purpose of covering overallotments in
the sale of Firm Securities. Any such election to purchase Optional Securities
may be exercised by written notice from you to the Company, given within a
period of 30 calendar days after the date of this Agreement, setting forth
aggregate principal amount of Optional Securities to be purchased and the date
on which such Optional Securities are to be delivered, as determined by you but
in no event earlier than the First Time of Delivery (as defined in Section 4
hereof) or, unless you and the Company otherwise agree in writing, earlier than
two or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Securities,
the several Underwriters propose to offer the Firm Securities for sale upon the
terms and conditions set forth in the Prospectus as amended or supplemented
relating to the Securities.
4. (a) The Securities to be purchased by each Underwriter hereunder will
be represented by one or more definitive global Securities in book-entry form
which will be deposited by or on behalf of the Company with The Depository Trust
Company ("DTC") or its designated custodian. The Company will deliver the
Securities to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., for the account of each Underwriter, against
payment by or on behalf of such Underwriter of the purchase price therefor by
wire transfer of Federal (same-day) funds to the account specified by the
Company to ▇▇▇▇▇▇▇, Sachs & Co. at least forty-eight hours in advance, by
causing DTC to credit the Securities to the account of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. at
DTC. The Company will cause the certificates representing the Securities to be
made available to ▇▇▇▇▇▇▇, Sachs & Co. for checking at least twenty-four hours
prior to the Time of Delivery (as defined below) at the office of DTC or its
designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be, with respect to the Firm Securities, 9:30 a.m.,
New York City time, on ____________, 1999, or at such other time and date as
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and the Company may agree upon in writing, and, with
respect to the Optional Securities, 9:30 a.m., New York City time, on the date
specified by ▇▇▇▇▇▇▇, Sachs & Co. in the written notice given by ▇▇▇▇▇▇▇, ▇▇▇▇▇
& Co. of the Underwriters' election to purchase the Optional Securities, or at
such other time and date as ▇▇▇▇▇▇▇, Sachs & Co. and the Company may agree upon
in the writing. Such time and date for delivery of the Firm Securities is herein
called the "First Time of Delivery", such time and date for delivery of the
Optional Securities, if not the First Time of Delivery, is herein called the
"Second Time of Delivery," and each such time and date for delivery is herein
called a "Time of Delivery."
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(b) The documents to be delivered at a Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross-receipt
for the Securities and any additional documents requested by the Underwriters
pursuant to Section 7(j) hereof, will be delivered at the offices of ▇▇▇▇▇▇ &
Bird LLP, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Closing
Location"), and the Securities will be delivered at the Designated Office, all
at such Time of Delivery. A meeting will be held at the Closing Location at 4:00
p.m., New York City time, on the New York Business Day next preceding such Time
of Delivery, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. For the purposes of this Section 4, "New York Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York City are generally authorized or obligated by
law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus as amended and supplemented in relation to
the Securities in a form approved by you and to file such Prospectus pursuant to
Rule 424(b) under the Act not later than the Commission's close of business on
the second business day following the execution and delivery of this Agreement,
or, if applicable, such earlier time as may be required by Rule 424(b) under the
Act; to make no further amendment or any supplement to the Registration
Statement or Prospectus as amended or supplemented after the date hereof
relating to the Securities prior to such Time of Delivery which shall be
disapproved by you promptly after reasonable notice thereof; to advise you,
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed and to furnish you with
copies thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of the Prospectus and for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Securities; to advise
you, promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending the use of
any Preliminary Prospectus or prospectus relating to the Securities, of the
suspension of the qualification of the Securities or the shares of Stock
issuable upon conversion of the Securities for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus or for additional information; and,
in the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus relating to the
Securities or suspending any such qualification, to promptly use its best
efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Securities and the shares of Stock issuable upon
conversion of the Securities for offering and sale under the securities laws of
such jurisdictions as you may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such jurisdictions for
as long as may be necessary to complete the distribution of the Securities,
provided that in connection therewith the
