Exhibit 10.1
EXECUTION COPY
TIME WARNER TELECOM
INC.
CLASS A COMMON
STOCK
UNDERWRITING
AGREEMENT
March 23, 2006
March 23, 2006
Deutsche Bank Securities
Inc.
Morgan Stanley & Co.
Incorporated
J.P. Morgan Securities
Inc.
Wachovia Capital Markets,
LLC
|
c/o
|
Deutsche Bank
Securities Inc.
|
60 Wall Street
New York, NY 10005
Ladies and Gentlemen:
Certain stockholders of the Time
Warner Telecom Inc., a Delaware corporation (the “
Company ”) named in Schedule III hereto (the “
Selling Stockholders ”) severally propose to sell to
Deutsche Bank Securities Inc. (“ Deutsche Bank
”), Morgan Stanley & Co. Incorporated (“
Morgan Stanley ”), Wachovia Capital Markets, LLC and
J.P. Morgan Securities Inc. (the “ Underwriters
”) an aggregate of 19,400,000 shares (the “ Firm
Shares ”) of the Class A Common Stock, par value
$.01 per share, of the Company (the “ Class A Common
Stock ”), each Selling Stockholder selling the amount set
forth opposite such Selling Stockholder’s name in Schedule
III hereto. The Selling Stockholders also propose to sell to the
several Underwriters not more than an additional aggregate of
2,910,000 shares of the Class A Common Stock (the “
Additional Shares ”) if and to the extent that
Deutsche Bank and Morgan Stanley shall have determined to exercise,
on behalf of the Underwriters, the right to purchase such
Additional Shares (or any portion thereof) granted in
Section 3 hereof. The Firm Shares and the Additional Shares
are hereinafter collectively referred to as the “
Shares .”
The Company has filed with the
Securities and Exchange Commission (the “ Commission
”) a registration statement, including a prospectus (the file
number of which is set forth in Schedule I hereto) on
Form S-3, relating to securities (the “ Shelf
Securities ”), including the Shares, for registration
under the Securities Act of 1933, as amended (the “
Securities Act ”), of such Shelf Securities and the
offering thereof from time to time in accordance with Rule 415. The
registration statement as amended to the date of this Agreement,
including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to
Rule 430A or Rule 430B under the Securities Act, is
hereinafter referred to as the “ Registration
Statement, ” and the related prospectus covering the
Shelf Securities dated March 17, 2006 in the form first used
to confirm sales of the Shares (or in the form first made available
to the Underwriters by the Company to meet requests of purchasers
pursuant to Rule 173 under the Securities Act) is hereinafter
referred to as the “ Basic Prospectus .” The
Basic Prospectus, as supplemented by the prospectus supplement
specifically relating to the Shares in the form first used to
confirm sales of the Shares (or in the form first made available to
the Underwriters by the Company to meet
requests of purchasers pursuant to Rule 173
under the Securities Act), is hereinafter referred to as the
“ Prospectus ,” and the term “
preliminary prospectus ” means the Basic Prospectus as
supplemented by the preliminary prospectus supplement dated
March 17, 2006. For purposes of this Agreement, “
free writing prospectus ” has the meaning set forth in
Rule 405 under the Securities Act and “ Time of Sale
Prospectus ” means the preliminary prospectus together
with the free writing prospectuses, if any, each identified in
Schedule I hereto. As used herein, the terms “Registration
Statement,” “Basic Prospectus,”
“preliminary prospectus,” “Time of Sale
Prospectus” and Prospectus shall include the documents, if
any, incorporated by reference therein. The terms “
supplement ,” “ amendment ,” and
“ amend ” as used herein with respect to the
Registration Statement, the Basic Prospectus, the Time of Sale
Prospectus, any preliminary prospectus or free writing prospectus
shall include all documents subsequently filed by the Company with
the Commission pursuant to the Securities Exchange Act of 1934, as
amended (the “ Exchange Act ”), that are deemed
to be incorporated by reference therein.
1. Representations and
Warranties . The Company represents and warrants to and agrees
with each of the Underwriters that:
(a) The Registration Statement has
become effective; no stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for such
purpose are pending before or, to the knowledge of the Company,
threatened by the Commission. If the Registration Statement is an
automatic shelf registration statement as defined in Rule 405 under
the Securities Act, the Company is a well-known seasoned issuer (as
defined in Rule 405 under the Securities Act) eligible to use the
Registration Statement as an automatic shelf registration statement
and the Company has not received notice that the Commission objects
to the use of the Registration Statement as an automatic shelf
registration statement.
(b) (i) Each document, if any, filed
or to be filed pursuant to the Exchange Act and incorporated by
reference in the Time of Sale Prospectus or the Prospectus complied
or will comply when so filed in all material respects with the
Exchange Act and the applicable rules and regulations of the
Commission thereunder, (ii) each part of the Registration
Statement, when such part became effective, did not contain, and
each such part, as amended or supplemented, if applicable, will not
contain any 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, (iii) the Registration
Statement as of the date hereof does not contain any 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, (iv) the Registration Statement and
the Prospectus comply, and as amended or supplemented, if
applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the
Commission thereunder, (v) the Time of Sale Prospectus does
not, and at the time of each sale of the Shares in connection with
the offering when the Prospectus is not yet
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available to prospective purchasers and at the
Closing Date (as defined in Section 5), the Time of Sale
Prospectus will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading, (vi) each broadly available road show,
if any, when considered together with the Time of Sale Prospectus,
does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading and (vii) the Prospectus does not contain and, as
amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except
that the representations and warranties set forth in this paragraph
do not apply to statements or omissions in the Registration
Statement, the Time of Sale Prospectus or the Prospectus based upon
information relating to any Underwriter furnished to the Company in
writing by such Underwriter expressly for use therein.
