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13,000,000 SHARES OF COMMON STOCK
COVAD COMMUNICATIONS GROUP, INC.
UNDERWRITING AGREEMENT
November __, 1999
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Credit Suisse First Boston Corporation
Deutsche Bank Securities Inc.
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation
▇▇▇▇▇▇▇, Sachs & Co.
▇▇▇▇▇▇▇▇ Capital Partners, L.P.
as Representatives of the several
Underwriters named in Schedule I hereto
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Covad Communications Group, Inc., a corporation organized and
existing under the laws of Delaware (the "Company"), and certain stockholders of
the Company named in Schedule II hereto (the "Selling Stockholders") propose,
subject to the terms and conditions stated herein, to sell to the several
underwriters named in Schedule I hereto, (collectively, the "Underwriters") an
aggregate of 13,000,000 shares (the "Firm Shares") of the common stock of the
Company, par value $0.001 per share (the "Common Stock"). Of the 13,000,000 Firm
Shares, 11,405,000 Firm Shares are being sold by the Company and 1,595,000 Firm
Shares are being sold by the Selling Stockholders. In addition, the Company
proposes to grant to the underwriters the option to purchase up to an additional
1,950,000 shares (the "Additional Shares") of Common Stock, for the sole purpose
of covering over-allotments in connection with the sale of the Firm Shares. The
Firm Shares and any Additional Shares purchased by the Underwriters are referred
to herein as the "Shares". The Shares are more fully described in the
Registration Statement referred to below.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
(i) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-88757), and any amendments thereto, and related preliminary
prospectuses for the registration under the Securities Act of 1933 (the
"Securities Act") of shares of common stock, which registration
statement, as so amended, has been declared effective by the
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Commission and copies of which have heretofore been delivered to the
Underwriters. Such registration statement (and any registration
statement increasing the size of the offering (a "Rule 462(b)
Registration Statement") filed pursuant to Rule 462(b) of the Securities
Act), in the respective forms in which they were declared effective, as
amended, including all exhibits thereto and all documents incorporated
by reference therein, is hereinafter referred to as the "Registration
Statement". Other than a Rule 462(b) Registration Statement, which
became effective upon filing, no other document with respect to the
Registration Statement has heretofore been filed with the Commission
(other than prospectuses filed pursuant to Rule 424(b) of the rules and
regulations of the Commission under the Securities Act (the "Securities
Act Regulations"), each in the form heretofore delivered to the
Underwriters). No stop order suspending the effectiveness of either
Registration Statement or the Rule 462(b) Registration Statement, if
any, has been issued and no proceeding for that purpose has been
initiated or, to the Company's knowledge, threatened by the Commission.
The Company, if required by the Securities Act Regulations, proposes to
file the Prospectus with the Commission pursuant to Rule 424(b) of the
Securities Act Regulations. The Prospectus, in the form in which it is
to be filed with the Commission pursuant to Rule 424(b) of the
Securities Act Regulations, is hereinafter referred to as the
"Prospectus", except that if any revised prospectus or prospectus
supplement shall be provided to the Underwriters by the Company for use
in connection with the offering and sale of the Shares (the "Offering")
which differs from the Prospectus (whether or not such revised
prospectus or prospectus supplement is required to be filed by the
Company pursuant to Rule 424(b) of the Securities Act Regulations), the
term "Prospectus" shall refer to such revised prospectus or prospectus
supplement, as the case may be, from and after the time it is first
provided to the Underwriters for such use. Any preliminary prospectus or
prospectus subject to completion included in the Registration Statement
or filed with the Commission pursuant to Rule 424 under the Securities
Act is hereafter called a "Preliminary Prospectus". All references in
this Agreement to the Registration Statement, the Rule 462(b)
Registration Statement, a Preliminary Prospectus and the Prospectus, or
any amendments or supplements to any of the foregoing, shall be deemed
to include any copy thereof filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval System ("▇▇▇▇▇").
(ii) The Registration Statement and the Prospectus, at the
time the Registration Statement became effective and as of the Closing
Date referred to in Section 3 hereof, complied and comply in all
material respects with the requirements of the Securities Act and the
Securities Act Regulations, and did not and as of the Closing Date do
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. The Prospectus, as of the date hereof
(unless the term "Prospectus" refers to a prospectus which has been
provided to the Underwriters by the Company for use in connection with
the offering of the Shares which differs from the Prospectus filed with
the Commission pursuant to Rule 424(b) of the Securities Act
Regulations, in which case at the time it is first provided to the
Underwriters for such use) and on the Closing Date, does not and will
not include an untrue statement of a material fact or omit to state a
material fact
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necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this Section (1)(ii)
shall not apply to statements in or omissions from the Registration
Statement or Prospectus made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in
writing by any Underwriter expressly for use in the Registration
Statement or the Prospectus. Each Preliminary Prospectus and Prospectus
filed as part of the Registration Statement, as part of any amendment
thereto or pursuant to Rule 424 under the Securities Act Regulations, if
filed by electronic transmission pursuant to ▇▇▇▇▇ (except as may be
permitted by Regulation S-T under the Securities Act) was identical to
the copy thereof delivered to the Underwriters for use in connection
with the offer and sales of the Shares. There are no contracts or other
documents required to be described in the Prospectus or to be filed as
exhibits to the Registration Statement under the Securities Act that
have not been described or filed therein as required, and there are no
business relationships or related-party transactions involving the
Company or any subsidiary or any other person required to be described
in the Prospectus that have not been described therein as required.
(iii) Each of the Company and its subsidiaries has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation and has
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus. Each of the
Company and each subsidiary is duly qualified as a foreign corporation
to transact business and is in good standing in the State of California
and each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except for such jurisdictions (other than the State of
California) where the failure to so qualify or to be in good standing
would not, individually or in the aggregate, result in a material
adverse change, or any development that could reasonably be expected to
result in a material adverse change, in the condition, financial or
otherwise, or in the business, operations or prospects, whether or not
arising from transactions in the ordinary course of business, of the
Company and its subsidiaries, considered as one entity (any such change
is called a "Material Adverse Change"). The Company does not own or
control, directly or indirectly, any corporation, association or other
entity other than Covad Communications Company, a California
corporation, DIECA Communications, Inc., a Virginia corporation, and
Covad Communications Investment Corp., a Delaware corporation. As of the
date hereof, (a) the Company has obtained CLEC regulatory approval in
each of the following States: Arizona, California, Colorado,
Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois,
Indiana, Kansas, Maryland, Massachusetts, Michigan, Minnesota, Missouri,
Montana, New Hampshire, New Jersey, New York, North Carolina, Ohio,
Oregon, Pennsylvania, Texas, Utah, Virginia, Washington, West Virginia
and Wisconsin and no such regulatory approval has been withdrawn, and to
the Company's knowledge no such regulatory approval is the subject of
any legal challenge (except as disclosed in the Prospectus) and (b) the
Company has not received any notice of rejection or denial, nor has it
withdrawn, any of its applications for CLEC approval in any of the 5
additional States where such applications, as of the date of the
Prospectus, are pending approval.
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(iv) All of the outstanding shares of capital stock of the
Company (including the Shares) have been duly authorized, validly
issued, and are fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights. The Shares, when issued,
delivered and sold in accordance with this Agreement, will be duly
authorized and validly issued, fully paid and nonassessable, and will
not have been issued in violation of or subject to any preemptive or
similar rights. At June 30, 1999, after giving effect to the issuance
and sale of the Shares pursuant hereto and the application of the net
proceeds from the sale thereof, the Company had the pro forma
consolidated capitalization as set forth in the Prospectus under the
caption "Capitalization", under the column entitled "As Adjusted".
(v) All of the outstanding capital stock of each
subsidiary of the Company is owned, directly or indirectly, by the
Company, free and clear of any security interest, claim, lien limitation
on voting rights or encumbrance; and all such securities have been duly
authorized, validly issued, and are fully paid and nonassessable and
were not issued in violation of any preemptive or similar rights.
(vi) Except as disclosed in the Prospectus, there are not
currently, and will not be as a result of the Offering, any outstanding
subscriptions, rights, warrants, calls, commitments of sale or options
to acquire, or instruments convertible into or exchangeable for, any
capital stock or other equity interest of the Company or any of its
subsidiaries.
(vii) The Common Stock (including the Shares) is
registered pursuant to Section 12(g) of the Securities Exchange Act of
1934 (the "Exchange Act") and is listed for quotation on the Nasdaq
National Market ("Nasdaq"), and the Company has taken no action designed
to, or likely to have the effect of, terminating the registration of the
Common Stock under the Exchange Act or delisting the Common Stock from
Nasdaq, nor has the Company received any notification that the
Commission or Nasdaq is contemplating terminating such registration or
listing.
(viii) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby,
including, without limitation, the corporate power and authority to
issue, sell and deliver the Shares as provided herein and the power to
effect the "Use of Proceeds" as described in the Prospectus.
(ix) This Agreement has been duly and validly authorized,
executed and delivered by the Company and is the legally valid and
binding agreement of the Company, enforceable against it in accordance
with its terms, except insofar as indemnification and contribution
provisions may be limited by applicable law or equitable principles and
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity.
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(x) Neither the Company nor any of its subsidiaries is,
or, after giving effect to the offering of the Shares, will be (a) in
violation of its charter or bylaws, (b) in default in the performance of
any bond, debenture, note, indenture, mortgage, deed of trust or other
agreement or instrument to which it is a party or by which it is bound
or to which any of its properties is subject, or (c) in violation of any
local, state or federal law, statute, ordinance, rule, regulation,
requirement, judgment or court decree (including, without limitation,
the Communications Act and the rules and regulations of the FCC and
environmental laws, statutes, ordinances, rules, regulations, judgments
or court decrees) applicable to the Company, its subsidiaries or any of
their assets or properties (whether owned or leased) other than, in the
case of clauses (b) and (c), any default or violation that could not
reasonably be expected to (1) individually or in the aggregate, result
in a material adverse effect on the properties, business, results of
operations, condition (financial or otherwise), affairs or prospects of
the Company and its subsidiaries, taken as a whole, (2) interfere with
or adversely affect the sale of the Shares pursuant hereto or (3) in any
manner draw into question the validity of this Agreement (any of the
events set forth in clauses (1), (2) or (3), a "Material Adverse
Effect"). There exists no condition that, with notice, the passage of
time or otherwise, would constitute a default under any such document or
instrument, except as disclosed in the Prospectus, except for any such
condition which would not reasonably be expected to result in a Material
Adverse Effect.