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Company shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York Business Day
next succeeding the date of this Agreement and from time to time, to furnish the
Underwriters with copies of the Prospectus as amended or supplemented in New
York City in such quantities as you may reasonably request, and, if the delivery
of a prospectus is required at any time in connection with the offering or sale
of the Securities and the shares of Stock issuable upon conversion of the
Securities and if at such time any event shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made when such Prospectus is delivered, not misleading, or, if for any
other reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the Act, the
Exchange Act or the Trust Indenture Act, to notify you and upon your request to
file such document and to prepare and furnish without charge to each Underwriter
and to any dealer in securities as many copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the Prospectus
which will correct such statement or omission or effect such compliance;
(d) To make generally available to its security holders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)), an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
of the Commission thereunder (including, at the option of the Company, Rule
158);
(e) The Company hereby agrees not to (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 Stock or any securities
convertible into or exercisable or exchangeable for Stock or (ii) enter into any
swap or other arrangement that transfers all or a portion of the economic
consequences associated with the ownership of any Stock (regardless of whether
any of the transactions described in clause (i) or (ii) is to be settled by the
delivery of Stock, or such other securities, in cash or otherwise), except to
the Underwriters pursuant to this Agreement, for a period of 90 days after the
date of the Prospectus without the prior written consent of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
Notwithstanding the foregoing, during such period (i) the Company may grant
stock options pursuant to the Company's existing stock option plans and (ii) the
Company may issue shares of Stock upon the exercise of an option or warrant or
the conversion of a security outstanding on the date hereof. The Company also
agrees not to file any registration statement with respect to any shares of
Stock or any securities convertible into or exercisable or exchangeable for
Stock for a period of 90 days after the date of the Prospectus without the prior
written consent of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. other than a registration statement on
Form S-8 with respect to up to 1,149,996 shares of Stock to be issued pursuant
to the Company's 1995 Stock Option Plan. The Company shall, prior to or
concurrently with the execution of this Agreement, deliver an agreement executed
by each of the directors and officers of the Company and each of ITC Holding
Company, Inc. and ITC Service
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Company, Inc. to the effect that such person will not, during the period
commencing on the date such person signs such agreement and ending 90 days after
the date of the Prospectus, without the prior written consent of ▇▇▇▇▇▇▇, Sachs
& Co., (A) engage in any of the transactions described in the first sentence of
this paragraph or (B) make any demand for, or exercise any right with respect
to, the registration of any shares of Stock or any securities convertible into
or exercisable or exchangeable for Stock.;
(f) To furnish to the holders of the Securities as soon as practicable
after the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders' equity and cash flows of the Company and
its consolidated subsidiaries certified by independent public accountants) and,
as soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the effective date
of the Registration Statement), to make available to its stockholders
consolidated summary financial information of the Company and its future
subsidiaries, if any, for such quarter in reasonable detail;
(g) During a period of three years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which the Securities or any class of securities of the Company is
listed; and (ii) such additional information concerning the business and
financial condition of the Company as you may from time to time reasonably
request (such financial statements to be on a consolidated basis to the extent
the accounts of the Company and its subsidiaries are consolidated in reports
furnished to its stockholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of the
Securities pursuant to this Agreement in the manner specified in the Prospectus,
as amended and supplemented in relation to the Securities, under the caption
"Use of Proceeds";
(i) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of this Agreement,
and the Company shall at the time of filing either pay to the Commission the
filing fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the Act;
(j) To reserve and keep available at all times, free of preemptive
rights, shares of Stock for the purpose of enabling the Company to satisfy any
obligation to issue shares of its Stock upon conversion of the Securities; and
(k) To use its best efforts to list, subject to notice of issuance, the
shares of Stock issuable upon conversion of the Securities on the Nasdaq
National Market ("NASDAQ").