(xi) None of (a) the execution, delivery or performance by
the Company of this Agreement, (b) the issuance or sale of the Shares
and (c) consummation by the Company of the transactions contemplated
hereby violate, conflict with or constitute a breach of any of the terms
or provisions of, or a default under (or an event that with notice or
the lapse of time, or both, would constitute a default), or require
consent which has not been obtained under, or result in the imposition
of a lien on any properties of the Company or any of its subsidiaries,
or an acceleration of any indebtedness of the Company or any of its
subsidiaries pursuant to, (1) the charter or bylaws of the Company or
any of its subsidiaries, (2) any bond, debenture, note, indenture,
mortgage, deed of trust or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or
its subsidiaries or their properties is or may be bound, (3) any
statute, rule or regulation applicable to the Company or any of its
subsidiaries or any of their assets or properties or (4) any judgment,
order or decree of any court or governmental agency or authority having
jurisdiction over the Company or any of its subsidiaries or any of their
assets or properties, except in the case of clauses (2), (3) and (4) for
such violations, conflicts, breaches, defaults, consents, impositions of
liens or accelerations that (x) would not singly, or in the aggregate,
have a Material Adverse Effect or (y) which are disclosed in the
Prospectus. Other than as described in the Prospectus, no consent,
approval, authorization or order of, or filing, registration,
qualification, license or permit of or with, (A) any court or
governmental agency, body or administrative agency (including, without
limitation, the FCC) or (B) any other person is required for (1) the
execution, delivery and performance by the Company of this Agreement,
(2) the sale of the Shares and the transactions contemplated hereby,
except (x) such as have been obtained and made under the Securities Act
and state securities or Blue Sky laws and regulations or such as may be
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required by the NASD or (y) where the failure to obtain any such
consent, approval, authorization or order of, or filing registration,
qualification, license or permit would not reasonably be expected to
result in a Material Adverse Effect.
(xii) Except as set forth in the Prospectus, there are no
legal or governmental actions, suits or proceedings pending or, to
Company's knowledge, threatened (a) against or affecting the Company or
any of its subsidiaries, (b) which has as the subject thereof any
officer or director (in any such capacity) of, or property owned or
leased by, the Company or any of its subsidiaries or (c) relating to
environmental or discrimination matters, where in any such case (1)
there is a reasonable possibility that such action, suit or proceeding
might be determined adversely to the Company or such subsidiary and (2)
any such action, suit or proceeding, if so determined adversely, would
reasonably be expected to result in a Material Adverse Change or
adversely affect the consummation of the transactions contemplated by
this Agreement. No material labor dispute with the employees of the
Company or any of its subsidiaries exists or, to the Company's
knowledge, is threatened or imminent.
(xiii) No action has been taken and no statute, rule,
regulation or order has been enacted, adopted or issued by any
governmental agency that prevents the issuance or sale of the Shares or
prevents or suspends the use of the Prospectus; no injunction,
restraining order or order of any nature by a federal or state court of
competent jurisdiction has been issued that prevents the issuance of the
Shares, prevents or suspends the sale of the Shares in any jurisdiction
referred to in Section 5(d) hereof or that could adversely affect the
consummation of the transactions contemplated by this Agreement or the
Prospectus; and every request of any securities authority or agency of
any jurisdiction for additional information has been complied with in
all material respects.
(xiv) Except as would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse
Change, (a) to the Company's knowledge, neither the Company nor any of
its subsidiaries is in violation of any federal, state, local or foreign
law or regulation relating to pollution or protection of human health or
the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife,
including without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum and petroleum products (collectively, "Materials
of Environmental Concern"), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Materials of Environmental Concern (collectively,
"Environmental Laws"), which violation includes, but is not limited to,
noncompliance with any permits or other governmental authorizations
required for the operation of the business of the Company or its
subsidiaries under applicable Environmental Laws, or noncompliance with
the terms and conditions thereof, nor has the Company or any of its
subsidiaries received any written communication, whether from a
governmental authority, citizens group, employee or otherwise, that
alleges that the Company or any of its subsidiaries is in violation of
any Environmental Law; (b) there is no claim, action or
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cause of action filed with a court or governmental authority, no
investigation with respect to which the Company or any of its
subsidiaries has received written notice, and no written notice by any
person or entity alleging potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, attorneys' fees or penalties
arising out of, based on or resulting from the presence, or release into
the environment, of any Material of Environmental Concern at any
location owned, leased or operated by the Company or any of its
subsidiaries, now or in the past (collectively, "Environmental Claims"),
pending or, to Company's knowledge, threatened against the Company or
any of its subsidiaries or any person or entity whose liability for any
Environmental Claim the Company or any of its subsidiaries has retained
or assumed either contractually or by operation of law; and (c) to the
Company's knowledge, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence or disposal of
any Material of Environmental Concern, that reasonably could result in a
violation of any Environmental Law or form the basis of a potential
Environmental Claim against the Company or any of its subsidiaries or
against any person or entity whose liability for any Environmental Claim
the Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law.
(xv) The Company and each of its subsidiaries has (a) good
and marketable title to all of the properties and assets described in
the Prospectus or the financial statements included in the Prospectus as
owned by it, free and clear of all liens, charges, encumbrances and
restrictions, except such as are described in the Prospectus or as would
not have a Material Adverse Effect, (b) peaceful and undisturbed
possession to the extent described in the Prospectus under all material
leases to which it is a party as lessee, (c) all licenses, certificates,
permits, authorizations, approvals, franchises and other rights from,
and has made all declarations and filings with, all federal, state and
local authorities (including, without limitation, the FCC), all
self-regulatory authorities and all courts and other tribunals (each an
"Authorization") necessary to engage in the business conducted by the
Company and its subsidiaries in the manner described in the Prospectus,
except as described in the Prospectus and except insofar as the failure
to obtain any such Authorization would not reasonably be expected to
have a Material Adverse Effect, and no such Authorization contains a
materially burdensome restriction that is not disclosed in the
Prospectus and (d) not received any notice that any governmental body or
agency is considering limiting, suspending or revoking any such
Authorization. Except where the failure to be in full force and effect
would not have a Material Adverse Effect, all such Authorizations are
valid and in full force and effect and the Company and each of its
subsidiaries is in compliance in all material respects with the terms
and conditions of all such Authorizations and with the rules and
regulations of the regulatory authorities having jurisdiction with
respect thereto. All material leases to which the Company and each of
its subsidiaries is a party are valid and binding and no default by the
Company or any of its subsidiaries has occurred and is continuing,
thereunder and, to the Company's knowledge, no material defaults by the
landlord are existing under any such lease that could reasonably be
expected to result in a Material Adverse Effect.
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(xvi) Except as described in the Prospectus, the Company
and its subsidiaries own, possess or have the right to employ sufficient
patents, patent rights, licenses (including all FCC, state, local or
other jurisdictional regulatory licenses), inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, software, systems
or procedures), trademarks, service marks and trade names, inventions,
computer programs, technical data and information (collectively, the
"Intellectual Property Rights") reasonably necessary to conduct their
businesses as now conducted; and the expected expiration of any of such
Intellectual Property Rights would not result in a Material Adverse
Change. The Intellectual Property Rights presently employed by the
Company and its subsidiaries in connection with the businesses now
operated by them or which are proposed to be operated by them are owned,
to the Company's knowledge, free and clear of and without violating any
right, claimed right, charge, encumbrance, pledge, security interest,
restriction or lien of any kind of any other person and neither the
Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect
to any of the foregoing except as would not reasonably be expected to
have a Material Adverse Effect. The use of the Intellectual Property in
connection with the business and operations of the Company and its
subsidiaries does not infringe on the rights of any person, except as
could not reasonably be expected to have a Material Adverse Effect.
(xvii) None of the Company or any of its subsidiaries, or,
or to the knowledge of the Company, any of their respective officers,
directors, partners, employees, agents or affiliates or any other person
acting on behalf of the Company or any of its subsidiaries has, directly
or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary
course of business) to any customer, supplier, employee or agent of a
customer or supplier, official or employee of any governmental agency
(domestic or foreign), instrumentality of any government (domestic or
foreign) or any political party or candidate for office (domestic or
foreign) or other person who was, is or may be in a position to help or
hinder the business of the Company or any of its subsidiaries (or assist
the Company or any of its subsidiaries in connection with any actual or
proposed transaction) which (a) would reasonably be expected to subject
the Company, or any other individual or entity to any damage or penalty
in any civil, criminal or governmental litigation or proceeding
(domestic or foreign), (b) if not given in the past, would reasonably be
expected to have had a Material Adverse Effect or (c) if not continued
if not continued in the future, would reasonably be expected to have a
Material Adverse Effect.
(xviii) All material tax returns required to be filed by
the Company and its subsidiaries in all jurisdictions have been so
filed. All taxes, including withholding taxes, penalties and interest,
assessments, fees and other charges due or claimed to be due from such
entities or that are due and payable have been paid, other than those
being contested in good faith and for which adequate reserves have been
provided or those currently payable without penalty or interest. To the
knowledge of the Company, there are no material proposed additional tax
assessments against the Company or any of its subsidiaries or the assets
or property of the Company or any of its
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subsidiaries. The Company has made adequate charges, accruals and
reserves in the applicable financial statements included in the
Prospectus in respect of all federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the
Company or any of its consolidated subsidiaries has not been finally
determined.
(xix) The Company is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "Investment Company
Act").
(xx) Except as disclosed in the Prospectus, there are no
holders of securities of the Company or any of its subsidiaries who, by
reason of the execution by the Company of this Agreement to which it is
a party or the consummation by the Company or any of its subsidiaries of
the transactions contemplated hereby, have the right to request or
demand that the Company or any of its subsidiaries register under the
Securities Act or analogous foreign laws and regulations securities held
by them, other than such that have been duly waived.
(xxi) The Company and its subsidiaries each maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that: (a) transactions are executed in accordance with
management's general or specific authorizations; (b) transactions are
recorded as necessary to permit preparation of financial statements in
conformity in all material respects with generally accepted accounting
principles and to maintain accountability for assets; and (c) the
recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to
any differences.
(xxii) Each of the Company and its subsidiaries are
insured by recognized, financially sound institutions with policies in
such amounts and with such deductibles and covering such risks as are
customary for similarly situated businesses including, but not limited
to, policies covering real and personal property owned or leased by the
Company and its subsidiaries against theft, damage, destruction and acts
of vandalism. The Company has no reason to believe that it or any
subsidiary will not be able (a) to renew its existing insurance coverage
as and when such policies expire or (b) to obtain comparable coverage
from similar institutions as may be necessary or appropriate to conduct
its business as now conducted and at a cost that would not result in a
Material Adverse Change.
(xxiii) The Company has not (a) taken, directly or
indirectly, any action designed to, or that might reasonably be expected
to, cause or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares
or (b) since the date of the Preliminary Prospectus (1) sold, bid for,
purchased or paid any person any compensation for soliciting purchases
of, the Shares or (2) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of
the Company.
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(xxiv) The Company and its subsidiaries and any "employee
benefit plan" (as defined under the Employee Retirement Income Security
Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, "ERISA")) established or
maintained by the Company, its subsidiaries or their "ERISA Affiliates"
(as defined below) are in compliance in all material respects with
ERISA. "ERISA Affiliate" means, with respect to the Company or a
subsidiary, any member of any group of organizations described in
Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986,
as amended, and the regulations and published interpretations thereunder
(the "Code") of which the Company or such subsidiary is a member. No
"reportable event" (as defined under ERISA) has occurred or is
reasonably expected to occur with respect to any "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of
their ERISA Affiliates. No "employee benefit plan" established or
maintained by the Company, its subsidiaries or any of their ERISA
Affiliates, if such "employee benefit plan" were terminated, would have
any "amount of unfunded benefit liabilities" (as defined under ERISA).
Neither the Company, its subsidiaries nor any of their ERISA Affiliates
has incurred or reasonably expects to incur any liability under (a)
Title IV of ERISA with respect to termination of, or withdrawal from,
any "employee benefit plan" or (b) Sections 412, 4971, 4975 or 4980B of
the Code. Each "employee benefit plan" established or maintained by the
Company, its subsidiaries or any of their ERISA Affiliates that is
intended to be qualified under Section 401(a) of the Code is so
qualified and nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualification.
(xxv) Except as otherwise disclosed in the Prospectus,
subsequent to the respective dates as of which information is given in
the Prospectus: (a) there has been no Material Adverse Change; (b) the
Company and its subsidiaries, considered as one entity, have not
incurred any material liability or obligation, indirect, direct or
contingent, not in the ordinary course of business nor entered into any
material transaction or agreement not in the ordinary course of
business; (c) there has been no dividend or distribution of any kind
declared, paid or made by the Company or, except for dividends paid to
the Company or other subsidiaries, any of its subsidiaries on any class
of capital stock or repurchase or redemption by the Company or any of
its subsidiaries of any class of capital stock; (d) there has been no
capital expenditure or commitment by the Company or any of its
subsidiaries exceeding $100,000, either individually or in the aggregate
except in the ordinary course of business as generally contemplated by
the Prospectus; (e) there has been no change in accounting methods or
practices (including any change in depreciation or amortization policies
or rates) by the Company or any of its subsidiaries; (f) there has been
no revaluation by the Company or any of its subsidiaries of any of their
assets; (g) there has been no increase in the salary or other
compensation payable or to become payable by the Company or any of its
subsidiaries to any of their officers, directors, employees or advisors,
nor any declaration, payment or commitment or obligation of any kind for
the payment by the Company or any of its subsidiaries of a bonus or
other additional salary or compensation to any such person; (h) there
has been no amendment or termination of any material contract, agreement
or license to which the Company or any subsidiary is a party or by which
it is bound; (i) there has been no waiver or release of
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any material right or claim of the Company or any subsidiary, including
any write-off or other compromise of any material account receivable of
the Company or any subsidiary; and (j) there has been no change in
pricing or royalties set or charged by the Company or any subsidiary to
their respective customers or licensees or in pricing or royalties set
or charged by persons who have licensed Intellectual Property Rights to
the Company or any of its subsidiaries.
(xxvi) Ernst & Young LLP, who have expressed their opinion
with respect to the financial statements (which term as used in this
Agreement includes the related notes thereto) and supporting schedules
included in the Prospectus are independent public or certified public
accountants within the meaning of Regulation S-X under the Securities
Act and the Exchange Act.
(xxvii) The financial statements, together with the
related notes, included in the Prospectus present fairly in all material
respects the consolidated financial position of the Company and its
subsidiaries as of and at the dates indicated and the results of their
operations and cash flows for the periods specified. Such financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the
periods involved, except as may be expressly stated in the related notes
thereto. The financial data set forth in the Prospectus under the
captions "Prospectus Summary -- Summary Consolidated Financial Data",
"Selected Consolidated Financial Data" and "Capitalization" fairly
present the information set forth therein on a basis consistent with
that of the audited financial statements contained in the Prospectus.
(xxviii) Except pursuant to this Agreement, there are no
contracts, agreements or understandings between the Company and any
other person that would give rise to a valid claim against the Company
or either of the Underwriters for a brokerage commission, finder's fee
or like payment in connection with the issuance, purchase and sale of
the Shares.
(xxix) The statements (including the assumptions described
therein) included in the Prospectus (a) are within the coverage of Rule
175(b) under the Securities Act to the extent such data constitute
forward looking statements as defined in Rule 175(c) and (b) were made
by the Company with a reasonable basis and reflect the Company's good
faith estimate of the matters described therein.
Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters pursuant
to this Agreement shall be deemed to be a representation and warranty by
the Company to the Underwriters as to the matters covered thereby.
The Company acknowledges that each of the Underwriters and, for
purposes of the opinions to be delivered to the Underwriters pursuant to Section
8 hereof, counsel to the
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Company and counsel to the Underwriters, will rely upon the accuracy and truth
of the foregoing representations and hereby consents to such reliance.
2. Representations and Warranties of the Selling Stockholders.
Each Selling Stockholder severally and not jointly represents and warrants to,
and agrees that:
(a) Such Selling Stockholder either (x) has good and valid title
to the Shares to be sold by such Selling Stockholder hereunder free and
clear of all liens, encumbrances, equities or claims, or (y) has
completed a notice of option exercise in respect of the Shares to be
sold by such Selling Stockholder hereunder and placed such notice in
custody as described in paragraph (b) below; and immediately prior to
the Closing Date such Selling Stockholder will have, good and valid
title to the Shares to be sold by such Selling Stockholder hereunder
free and clear of all liens, encumbrances, equities or claims; and upon
delivery of such Shares and payment therefor pursuant hereto, good and
valid title to such Shares, free and clear of all liens, encumbrances,
equities or claims, will pass to the several Underwriters.
(b) Such Selling Stockholder either (x) has placed in custody
under a custody agreement (the "Custody Agreement" and, together with
all other similar agreements executed by the other Selling Stockholders,
the "Custody Agreements") with Boston Equiserve, as custodian (the
"Custodian"), for delivery under this Agreement, certificates in
negotiable form (with signature guaranteed by a commercial bank or trust
company having an office or correspondent in the United States or a
member firm of the New York or American Stock Exchanges) representing
the Shares to be sold by such Selling Stockholder hereunder or (y) has
completed a notice of option exercise in respect of the Shares to be
sold by such Selling Stockholder hereunder and placed such notice in
custody with the Custodian.
(c) Such Selling Stockholder has duly and irrevocably executed
and delivered a power of attorney (the "Power of Attorney" and, together
with all other similar agreements executed by the other Selling
Stockholders, the "Powers of Attorney") appointing certain officers of
the Company as attorneys-in-fact, with full power of substitution, and
with full authority on the terms set forth therein (exercisable by any
one or more of them) to execute and deliver this Agreement and to take
such other action as may be necessary or desirable to carry out the
provisions hereof on behalf of such Selling Stockholder.
(d) Such Selling Stockholder has full right, power and authority
to enter into this Agreement, the Power of Attorney and the Custody
Agreement; the execution, delivery and performance of this Agreement,
the Power of Attorney and the Custody Agreement by such Selling
Stockholder and the consummation by such Selling Stockholder of the
transactions contemplated hereby will not conflict with or result in a
breach or violation of the provisions of the constituent documents of
such Selling Stockholder, if any, or 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
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which such Selling Stockholder is a party or by which such Selling
Stockholder is bound or to which any of the property or assets of such
Selling Stockholder is subject, nor will such actions result in any
violation of any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over such Selling
Stockholder or the property or assets of such Selling Stockholder; and,
except for the registration of the Shares under the Act and such
consents, approvals, authorizations, registrations or qualifications as
may be required under applicable state securities laws in connection
with the purchase and distribution of the Shares by the Underwriters, no
consent, approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is required for the
execution, delivery and performance of this Agreement, the Power of
Attorney or the Custody Agreement by such Selling Stockholder and the
consummation by such Selling Stockholder of the transactions
contemplated hereby.