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6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Securities and the shares of Stock
issuable upon conversion of the Securities under the Act and all other expenses
in connection with the preparation, printing and filing of the Registration
Statement, any Preliminary Prospectus and the Prospectus and amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Underwriters and dealers; (ii) the cost of printing or producing any Agreement
among Underwriters, this Agreement, the Indenture, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Securities;
(iii) all expenses in connection with the qualification of the Securities and
the shares of Stock issuable upon conversion of the Securities for offering and
sale under state securities laws as provided in Section 5(b) hereof, including
the fees and disbursements of counsel for the Underwriters in connection with
such qualification and in connection with the Blue Sky and legal investment
surveys; (iv) any fees charged by securities rating services for rating the
Securities; (v) the filing fees incident to, and the fees and disbursements of
counsel for the Underwriters in connection with, any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of the
Securities; (vi) the cost of preparing the Securities; (vii) the fees and
expenses of the Trustee and any agent of the Trustee and the fees and
disbursements of counsel for the Trustee in connection with the Indenture and
the Securities; and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, and Sections 8 and 11 hereof, the Underwriters will
pay all of their own costs and expenses, including the fees of their counsel,
transfer taxes on resale of any of the Securities by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder shall be subject, in
their discretion, to the condition that all representations and warranties and
other statements of the Company herein are, at and as of such Time of Delivery,
true and correct, the condition that the Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) The Prospectus as amended or supplemented in relation to the
Securities shall have been filed with the Commission pursuant to Rule 424(b)
within the applicable time period prescribed for such filing by the rules and
regulations under the Act and in accordance with Section 5(a) hereof; if the
Company has elected to rely upon Rule 462(b), the Rule 462(b) Registration
Statement shall have become effective by 10:00 p.m., Washington, D.C. time, on
the date of this Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the part of the
Commission shall have been complied with to your reasonable satisfaction;
(b) The Underwriters shall have received on such Time of Delivery an
opinion, dated such Time of Delivery, of ▇▇▇▇▇▇ & Bird LLP, counsel for the
Underwriters, as to certain of the matters referred to in paragraphs ______ and
_______ of Exhibit A hereto.
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(c) The Underwriters shall have received on such Time of Delivery an
opinion (satisfactory to you and counsel for the Underwriters), dated such Time
of Delivery of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., counsel for the Company, substantially in
the form of Exhibit A hereto.
(d) On the date of the Prospectus, as amended and supplemented in
relation to the Securities, at a time prior to the execution of this Agreement,
at 9:30 a.m., New York City time, on the effective date of any post-effective
amendment to the Registration Statement filed subsequent to the date of this
Agreement and also at each Time of Delivery, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP shall have
furnished to you a letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, to the effect set forth in
Annex I hereto (the executed copy of the letter delivered prior to the execution
of this Agreement is attached as Annex I(a) hereto and a draft of the form of
letter to be delivered on the effective date of any post-effective amendment to
the Registration Statement and as of each Time of Delivery is attached as Annex
I(b) hereto");
(e) (i) The Company shall not have sustained since the date of the latest
audited financial statements included or incorporated by reference in the
Prospectus any material loss or material interference with its business from
fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus, and (ii) since
the respective dates as of which information is given in the Prospectus there
shall not have been any change in the capital stock (other than exercises of
stock options granted as of the date hereof in the ordinary course) or long-term
debt of the Company or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company, otherwise than as
set forth or contemplated in the Prospectus, the effect of which, in any such
case described in Clause (i) or (ii), is in the judgment of the Underwriters so
material and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Securities being issued at such Time
of Delivery on the terms and in the manner contemplated in the Prospectus;
(f) On or after the date hereof (i) no downgrading shall have occurred in
the rating accorded the Company's debt securities by any "nationally recognized
statistical rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt securities;
(g) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; or on NASDAQ; (ii) a suspension or
material limitation in trading in the Company's securities on NASDAQ; (iii) a
general moratorium on commercial banking activities declared by either Federal
or New York or Georgia State authorities; or (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the United States
of a national emergency or war, if the effect of any such event specified in
this Clause (iv) in the judgment of the Representatives makes it
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impracticable or inadvisable to proceed with the public offering or the delivery
of the Securities being issues at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(h) The Company shall have complied with the provisions of Section 5(c)
hereof with respect to the furnishing of prospectuses on the New York Business
Day next succeeding the date of this Agreement;
(i) The shares of Stock issuable upon conversion of the Securities shall
have been duly listed, subject to notice of issuance, for quotation on NASDAQ;
and
(j) The Company shall have furnished or caused to be furnished to you at
such Time of Delivery certificates of officers of the Company satisfactory to
you as to the accuracy of the representations and warranties of the Company
herein at and as of such Time of Delivery, as to the performance by the Company
of all of its obligations hereunder to be performed at or prior to such Time of
Delivery, as to the matters set forth in subsections (a) and (e) of this Section
and as to such other matters as you may reasonably request.