(e) To the extent that any statements or omissions made in the
Registration Statement, the Prospectus or any amendment or supplement
thereto are made in reliance upon and in conformity with written
information furnished to the Company by such Selling Stockholder
specifically for use therein, the Registration Statement and the
Prospectus and any amendments or supplements thereto will not, when they
become effective or are filed with the Commission, as the case may be,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in relation to such written
information.
(f) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
3. Purchase, Sale and Delivery of the Shares.
(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 11,405,000 Firm Shares and
each Selling Stockholder hereby agrees to sell the number of Firm Shares
set opposite its name in Schedule II hereto, severally and not jointly,
to the Underwriters and the Underwriters, severally and not jointly,
agree to purchase from the Company and the Selling Stockholders, at a
purchase price per share of $[_____], the number of Firm Shares set
forth opposite the respective names of the Underwriters in Schedule I
hereto plus any additional number of Shares which such Underwriter may
become obligated to purchase pursuant to the provisions of Section 11
hereof.
(b) Payment of the purchase price for, and delivery of the Firm
Shares shall be made at the office of Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, or at such other place as shall be agreed
upon by the Underwriters and the Company, at 9.00 A.M. on November__,
1999 (unless postponed in accordance with the provisions of
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Section 11 hereof) after the determination of the public offering price
of the Firm Shares, or such other time not later than ten business days
after such date as shall be agreed upon by the Underwriters and the
Company (such time and date of payment and delivery being herein called
the "Closing Date"). Payment shall be made to the Company and the
Selling Stockholders by certified or official bank check or checks drawn
in, or by wire transfer for settlement in, New York Clearing House funds
or similar next day funds payable to the order of the Company and the
Selling Stockholders, against delivery to Underwriters of, for the
respective accounts of the Underwriters, certificates for the Shares to
be purchased by them. Certificates for the Shares shall be registered in
such name or names and in such authorized denominations as the
Underwriters may request in writing at least two full business days
prior to the Closing Date. The Company and the Selling Stockholders will
permit the Underwriters to examine and package such certificates for
delivery at least one full business day prior to the Closing Date.
(c) In addition, the Company hereby grants to the Underwriters
the option to purchase up to 1,950,000 Additional Shares at the same
purchase price per share to be paid by the Underwriters for the Firm
Shares as set forth in this Section 3, for the sole purpose of covering
over-allotments in the sale of Firm Shares by the Underwriters. This
option may be exercised at any time, in whole or in part, on or before
the thirtieth day following the date of the Prospectus, by written
notice by the Underwriters to the Company. Such notice shall set forth
the aggregate number of Additional Shares as to which the option is
being exercised and the date and time, as reasonably determined by the
Underwriters, when the Additional Shares are to be delivered (such date
and time being herein sometimes referred to as the "Additional Closing
Date"); provided, however, that the Additional Closing Date shall not be
earlier than the Closing Date or earlier than the second full business
day after the date on which the option shall have been exercised nor
later than the eighth full business day after the date on which the
option shall have been exercised (unless such time and date are
postponed in accordance with the provisions of Section 11 hereof).
Certificates for the Additional Shares shall be registered in such name
or names and in such authorized denominations as the Underwriters may
request in writing at least two full business days prior to the
Additional Closing Date. The Company will permit the Underwriters to
examine and package such certificates for delivery at least one full
business day prior to the Additional Closing Date.
(d) The number of Additional Shares to be sold to each
Underwriter shall be the number which bears the same ratio to the
aggregate number of Additional Shares being purchased as the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule
I hereto (or such number increased as set forth in Section 11 hereof)
bears to the total number of Firm Shares being purchased from the
Company and the Selling Stockholders, subject, however, to such
adjustments to eliminate any fractional shares as the Underwriters in
their sole discretion shall make.
(e) Payment for the Additional Shares shall be made by wire
transfer in same day funds payable to the order of the Company at the
office of Bear, ▇▇▇▇▇▇▇ & Co. Inc.,
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245 Park Avenue, New York, New York, or such other location as may be
mutually acceptable, upon delivery of the certificates for the
Additional Shares to the Underwriters.
4. Offering. Upon the Underwriters' authorization of the release
of the Firm Shares, the Underwriters propose to offer the Shares for sale to the
public upon the terms set forth in the Prospectus.
5. Covenants of the Company. The Company covenants and agrees
with each of the Underwriters that:
(a) The Company will notify the Underwriters immediately (and, if
requested by the Underwriters, will confirm such notice in writing) (i)
when any posteffective amendment to the Registration Statement becomes
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 the Prospectus or any amendment of or
supplement to the Registration Statement or the Prospectus or any
document to be filed pursuant to the Exchange Act during any period when
the Prospectus is required to be delivered under the Securities Act,
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of either 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 or inquiries
from the Commission, and (vi) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of
any proceeding for 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 order and, if issued, to
obtain the lifting of such order as soon as possible. The Company will
not file any post-effective amendment to the Registration Statement or
any amendment of or supplement to the Prospectus (including any revised
prospectus which the Company proposes for use by the Underwriters in
connection with the offering of the Shares which differs from the
prospectus filed with the Commission pursuant to Rule 424(b) of the
Securities Act Regulations, whether or not such revised prospectus is
required to be filed pursuant to Rule 424(b) of the Securities Act
Regulations) to which the Underwriters or Underwriters' Counsel (as
hereinafter defined) shall reasonably object, will furnish the
Underwriters with copies of any such amendment or supplement a
reasonable amount of time prior to such proposed filing or use, as the
case may be, and will not file any such amendment or supplement or use
any such prospectus to which the Underwriters or counsel for the
Underwriters shall reasonably object.
(b) If any event shall occur as a result of which the Prospectus
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 either Registration Statement to comply
with the Securities Act or the Securities Act
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Regulations, the Company will notify the Underwriters promptly and
prepare and file with the Commission an appropriate amendment or
supplement (in form and substance satisfactory to the Underwriters)
which will correct such statement or omission or which will effect such
compliance.
(c) The Company has delivered to the Underwriters five signed
copies of the Registration Statement as originally filed, including
exhibits, and all amendments thereto, and the Company will promptly
deliver to each of the Underwriters, from time to time during the period
that the Prospectus is required to be delivered under the Securities
Act, such number of copies of the Prospectus and the Registration
Statement, and all amendments of and supplements to such documents, if
any, as the Underwriters may reasonably request.
(d) The Company will endeavor in good faith, in cooperation with
the Underwriters, to qualify the Shares for offering and sale under the
securities laws relating to the offering or sale of the Shares of such
jurisdictions as the Underwriters 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 Securities Act) to its security holders and to
the Underwriters 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 (or if such
fiscal quarter is the Company's fourth fiscal quarter, not later than 90
days after the end of such quarter), an earnings 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 (as defined in Rule 158(c)
under the Securities Act).
(f) During the period of 90 days from the date of the Prospectus,
the Company will not, directly or indirectly, without the prior written
consent of Bear, ▇▇▇▇▇▇▇ & Co. Inc., offer, sell, contract to sell,
grant any option to purchase, pledge or otherwise dispose (or announce
any offer, sale, contract to sell, grant of an option to purchase,
pledge or other disposition) of any shares of Common Stock of the
Company or any securities convertible into or exercisable into or
exchangeable for such Common Stock, except that the Company may issue
(i) shares of Common Stock and options to purchase Common Stock under
its 1997 Stock Plan and its 1998 Purchase Plan (as such terms are
defined in the Prospectus), (ii) shares of Common Stock upon exercise of
warrants to purchase Common Stock that were issued and outstanding on
the date of the Prospectus or (iii) shares of Common Stock in connection
with strategic relationships and acquisitions of businesses,
technologies and products complementary to those of the Company, so long
as the recipients of such shares agree to be bound by a lock-up
agreement (which shall
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provide that any transferees and assigns of such recipients shall be
bound by the lock-up agreement) for the remainder of the 90-day lock-up
period.
(g) During a period of three years from the date of the
Prospectus, the Company will furnish to the Underwriters copies of (i)
all reports to its stockholders; 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
Shares as set forth in the Prospectus under the caption "Use of
Proceeds".
(i) If the Company elects 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 the Underwriters' reasonable satisfaction.
(j) The Company, during the period when the Prospectus is
required to be delivered under the Securities Act or the Exchange Act,
will file all documents required to be filed with the Commission
pursuant to Sections 13, 14 or 15 of the Exchange Act within the time
periods required by the Exchange Act and the rules and regulations
thereunder.
6. Covenants of the Selling Stockholders. Each Selling
Stockholder severally and not jointly covenants and agrees that:
(i) For a period of 90 days from the date of the Prospectus, it
will not, directly or indirectly, sell, offer or agree to sell, grant
any option for the sale of, or otherwise dispose of, directly or
indirectly, any Common Stock (or any securities convertible into,
exercisable for or exchangeable for Common Stock) without the prior
written consent of Bear, ▇▇▇▇▇▇▇ & Co. Inc.
(ii) The Shares to be sold by such Selling Stockholder hereunder,
which are represented by the certificates or notices of option exercise
held in custody for such Selling Stockholder, are subject to the
interest of the Underwriters and the other Selling Stockholders
thereunder, the arrangements made by such Selling Stockholder for such
custody are to that extent irrevocable, and the obligations of such
Selling Stockholder hereunder will not be terminated by any act of such
Selling Stockholder, by operation of law, by the death or incapacity of
any individual Selling Stockholder or, in the case of a trust, by the
death or incapacity of any executor or trustee or the termination of
such trust, or the occurrence of any other event.
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(iii) If at any time when a prospectus relating to the Shares is
required to be delivered under the Securities Act any information which
such Selling Stockholder has provided to the Company or the Underwriters
becomes incorrect, or if it shall be necessary at any time to amend or
supplement any information provided by such Selling Stockholder to the
Company for inclusion in the Prospectus or Registration Statement to
comply with the Securities Act or the Regulations, such Selling
Stockholder will notify the Company and the Underwriters promptly so
that the Company may prepare and file with the Commission an appropriate
amendment or supplement (in form and substance satisfactory to the
Underwriters) which will correct such statement or omission.
(iv) Such Selling Stockholder will deliver to the Underwriters
prior to the Closing Date a properly completed and executed United
States Treasury Department Form W-9.
7. 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 thereto
(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 Shares
(including those supplied to the Underwriters in quantities as hereinabove
stated), (ii) the transfer and delivery of the Shares to the Underwriters,
including any transfer or other taxes payable thereon, (iii) the qualification
of the Shares under state or foreign securities or Blue Sky laws, including the
costs of printing and mailing a preliminary and final "Blue Sky Memorandum" and
the fees of counsel in connection therewith and such counsel's disbursements in
relation thereto, (iv) listing of the Shares for quotation on the Nasdaq, (v)
filing fees of the Commission and the NASD, (vi) the cost of printing
certificates representing the Shares, and (vii) the cost and charges of any
transfer agent or registrar.
8. Conditions of Underwriters' Obligations. The obligations of
the Underwriters to purchase and pay for the Firm Shares and the Additional
Shares, as provided herein, shall be subject to the accuracy of the
representations and warranties of the Company and the Selling Stockholders
herein contained, as of the date hereof and as of the Closing Date (for purposes
of this Section 8, "Closing Date" shall refer to the Closing Date for the Firm
Shares and any Additional Closing Date, if different, for the Additional
Shares), to the absence from any certificates, opinions, written statements or
letters furnished to the Underwriters or to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
("Underwriters' Counsel") pursuant to this Section 8 of any material
misstatement or omission, to the performance by the Company or the Selling
Stockholders of its or their obligations hereunder, and to the following
additional conditions:
(a) On the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued under
the Securities Act or proceedings
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therefor initiated or, to the Company's knowledge, threatened by the
Commission. The Prospectus shall have been filed or transmitted for
filing with the Commission pursuant to Rule 424(b) of the Securities Act
Regulations within the prescribed time period, and prior to the Closing
Date the Company shall have provided evidence satisfactory to the
Underwriters of such timely filing or transmittal.
(b) All of the representations and warranties of the Company and
the Selling Stockholders contained in this Agreement shall be true and
correct on the date hereof and on the Closing Date with the same force
and effect as if made on and as of the date hereof, and the Closing
Date, respectively. The Company and the Selling Stockholders shall have
performed or complied with all of the agreements herein contained and
required to be performed or complied with by it or them at or prior to
the Closing Date.
(c) The Prospectus shall have been printed and copies distributed
to the Underwriters not later than 10:00 a.m., New York City time, on
the second business day following the date of this Agreement or at such
later date and time as to which the Underwriters may agree, and no stop
order suspending the qualification or exemption from qualification of
the Shares in any jurisdiction referred to in Section 5(d) shall have
been issued and no proceeding for that purpose shall have been commenced
or shall be pending or threatened.
(d) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the Closing Date, prevent the
sale of the Shares; no action, suit or proceeding shall have been
commenced and be pending against or affecting or, to the best knowledge
of the Company, threatened against, the Company before any court or
arbitrator or any governmental body, agency or official that (1) could
reasonably be expected to result in a Material Adverse Effect and (2)
has not been disclosed in the Prospectus.
(e) Since the respective dates as of which information is given
in the Prospectus, (i) there shall not have been any Material Adverse
Change, or any development that is reasonably likely to result in a
Material Adverse Change, in the capital stock or the long-term debt, or
material increase in the short-term debt, of the Company or any of its
subsidiaries from that set forth in the Prospectus, (ii) no dividend or
distribution of any kind shall have been declared, paid or made by the
Company or any of its subsidiaries on any class of its capital stock,
other than as described in the Prospectus, (iii) neither the Company nor
any of its subsidiaries shall have incurred any liabilities or
obligations, direct or contingent, that are material, individually or in
the aggregate, to the Company and its subsidiaries, taken as a whole,
and that are required to be disclosed on the latest balance sheet or
notes thereto included in the Prospectus in accordance with generally
accepted accounting principles and are not so disclosed. Since the date
hereof and since the dates as of which information is given in the
Prospectus, there shall not have occurred any Material Adverse Effect.
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(f) The Underwriters shall have received a certificate, dated the
Closing Date, signed on behalf of the Company by each of the Company's
Chief Executive Officer and Chief Financial Officer in form and
substance reasonably satisfactory to the Underwriters, confirming, as of
the Closing Date, the matters set forth in paragraphs (a), (b), (d) and
(e) of this Section 8 and that, as of the Closing Date, the obligations
of the Company to be performed hereunder on or prior thereto have been
duly performed in all material respects.
(g) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, in form and substance satisfactory to
the Underwriters and counsel to the Underwriters, of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel for the Company, to the effect set
forth in Exhibit A hereto.
(h) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, in form and substance satisfactory to
the Underwriters and counsel to the Underwriters, of ▇▇▇▇▇ ▇▇▇▇▇▇,
General Counsel of the Company, to the effect set forth in Exhibit B
hereto.
(i) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, in form and substance satisfactory to
the Underwriters and counsel to the Underwriters, of counsel for each
Selling Stockholder, to the effect set forth in Exhibit C hereto.
(j) All proceedings taken in connection with the sale of the Firm
Shares and the Additional Shares as herein contemplated shall be
satisfactory in form and substance to the Underwriters and to
Underwriters' Counsel, and the Underwriters shall have received from
Underwriters' Counsel a favorable opinion, dated as of the Closing Date
with respect to the issuance and sale of the Shares, the Registration
Statement and the Prospectus and such other related matters as the
Underwriters 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.
(k) At the time this Agreement is executed and at the Closing
Date, the Underwriters shall have received a letter from Ernst & Young
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 reasonably
satisfactory to the Underwriters, containing statements and information
of the type ordinarily included in auditors' "comfort letters" to
underwriters with respect to financial statements and certain
information of the Company and its subsidiaries contained or
incorporated by reference (if any) in the Registration Statement and the
Prospectus.
(l) At the time this Agreement is executed, the Underwriters
shall have received a "lock-up" agreement, substantially in the form
attached as Exhibit D hereto, from each of the Selling Stockholders.
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(m) At the Closing Date, the Shares shall have been approved for
quotation on the Nasdaq.
(n) At the time this Agreement is executed, and at the Closing
Time, the NASD shall not have withdrawn, or given notice of an intention
to withdraw, its approval of the fairness of the underwriting terms and
arrangements of the offering of the Shares by the Underwriters.
(o) All opinions, certificates, letters and other documents
required by this Section 8 to be delivered by the Company will be in
compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Underwriters. The Company will
furnish the Underwriters with such conformed copies of such opinions,
certificates, letters and other documents as Bear, ▇▇▇▇▇▇▇ & Co. Inc.
shall reasonably request. Prior to the Closing Date, the Company shall
have furnished to the Underwriters such further information,
certificates and documents as the Underwriters may reasonably request.
If any of the conditions specified in this Section 8 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 the
Underwriters or to Underwriters' Counsel pursuant to this Section 8 shall not be
in all material respects reasonably satisfactory in form and substance to the
Underwriters and to Underwriters' Counsel, all obligations of the Underwriters
hereunder may be canceled by the Underwriters at, or at any time prior to, the
Closing Date and the obligations of the Underwriters to purchase the Additional
Shares may be canceled by the Underwriters at, or at any time prior to, the
Additional Closing Date. Notice of such cancellation shall be given to the
Company and each Selling Stockholder in writing, or by telephone, telex or
telegraph, confirmed in writing.
9. 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 Securities Act or Section 20(a) of the
Exchange Act and each Selling Stockholder and each person, if any, who
controls any Selling Stockholder within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act against any and all
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), joint or
several, to which they or any of them may become subject under the
Securities 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 either the Registration
Statement, as originally filed or any amendment thereof, or any related
Preliminary Prospectus or the Prospectus, or in any supplement thereto
or amendment
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22
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 (i) 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 expressly
for use therein and (ii) with respect to any preliminary prospectus or
preliminary prospectus supplement to the extent that any such loss,
claim, damage or liability results from the fact that an Underwriter
sold Shares to a person as to whom it shall be established that there
was not sent or given, at or prior to written confirmation of such sale,
a copy of the prospectus or prospectus supplement as then amended or
supplemented in any case where such delivery is required by the
Securities Act if the Company has previously furnished copies thereof in
sufficient quantity to such Underwriter and with sufficient time to
effect a recirculation pursuant to Rule 461 under the Securities Act and
the loss, claim, damage or liability of the Underwriters results from an
untrue statement or omission of a material fact contained in the
preliminary prospectus or preliminary prospectus supplement which was
identified in writing prior to the effective date of the registration
statement to such Underwriter and corrected in the prospectus or
prospectus supplement as then amended, and such correction would have
cured the defect giving rise to such loss, claim, damage or liability.
This indemnity agreement will be in addition to any liability which the
Company may otherwise have, including under this Agreement.