(k) The Company has obtained and delivered to the Underwriters executed
copies of an agreement from the executive officers and directors of ITC Holding
Company, Inc. and ITC Service Company, Inc., substantially to the effect set
forth in Subsection 5(e) hereof in form and substance satisfactory to you.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, any preliminary prospectus supplement, the Registration Statement,
the Prospectus as amended or supplemented and any other prospectus relating to
the Securities, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through ▇▇▇▇▇▇▇, Sachs & Co. expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
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based upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, any preliminary prospectus supplement,
the Registration Statement, the Prospectus as amended or supplemented and any
other prospectus relating to the Securities, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through ▇▇▇▇▇▇▇, ▇▇▇▇▇
& Co. expressly for use therein; and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(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 the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such action 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.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to
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reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Securities . If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus as amended or
supplemented relating to the Securities. The relative fault 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 on the one hand or
the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this subsection (d) 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 subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this subsection (d),
no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act. The
remedies provided for in this Section 8 are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any indemnified party
at law or in equity.
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9. (a) If any Underwriter shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, you may in your discretion
arrange for you or another party or other parties to purchase such Securities on
the terms contained herein. If within thirty-six hours after such default by any
Underwriter you do not arrange for the purchase of such Securities, then the
Company shall be entitled to a further period of thirty-six hours within which
to procure another party or other parties satisfactory to you to purchase such
Securities on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the purchase of
such Securities , or the Company notifies you that it has so arranged for the
purchase of such Securities, you or the Company shall have the right to postpone
such Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments to the Registration Statement or
the Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate principal amount of such
Securities which remains unpurchased does not exceed one-eleventh of the
aggregate principal amount of all the Securities to be purchased at such Time of
Delivery, then the Company shall have the right to require each non-defaulting
Underwriter to purchase the principal amount of Securities which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the principal amount of Securities which such Underwriter agreed
to purchase hereunder at such Time of Delivery) of the Securities of such
defaulting Underwriter or Underwriters for which such arrangements have not been
made; but nothing herein shall relieve a defaulting Underwriter from liability
for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate principal amount of Securities
which remains unpurchased exceeds one-eleventh of the aggregate principal amount
of all the Securities, or if the Company shall not exercise the right described
in subsection (b) above to require non-defaulting Underwriters to purchase
Securities of a defaulting Underwriter or Underwriters, then this Agreement (or,
with respect to the Second Time of Delivery, the obligation of the Underwriters
to purchase and of the Company to sell the Optional Securities) shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter or
the Company, except for the expenses to be borne by the Company and the
Underwriters as provided in Section 6 hereof and the indemnity and contribution
agreements in Section 8 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
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investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Underwriter except as
provided in Sections 6 and 8 hereof; but, if for any other reason, any
Securities are not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Securities, but the Company shall then be
under no further liability to any Underwriter except as provided in Sections 6
and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. on behalf of you as the
Underwriters.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of ▇▇▇▇▇▇▇, Sachs &
Co., ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Secretary; provided, however, that any notice
to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company by you upon
request. Any such statements, requests, notices or agreements shall take effect
upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and, to the extent provided in Sections 8 and
10 hereof, the officers and directors of the Company and each person who
controls the Company or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
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16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
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If the foregoing is in accordance with your understanding, please sign
and return to us one for the Company and each of the Underwriters plus one for
each counsel counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Underwriters and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
MINDSPRING ENTERPRISES, INC.
By:
-----------------------------
Name:
------------------------
Title:
-----------------------
Accepted as of the date hereof:
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
ING Baring ▇▇▇▇▇▇ ▇▇▇▇ LLCJ.▇. ▇▇▇▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation
First Union Capital Markets Corp.
▇▇▇▇▇▇▇▇▇ & Company, Inc.
By:
--------------------------------
(▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.)
On behalf of each of the Underwriters
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SCHEDULE I
AGGREGATE
PRINCIPAL
AMOUNT OF
OPTIONAL
SECURITIES TO
PRINCIPAL BE PURCHASED
AMOUNT OF IF MAXIMUM
SECURITIES TO OPTION
BE PURCHASED EXERCISED
------------- ---------------
UNDERWRITER
-----------
▇▇▇▇▇▇▇, Sachs & Co....................................................................... $
ING Baring ▇▇▇▇▇▇ ▇▇▇▇ LLC..............................................
▇.▇. ▇▇▇▇▇▇▇▇ & Co......................................................
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇............................................
Securities Corporation................................................
First Union Capital Markets Corp........................................
▇▇▇▇▇▇▇▇▇ & Company, Inc................................................