(b) Each Selling Stockholder severally, and not jointly, agrees
to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, against any and all
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), joint or
several, to which they or any of them may become subject under the
Securities 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, 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, but in each
case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company or the
Underwriters by or on behalf of such Selling Stockholder specifically
for inclusion therein; provided that no Selling Stockholder shall be
liable in any such case to the extent but only to the extent that the
loss, claim, damage or liability
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23
of the Underwriters results from an untrue statement or omission of a
material fact contained in the preliminary prospectus or preliminary
prospectus supplement which was identified in writing prior to the
effective date of the registration statement to such Underwriter and
corrected in the prospectus or prospectus supplement as then amended,
and such correction would have cured the defect giving rise to such
loss, claim, damage or liability. Notwithstanding the provisions of this
Section 9(b), the aggregate liability of any Selling Stockholder under
this Section 9(b) shall not exceed the proceeds (net of underwriting
discounts but before expenses) received by such Selling Stockholder from
the sale of Shares under this Agreement. The Underwriters and the
Company acknowledge that the statements specifically relating to each
Selling Stockholder under the caption "Selling Stockholders" in the
Prospectus constitute the only information furnished in writing by or on
behalf of such Selling Stockholder expressly for use in the Registration
Statement as originally filed or in any amendment thereof, any related
Preliminary Prospectus or the Prospectus or in any amendment thereof or
supplement thereto, as the case may be. This indemnity agreement will be
in addition to any liability which the Selling Stockholders may
otherwise have, including under this Agreement; provided, however, that
in no event shall the aggregate liability of any Selling Stockholder for
any breach of the representations and warranties contained in Section
2(e) (when combined with any liability under the indemnity above) exceed
the proceeds (net of underwriting discounts but before expenses)
received by such Selling Stockholder from the sale of Shares under this
Agreement.
(c) Each Underwriter severally, and not jointly, agrees to
indemnify and hold harmless the Company, each Selling Stockholder, 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 or any Selling Stockholder within the
meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, against any and all 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), joint or several, to which they
or any of them may become subject under the Securities 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 either Registration Statement, as originally filed or any
amendment thereof, or any related preliminary prospectus, preliminary
prospectus supplement or 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 and the Selling Stockholders by or
on behalf of any Underwriter expressly for use therein, provided,
however, that in no case, shall any
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24
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.
(d) Promptly after receipt by an indemnified party under
Subsection (a), (b) or (c) 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 the indemnifying party from any liability which
it may have under this Section 9, except to the extent that the
indemnifying party has been prejudiced in any material respect by such
failure or from any liability that it may have otherwise). 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.
10. Contribution. To the extent the indemnification provided for
in Section 9 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, the Selling Stockholders 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 or the Selling Stockholders, as
the case may be, any contribution received by the Company or the Selling
Stockholders, as the case may be, 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 Securities
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25
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 Selling Stockholders 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 Selling Stockholders on
the one hand and the Underwriters on the other hand from the offering of the
Shares 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 9 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, the Selling Stockholders 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
Selling Stockholders on the one hand and the Underwriters on the other hand
shall be deemed to be in the same proportion as (x) the total proceeds from the
offering of the Shares (net of underwriting discounts and commissions but before
deducting expenses) received by the Company and Selling Stockholders 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. As between the Company and each Selling Stockholder, the relative
benefits received by the Company on the one hand and such Selling Stockholder on
the other shall be deemed to be in the same proportion as the total proceeds
from the sale of the Shares (net of underwriting discounts but before deducting
expenses) received by the Company, bears to the total proceeds from the sale of
Shares (net of underwriting discounts but before deducting expenses) received by
such Selling Stockholder pursuant to this agreement. The relative fault of the
Company, the Selling Stockholders and 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, the Selling Stockholders or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company,
the Selling Stockholders and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 10 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 10, (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, (ii) in no case shall any Selling
Stockholder be liable or responsible for any amount in excess of the proceeds
(net of underwriting discounts but before expenses) received by such Selling
Stockholder for its Shares and (iii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Notwithstanding the provisions of this Section 10
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 Shares
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. Notwithstanding the provisions of this Section 10, no
Selling Stockholder shall be required to contribute under this Section 10 except
to the extent and under such
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circumstances as such Selling Stockholder would have been liable pursuant to
Section 9(b) hereof had indemnification been available. For purposes of this
Section 10, each person, if any, who controls an Underwriter within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange Act shall
have the same rights to contribution as such Underwriter, each person, if any,
who controls a Selling Stockholder within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as such Selling Stockholder, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities 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 10. 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 10 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.
11. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Shares or Additional Shares hereunder,
and if the Firm Shares or Additional Shares with respect to which such
default relates do not (after giving effect to arrangements, if any,
made by the Underwriters pursuant to Subsection (b) below) exceed in the
aggregate 10% of the number of Firm Shares or Additional Shares, the
Firm Shares or Additional Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase shall be purchased
by the non-defaulting Underwriters in proportion to the respective
proportions which the numbers of Firm Shares set forth opposite their
respective names in Schedule I hereto bear to the aggregate number of
Firm Shares set forth opposite the names of the non-defaulting
Underwriters.
(b) In the event that such default relates to more than 10% of
the Firm Shares or Additional Shares, as the case may be, the
Underwriters may in their discretion arrange for themselves or for
another party or parties (including any non-defaulting Underwriter or
Underwriters who so agree) to purchase such Firm Shares or Additional
Shares, as the case may be, to which such default relates on the terms
contained herein. In the event that within 5 calendar days after such a
default the Underwriters do not arrange for the purchase of the Firm
Shares or Additional Shares, as the case may be, to which such default
relates as provided in this Section 11, this Agreement, or in the case
of a default with respect to the Additional Shares, the obligations of
the Underwriters to purchase and of the Company to sell the Additional
Shares, shall thereupon terminate, without liability on the part of the
Company or the Selling Stockholders with respect thereto (except in each
case as provided in Section 7, 9(a) and 10 hereof) or the Underwriters,
but nothing in this Agreement shall relieve a defaulting Underwriter or
Underwriters of its or their
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27
liability, if any, to the other Underwriters, the Company, or the
Selling Stockholders for damages occasioned by its or their default
hereunder.
(c) In the event that the Firm Shares or Additional Shares 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, the Underwriters, the Company and the Selling Stockholders
shall have the right to postpone the Closing Date or Additional Closing
Date, as the case may be, 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 11 with like
effect as if it had originally been a party to this Agreement with
respect to such Firm Shares or Additional Shares.
12. Survival of Representations and Agreements. All
representations and warranties, covenants and agreements of the Underwriters,
the Company and the Selling Stockholders contained in this Agreement, including
the agreements contained in Section 7, the indemnity agreements contained in
Section 9 and the contribution agreements contained in Section 10, 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 of the Company or by or on behalf of any Selling Stockholder or
controlling person thereof, and shall survive delivery of and payment for the
Shares to and by the Underwriters. The representations contained in Section 1
and the agreements contained in Sections 7, 9, 10, 13(d) and 14 hereof shall
survive the termination of this Agreement, including termination pursuant to
Section 11 or 13 hereof.
13. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon the execution and
delivery of a counterpart hereof by each of the parties hereto.
(b) The Underwriters shall have the right to terminate this
Agreement at any time prior to the Closing Date or the obligations of
the Underwriters to purchase the Additional Shares at any time prior to
the Additional Closing Date, as the case may be, if on or prior to such
date, (i) the Company or any Selling Stockholder shall have failed,
refused or been unable to perform in any material respect any agreement
on its part to be performed hereunder, (ii) any other condition to the
obligations of the Underwriters hereunder as provided in Section 8 is
not fulfilled when and as required in any material respect, (iii) in the
reasonable judgment of the Underwriters any Material Adverse Change
shall have occurred since the respective dates as of which information
is given in the Prospectus, other than as set forth in the Prospectus,
(iv) any downgrading shall have 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
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Rule 436(g)(2) under the Securities Act, or any 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, or (v)(A) any domestic or international event or act or
occurrence has materially disrupted, or in the opinion of the
Underwriters will in the immediate future materially disrupt, the market
for the Company's securities or for securities in general; or (B)
trading in securities generally on the New York Stock Exchange ("NYSE")
or quotations on the Nasdaq shall have been suspended or materially
limited, or minimum or maximum prices for trading shall have been
established, or maximum ranges for prices for securities shall have been
required, on such exchange, or by such exchange or other regulatory body
or governmental authority having jurisdiction; or (C) a banking
moratorium shall have been declared by federal or state authorities, or
a moratorium in foreign exchange trading by major international banks or
persons shall have been declared; or (D) there is an outbreak or
escalation of armed hostilities involving the United States on or after
the date hereof, or if there has been a declaration by the United States
of a national emergency or war, the effect of which shall be, in the
Underwriters' judgment, to make it inadvisable or impracticable to
proceed with the offering, sale and delivery of the Firm Shares or the
Additional Shares, on the terms and in the manner contemplated by the
Prospectus; or (E) there shall have been such a material adverse change
in general economic, political or financial conditions or if the effect
of international conditions on the financial markets in the United
States shall be such as, in the Underwriters' judgment, makes it
inadvisable or impracticable to proceed with the offering, sale and
delivery of the Firm Shares or the Additional Shares, as the case may
be, on the terms and in the manner contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 13 shall
be by telephone, telex, telegraph or telephonic facsimile, confirmed in
writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (other than pursuant to Section 11(b) or 13(b)
hereof), or if the sale of the Shares 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 of any Selling Stockholders to
perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by the Underwriters, reimburse the
Underwriters for all out-of-pocket expenses (including the fees and
expenses of their counsel), incurred by the Underwriters in connection
herewith.
14. Underwriters' Information. The Company, the Underwriters and
each Selling Stockholder severally acknowledge that the statements set forth in
(i) the last paragraph of the outside front cover of the Prospectus concerning
the delivery of the shares of Common Stock to the Underwriters and the offering
of such shares by the Underwriters; (ii) the third paragraph under the caption
"Underwriting" in the Prospectus concerning the proposed public offering price,
discount and concession; and (iii) the tenth paragraph under the caption
"Underwriting" in the Prospectus concerning transactions that stabilize,
maintain, or otherwise affect the price of the Common Stock, constitute the only
information furnished in writing by or on behalf of any Underwriter expressly
for use in the Registration Statement, as originally filed
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or in any amendment thereof, any related Preliminary Prospectus or preliminary
prospectus supplement or the Prospectus or in any amendment thereof or
supplement thereto, as the case may be.
15. Notices. 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, telegraphed or telecopied
and confirmed in writing to such Underwriter, c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Finance Department,
telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇, with a copy, which shall not constitute notice,
to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇;
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇; and if sent to the
Company, shall be mailed, delivered or telexed, telegraphed or telecopied and
confirmed in writing to Covad Communications Group, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Executive Officer,
telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇, with a copy, which shall not constitute notice,
to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇; and if
sent to any of the Selling Stockholders shall be mailed, delivered, or telexed,
telegraphed or telecopied and confirmed in writing to such Selling Stockholder
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇.
16. Parties. This Agreement shall inure solely to the benefit of,
and shall be binding upon, the Underwriters, the Selling Stockholders and the
Company and the controlling persons, directors and officers referred to in
Section 9 and 10, 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 Shares from any of the Underwriters.
17. GOVERNING LAW; Construction. This Agreement shall be
construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed within such State, without
giving any effect to any provisions thereof relating to conflicts of law. TIME
IS OF THE ESSENCE IN THIS AGREEMENT.
18. Captions. The captions included in this Agreement are
included solely for convenience of reference and are not to be considered a part
of this Agreement.
19. Counterparts. This Agreement may be executed in various
counterparts which together shall constitute one and the same instrument.
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If the foregoing correctly sets forth the understanding among the
Underwriters, the Company and the Selling Stockholders, please so indicate in
the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement among us.
Very truly yours,
COVAD COMMUNICATIONS GROUP, INC.
By: ________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: President and Chief Executive Officer
Accepted as of the date first above written
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
DEUTSCHE BANK SECURITIES INC.
▇▇▇▇▇▇▇▇▇, LUFKIN & ▇▇▇▇▇▇▇▇ SECURITIES CORPORATION
▇▇▇▇▇▇▇, SACHS & CO.
▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, L.P.
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
SELLING STOCKHOLDERS
By: ________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇, Attorney-in-Fact
31
SCHEDULE I
Number of Shares to be
Name of Underwriters Purchased
-------------------- ---------
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Deutsche Bank Securities Inc.
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation
Credit Suisse First Boston Corporation
▇▇▇▇▇▇▇, Sachs & Co.
▇▇▇▇▇▇▇▇ Capital Partners L.P.
----------------------
Total 13,000,000
32
SCHEDULE II
Number of Firm Shares to
Name of Selling Stockholder be Sold
--------------------------- -------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 500,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. 300,000
▇▇▇▇▇▇▇ ▇▇▇▇ 300,000
▇▇▇▇▇ ▇▇▇▇▇▇ 300,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ 50,000
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 33,000
▇▇▇▇▇▇ ▇▇▇▇▇ 25,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ 25,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, III 20,000
▇▇▇▇ ▇▇▇▇▇▇ 17,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ 10,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ 10,000
▇▇▇▇▇ ▇▇▇▇▇▇▇ 5,000
------------------------
Total 1,595,000
33
Exhibit A
FORM OF OPINION OF ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
1. The Company has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the State of Delaware,
has the corporate power and authority to own its property and to conduct
its business as described in the Prospectus. The Company is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a Material Adverse Effect on the Company on a consolidated basis.
2. Each of the subsidiaries is a corporation duly incorporated
and validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation, has all requisite corporate power and
authority to carry on its business as it is currently being conducted
and as described in the Prospectus and to own, lease and operate its
properties. Each of the subsidiaries is duly qualified and in good
standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a Material Adverse Effect on the Company on a consolidated basis.
3. All of the outstanding shares of capital stock of the Company
have been, to such counsel's knowledge, duly authorized and validly
issued, are fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights contained in the Amended
and Restated Certificate of Incorporation, Bylaws of the Company or any
Reviewed Agreement (as defined). As of June 30, 1999, the authorized,
issued and outstanding capital stock of the Company is as set forth in
the Prospectus under the caption "Capitalization", under the column
entitled "Actual".
4. To such counsel's knowledge, there are not currently, and will
not be following the offering of the Shares, any outstanding
subscriptions, rights, warrants, calls, commitments of sale or options
to acquire, or instruments convertible into or exchangeable for, any
capital stock or other equity interest of the Company, except as
described in the Prospectus and except as contained in the Amended and
Restated Certificate of Incorporation, Bylaws of the Company or any
Reviewed Agreement.
5. The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby, including, without
limitation, the corporate power and authority to issue, sell and deliver
the Shares.
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6. This Agreement has been duly and validly authorized, executed
and delivered by the Company.
7. The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will
not contravene any provision of (a) the Delaware General Corporation Law
or any federal statute, rule or regulation known to us to be applicable
to the Company (other than federal or state securities laws, which are
specifically addressed elsewhere herein, and other than as are
specifically addressed in the opinion of ▇▇▇▇▇ ▇▇▇▇▇▇, General Counsel
of the Company, separately delivered to you pursuant to Section 8(h) of
the Underwriting Agreement), (b) the Amended and Restated Certificate of
Incorporation or bylaws of the Company, (c) any Reviewed Agreement (as
defined) binding upon the Company that is material to the Company on a
consolidated basis or (d) to such counsel's knowledge, any order,
judgment, or decree of any governmental body, agency or court having
jurisdiction over the Company. No consent, approval, authorization or
order of or qualification with any governmental body or agency is
required for the performance by the Company of its obligations under
this Agreement, except such as has been obtained under the Securities
Act and as may be required by the securities or "blue sky" laws of the
various states in connection with the offer and sale of the Shares as
contemplated by the Prospectus.
8. The Company is not and, after giving effect to the offering of
the Shares and the application of the proceeds therefrom as described in
the Prospectus, will not be an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
9. The Registration Statement, Preliminary Prospectus and
Prospectus comply as to form in all material respects with the
requirements for registration statements on Form S-3 under the
Securities Act and the Securities Act Regulations; it being understood,
however, that such counsel need not express an opinion with respect to
the financial statements, schedules and other financial data included in
the Registration Statement, Preliminary Prospectus or Prospectus. To
such counsel's knowledge, there are no contracts, indentures, mortgages,
loan agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to therein, and,
to such counsel's knowledge, the descriptions thereof or references
thereto are correct in all material respects.
10. Except as set forth in this Agreement or waived or exercised
in connection with the Registration Statement, to such counsel's
knowledge, there are no holders of securities of the Company who, by
reason of the execution by the Company of this Agreement or the
consummation by the Company of the transactions contemplated hereby,
have the right to request or demand that the Company register securities
held by them under the Securities Act.
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11. To such counsel's knowledge, there is no legal or
governmental proceeding pending or threatened to which the Company or
any of its Subsidiaries is a party or to which any of the properties of
the Company or any of its Subsidiaries is subject other than proceedings
fairly summarized in all material respects in the Prospectus and
proceedings which such counsel believes are not likely to have a
Material Adverse Effect on the Company and its subsidiaries, taken as a
whole, or on the power or ability of the Company to perform its
obligations under this Agreement or to consummate the offering of the
Shares as contemplated by the Prospectus.
In rendering such opinion, such counsel may rely as to matters
involving the application of laws other than the laws of the United States,
California and any other 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 familiar with the applicable laws and
reasonably acceptable to Underwriters' Counsel; provided, that such opinion
shall expressly state that the Underwriters may rely on such opinion as if it
were addressed to them. In rendering such opinion, such counsel may rely as to
matters of fact, to the extent they deem proper, on certificates of responsible
officers of the Company and its subsidiaries and certificates or other written
statements of officers of departments of various jurisdictions having custody of
documents respecting the existence or good standing of the Company and its
subsidiaries, provided that such opinion shall state that such counsel believes
that such counsel and the Underwriters are justified in so relying upon any such
certificate. 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, the Underwriters and they are justified in relying thereon.
Such counsel has participated in conferences with officers and
other representatives of the Company, representatives of the independent
certified public accountants of the Company and the Underwriters and its
representatives at which the contents of the Registration Statement, Preliminary
Prospectus and the Prospectus and related matters were discussed and, although
such counsel is not passing upon and assumes no responsibility for, the
accuracy, completeness or fairness of the statements contained in the
Registration Statement, Preliminary Prospectus or the Prospectus (except as
indicated above), on the basis of the foregoing, no facts have come to such
counsel's attention which led such counsel to believe that the Registration
Statement, at the time it became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus, as of its date or the Closing Date, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (except as to financial statements
and schedules and other financial data, included therein).
36
Exhibit B
FORM OF OPINION OF ▇▇▇▇▇ ▇▇▇▇▇▇, GENERAL COUNSEL OF THE COMPANY
1. Neither the execution and delivery of this Agreement nor the
sale of the Shares contemplated hereby will violate (i) the
Communications Act of 1934 (the "Communications Act") as interpreted as
of this date, (ii) the Telecommunications Act of 1996 (the "Telecom Act
of 1996") as interpreted as of this date, (iii) any rules or regulations
of the Federal Communications Commission (the "FCC") applicable to the
Company as interpreted as of this date or (iv) any rules or regulations
of the California Public Utilities Commission, New York Public Service
Commission, Massachusetts Department of Public Utilities, Washington
Utilities and Transportation Commission, Illinois Commerce Commission,
the Oregon Public Utilities Commission or any other jurisdiction where
the Company has obtained CLEC regulatory approval (collectively, the
"State Telecommunications Agencies") as interpreted as of this date.
2. The Company (i) has made all reports and filings, and paid all
fees, required by the FCC and any of the State Telecommunications
Agencies and (ii) has all certificates, orders, permits, licenses,
authorizations, consents and approvals of and from, and has made all
filings and registrations with, the FCC and any of the State
Telecommunications Agencies necessary to own, lease, license and use its
properties and assets and to conduct its business as described in the
Prospectus; and, except as described in the Prospectus, there are no
pending or, to my knowledge, threatened proceedings before the FCC or
any State Telecommunications Agency relating to the revocation or
modification of any such certificates, orders, permits, licenses,
authorizations, consents or approvals which, if determined adversely,
would have a Material Adverse Effect.