..........................................................................................
---------- ----------
TOTAL..................................................................................... ========== ==========
24
ANNEX I
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company within the meaning of the Act and the applicable published
rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
prospective financial statements and/or pro forma financial information)
examined by them and included or incorporated by reference in the
Registration Statement or the Prospectus comply as to form in all
material respects with the applicable accounting requirements of the Act
or the Exchange Act, as applicable, and the related published rules and
regulations thereunder; and, if applicable, they have made a review in
accordance with standards established by the American Institute of
Certified Public Accountants of the consolidated interim financial
statements, selected financial data, pro forma financial information,
prospective financial statements and/or condensed financial statements
derived from audited financial statements of the Company for the periods
specified in such letter, as indicated in their reports thereon, copies
of which have been separately furnished to the Underwriters;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statement of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus and/or included in the Company's quarterly report on Form 10-Q
incorporated by reference into the Prospectus as indicated in their
reports thereon copies of which have been separately furnished to the
Representatives; and on the basis of specified procedures including
inquiries of officials of the Company who have responsibility for
financial and accounting matters regarding whether the unaudited
condensed consolidated financial statements referred to in paragraph
(vi)(A)(i) below comply as to form in the related in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations, nothing
came to their attention that caused them to believe that the unaudited
condensed consolidated financial statements do not comply as to form in
all material respects with the applicable accounting requirements of the
Act and the Exchange Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the Prospectus
and included or incorporated by reference in Item 6 of the Company's
Annual Report on Form 10-K for the most recent fiscal year agrees with
the corresponding amounts (after restatement where applicable) in the
audited consolidated
25
financial statements for such five fiscal years which were included or
incorporated by reference in the Company's Annual Reports on Form 10-K
for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and
on the basis of limited procedures specified in such letter nothing came
to their attention as a result of the foregoing procedures that caused
them to believe that this information does not conform in all material
respects with the disclosure requirements of Items 301, 302, 402 and
503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company, inspection of the minute books of
the Company since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, inquiries of
officials of the Company responsible for financial and accounting matters
and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus and/or included or
incorporated by reference in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Prospectus do not
comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act and the related
published rules and regulations, or (ii) any material
modifications should be made to the unaudited consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included or incorporated by reference in
the Company's Quarterly Reports on Form 10-Q incorporated by
reference in the Prospectus, for them to be in conformity with
generally accepted accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any
such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included
or incorporated by reference in the Company's Annual Report on
Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived the
unaudited condensed financial statements referred to in Clause (A)
and any unaudited income statement data and balance sheet items
included in the Prospectus and referred to in Clause (B) were not
determined on a basis substantially consistent with the basis for
the audited financial statements included or
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26
incorporated by reference in the Company's Annual Report on Form
10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed
financial statements included or incorporated by reference in the
Prospectus do not comply as to form in all material respects with
the applicable accounting requirements of the Act and the
published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, upon
earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on the
date of the latest balance sheet included or incorporated by
reference in the Prospectus) or any increase in the consolidated
long-term debt of the Company, or any decreases in consolidated
net current assets or stockholders' equity or other items
specified by the Underwriters, or any increases in any items
specified by theUnderwriters, in each case as compared with
amounts shown in the latest balance sheet included or incorporated
by reference in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus
to the specified date referred to in Clause (E) there were any
decreases in consolidated net revenues or operating profit or the
total or per share amounts of consolidated net income or other
items specified by the Representatives, or any increases in any
items specified by theUnderwriters, in each case as compared with
the comparable period of the preceding year and with any other
period of corresponding length specified by theUnderwriters,
except in each case for increases or decreases which the
Prospectus discloses have occurred or may occur or which are
described in such letter; and
(vii) In addition to the examination referred to in their
report(s) included or incorporated by reference in the Prospectus and the
limited procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (iii) and (vi) above, they have
carried out certain specified procedures, not constituting an examination
in accordance with generally accepted auditing standards, with respect to
certain amounts, percentages and financial information specified by the
Underwriters which are derived from the general accounting records of the
Company, which appear in the Prospectus (excluding documents incorporated
by reference) or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Representatives or in documents
incorporated by reference in the Prospectus specified by the
Underwriters, and have compared certain of such amounts, percentages and
financial
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27
information with the accounting records of the Company and have found
them to be in agreement.
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