3. No decree or order of the FCC or any State Telecommunications
Agency is outstanding against the Company and no litigation, proceeding,
inquiry or investigation has been commenced or, to such counsel's
knowledge, threatened, and no formal notice of violation or order to
show cause has been issued, against the Company before the FCC or any of
the State Telecommunications Agencies.
4. The statements in the Prospectus under the headings of "Risk
Factors--Charges for unbundled network elements are outside of our
control because they are proposed by traditional telephone companies and
are subject to costly regulatory approval processes", "Risk Factors--The
failure of traditional telephone companies to adequately provide
transmission facilities and provision telephone wires is likely to
impair our ability to install lines and adversely affect our growth
rate", "Risk Factors--We depend on the traditional telephone companies
for the quality and availability of the telephone wires that we use",
"Risk Factors--Our business will suffer if our interconnection
agreements are not renewed or if they are renewed or modified on
unfavorable terms", "Risk Factors--Our services are subject to
government regulation, and changes in current of future laws or
regulations could adversely affect our business", "Business--Industry
Background--Impact of Regulatory Developments" and "Business--Government
Regulation", to the extent such statements constitute summaries
37
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of the Telecommunications Act of 1996 or rules and regulations of the
FCC or any of the State Telecommunications Agencies, fairly and
accurately summarize the matters therein described.
5. Neither the execution and delivery of this Agreement nor the
sale of the Shares contemplated hereby will conflict with or result in a
violation of any of the Material Agreements (as defined), except for
such conflicts or violations which would not have a Material Adverse
Effect.
6. As of the date hereof, (A) the Company has obtained CLEC
regulatory approval in each of the following States: Arizona,
California, Colorado, Connecticut, Delaware, District of Columbia,
Florida, Georgia, Illinois, Indiana, Kansas, Maryland, Massachusetts,
Michigan, Minnesota, Missouri, Montana, New Hampshire, New Jersey, New
York, North Carolina, Ohio, Oregon, Pennsylvania, Texas, Utah, Virginia,
Washington, West Virginia and Wisconsin and no such regulatory approval
has been withdrawn, and no such regulatory approval is the subject of
any legal challenge (except as disclosed in the Prospectus) and (B) the
Company has not received any notice of rejection or denial, nor has it
withdrawn, any of its applications for CLEC approval in any of the 5
additional States where such applications, as of the date of the
Prospectus, are pending approval.
7. The Company has the consents, approvals, authorizations,
licenses, certificates, permits, or orders of the FCC or the State
Telecommunications Agencies, if any is required, for the sale of the
Shares as contemplated in the Prospectus, except where the failure to
obtain the consents, approvals, authorizations, licenses, certificates,
permits or orders would not have a Material Adverse Effect.
In rendering such opinion, such counsel may rely as to matters
involving the application of laws other than the laws of the United States,
California and any other jurisdictions in which he is 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 familiar with the applicable laws and
reasonably acceptable to Underwriters' Counsel; provided, that such opinion
shall expressly state that the Underwriters may rely on such opinion as if it
were addressed to them. In rendering such opinion, such counsel may rely as to
matters of fact, to the extent he deems proper, on certificates of responsible
officers of the Company and its subsidiaries and certificates or other written
statements of officers of departments of various jurisdictions having custody of
documents respecting the existence or good standing of the Company, and its
subsidiaries, provided that such opinion shall state that such counsel and the
Underwriters are justified in so relying upon any such certificate. 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, the
Underwriters and they are justified in relying thereon.
38
Exhibit C
FORM OF OPINION OF COUNSEL TO SELLING STOCKHOLDERS
1. The Underwriting Agreement has been duly authorized, executed
and delivered by or on behalf of, and is a valid and binding agreement
of, the Selling Stockholder, enforceable in accordance with its terms,
except as rights to indemnification thereunder may be limited by
applicable law and except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general
equitable principles.
2. The execution and delivery by the Selling Stockholder of, and
the performance by the Selling Stockholder of its obligations under, the
Underwriting Agreement and its Custody Agreement and its Power of
Attorney will not, contravene or conflict with, result in a breach of,
or constitute a default under, the charter or by-laws, partnership
agreement, trust agreement or other organizational documents, as the
case may be, of the Selling Stockholder, or, to the best of such
counsel's knowledge, violate or contravene any provision of applicable
law or regulation, or violate, result in a breach of or constitute a
default under the terms of any other agreement or instrument to which
the Selling Stockholder is a party or by which it is bound, or any
judgment, order or decree applicable to the Selling Stockholder of any
court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Selling Stockholder.
3. The Selling Stockholder has good and valid title to all of the
Common Shares which may be sold by the Selling Stockholder under the
Underwriting Agreement and has the legal right and power, and all
authorizations and approvals required under its Declaration of Trust, as
amended, if any, to enter into the Underwriting Agreement and its
Custody Agreement and its Power of Attorney, to sell, transfer and
deliver all of the Common Shares which may be sold by the Selling
Stockholder under the Underwriting Agreement and to comply with its
other obligations under the Underwriting Agreement, its Custody
Agreement and its Power of Attorney.
4. Each of the Custody Agreement and Power of Attorney of the
Selling Stockholder has been duly authorized, executed and delivered by
the Selling Stockholder and is a valid and binding agreement of the
Selling Stockholder, enforceable in accordance with its terms, except as
rights to indemnification thereunder may be limited by applicable law
and except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
or affecting creditors' rights generally or by general equitable
principles.
5. Assuming that the Underwriters purchase the Common Shares
which are sold by the Selling Stockholder pursuant to the Underwriting
Agreement for value, in good faith and without notice of any adverse
claim, the delivery of such Common Shares pursuant to the Underwriting
Agreement will pass good and valid title to such Common Shares, free and
clear of any security interest, mortgage, pledge, lien encumbrance or
other claim.
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6. To the best of such counsel's knowledge, no consent, approval,
authorization or other order of, or registration or filing with, any
court or governmental authority or agency, is required for the
consummation by the Selling Stockholder of the transactions contemplated
in the Underwriting Agreement, except as required under the Securities
Act of 1933, applicable state securities or blue sky laws, and from the
NASD.
Very truly yours,
________________________________________
40
Exhibit D
Covad Communications Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
LOCK-UP AGREEMENT
___________, 1999
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Credit Suisse First Boston Corporation
Deutsche Bank Securities Inc.
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation
▇▇▇▇▇▇▇, Sachs & Co.
▇▇▇▇▇▇▇▇ Capital Partners, L.P.
as Representatives of the several Underwriters
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
In consideration of the agreement of the several Underwriters,
for which Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, Credit
Suisse First Boston Corporation, Deutsche Bank Securities Inc., ▇▇▇▇▇▇▇▇▇,
Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation, ▇▇▇▇▇▇▇, Sachs & Co. and ▇▇▇▇▇▇▇▇
Capital Partners, L.P. intend to act as Representatives, to underwrite a
proposed public offering (the "Offering") of shares of common stock (the "Common
Stock") of Covad Communications Group, Inc., a corporation organized under the
laws of the State of Delaware (the "Company"), as contemplated by a registration
statement filed with the Securities and Exchange Commission on Form S-3, the
undersigned hereby (a) agrees that the undersigned will not, directly or
indirectly, during a period of ninety (90) days from the date of the final
prospectus for the Offering (the "Lock-Up Period"), without the prior written
consent of Bear, ▇▇▇▇▇▇▇ & Co. Inc., issue, sell, offer or agree to sell, grant
any option for the sale of, pledge, make any short sale or maintain any short
position, establish or maintain a "put equivalent position" (within the meaning
of Rule 16-a-1(h) under the Securities Exchange Act of 1934, as amended), enter
into any swap, derivative transaction or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock (whether any such transaction is to be settled by delivery of
Common Stock, other securities, cash or other consideration) or otherwise
dispose of, any Common Stock (or any securities convertible into, exercisable
for or exchangeable for Common Stock) or interest therein of the Company or of
any of its subsidiaries, and (b) authorizes the Company during the Lock-Up
Period to cause the transfer agent to decline to transfer and/or to note stop
transfer restrictions on the transfer books and records of the Company with
respect to any shares of Common Stock and any securities convertible into
exercisable or exchangeable for Common Stock for which the
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undersigned is the record holder and, in the case of any such share or
securities for which the undersigned is the beneficial but not the record
holder, agrees to cause the record holder to cause the transfer agent to decline
to transfer and/or to note stop transfer restrictions on such books and records
with respect to such shares or securities; provided, however, that the
undersigned may make such a disposition: (i) as a bona fide gift or gifts,
provided that the donee or donees thereof agree in writing to be bound by the
terms of this Agreement; (ii) as a distribution to limited partners or
shareholders of the undersigned, provided that the distributees thereof agree in
writing to be bound by the terms of this Agreement; (iii) if the undersigned is
an individual, either during his or her lifetime or on death by will or
intestacy to his or her immediate family or to a trust the beneficiaries of
which are exclusively the undersigned and/or a member or members of his or her
immediate family, provided that prior to any such transfer each transferee
agrees in writing to be bound by the terms of this Agreement; or (iv) with the
prior written consent of the Representatives. For the purposes of this
paragraph, "immediate family" shall mean spouse, lineal descendant, father,
mother, brother or sister of the transferor.
The undersigned hereby represents and warrants that the
undersigned has full power and authority to enter into the agreements set forth
herein, and that, upon request, the undersigned will execute any additional
documents necessary in connection with enforcement hereof. Any obligations of
the undersigned shall be binding upon the successors and assigns of the
undersigned.
[signature page follows]
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The undersigned hereby executes this Agreement and agrees to its
terms as of the date first written above.
Very truly yours,
___________________________________
(Signature)
Please type:
(Name)
___________________________________
(Address)
___________________________________
(Social Security or
Taxpayer Identification No.)
Number of shares owned or subject to Certificate numbers:
warrants, options or convertibles
securities:
___________________________________ ___________________________________
___________________________________