(c) The Company is not an
“ineligible issuer” in connection with the offering
pursuant to Rules 164, 405 and 433 under the Securities Act. Any
free writing prospectus that the Company is required to file
pursuant to Rule 433(d) under the Securities Act has been, or will
be, filed with the Commission in accordance with the requirements
of the Securities Act and the applicable rules and regulations of
the Commission thereunder. Each free writing prospectus that the
Company has filed, or is required to file, pursuant to Rule 433(d)
under the Securities Act or that was prepared by or behalf of or
used or referred to by the Company complies or will comply in all
material respects with the requirements of the Securities Act and
the applicable rules and regulations of the Commission thereunder.
Except for the free writing prospectuses, if any, identified in
Schedule I hereto, and electronic road shows, if any, each
furnished to the Underwriters before first use, the Company has not
prepared, used or referred to, and will not, without your prior
consent, prepare, use or refer to, any free writing
prospectus.
(d) 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 Time of Sale Prospectus and 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 and its subsidiaries, taken
as a whole. For the purposes of this Agreement, the term
“subsidiary” refers to all direct and indirect
subsidiaries of the Company.
(e) Each subsidiary of the Company
has been duly incorporated or, in the case of partnerships or
limited liability companies, duly organized, is validly existing as
a corporation, a partnership or a limited liability company, as the
case
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may be, in good standing under the laws of the
jurisdiction of its incorporation or organization, has the
corporate power or power as a partnership or limited liability
company, as applicable, and authority to own its property and to
conduct its business as described in the Time of Sale Prospectus
and 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 and its subsidiaries, taken as a whole; all of the issued
shares of capital stock of each subsidiary of the Company that is a
corporation have been duly and validly authorized and issued, are
fully paid and non-assessable and are owned directly or indirectly
by the Company, free and clear of any security interest, mortgage,
pledge, lien, encumbrance or claim (collectively, “
Liens ”) except for any Liens securing indebtedness of
the Company or its subsidiaries for borrowed money (including
pursuant to its credit agreement or indentures) or as described in
the Time of Sale Prospectus or Registration Statement, and all of
the partnership interests or limited liability company membership
interest in each of the Company’s subsidiaries that is a
partnership or a limited liability company, as the case may be, are
owned directly or indirectly by the Company, free and clear of all
Liens except for any Liens securing indebtedness of the Company or
its subsidiaries for borrowed money (including pursuant to its
credit agreement or indentures) or as described in the Time of Sale
Prospectus or Registration Statement.
(f) This Agreement has been duly
authorized, executed and delivered by the Company.
(g) The authorized capital stock of
the Company conforms as to legal matters in all material respects
to the description thereof contained in the Prospectus.
(h) The outstanding shares of
capital stock of the Company (including the Shares of Class B
Common Stock held by the Selling Stockholders) have been duly
authorized and are validly issued, fully paid and
non-assessable.
(i) The execution and delivery by
the Company of, and the performance by the Company of its
obligations under, this Agreement and the Shares and will not
contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or any of its subsidiaries
or any agreement or other instrument binding upon the Company or
any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole (including, without limitation, all
agreements and indentures listed as Exhibits to the Company’s
Annual Report on Form 10-K for its fiscal year ended
December 31, 2005), or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the
Company or any of its subsidiaries, and 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 and the Shares, except such as
have been
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obtained under the Securities Act and the
Exchange Act and as set forth in the Time of Sale Prospectus or
such 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.
(j) There has not occurred any
material adverse change, or any development involving a prospective
material adverse change, in the condition, financial or otherwise,
or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Time of
Sale Prospectus.
(k) There are no legal or
governmental proceedings pending or, to the knowledge of the
Company, 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 (i) other than proceedings
accurately described in all material respects in the Time of Sale
Prospectus and proceedings that would not 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 the Shares or to consummate the
transactions contemplated by the Prospectus or (ii) that are
required to be described in the Registration Statement or the
Prospectus and are not so described; and there are no statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not
described or filed as required.
(l) The Company is not, and after
giving effect to the offering and sale of the Shares and the
application of the proceeds thereof as described in the Prospectus
will not be, required to register as an “investment
company” as such term is defined in the Investment Company
Act of 1940, as amended.
(m) The Company and its subsidiaries
(i) are in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants (“
Environmental Laws ”), (ii) have received all
permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where
such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply
with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a
whole.
(n) There are no costs or
liabilities associated with Environmental Laws (including, without
limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental
Laws or any permit, license or approval, any related constraints on
operating activities and any potential liabilities to third
parties) which would, singly or in
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the aggregate, have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
(o) There are no contracts,
agreements or understandings between the Company and any person
granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
of the securities of the Company (except as otherwise disclosed in
the Registration Statement) or to require the Company to include
such securities with the Shares registered pursuant to the
Registration Statement.
(p) Subsequent to the date as of
which information is given in the Time of Sale Prospectus,
(i) the Company has not incurred any material liability or
obligation, direct or contingent, nor entered into any material
transaction, in each case, not in the ordinary course of business;
(ii) the Company has not purchased any of its outstanding
capital stock, nor declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock other than ordinary
and customary dividends; and (iii) there has not been any
material change in the capital stock, short-term debt or long-term
debt of the Company and its subsidiaries, taken as a whole, except
in each case as described in the Time of Sale Prospectus or the
Registration Statement.
(q) The Company and its subsidiaries
have good and marketable title in fee simple to all real property
and good and marketable title to all personal property owned by
them, free and clear of all Liens except for any Liens securing
indebtedness of the Company or its subsidiaries for borrowed money
(including pursuant to its credit agreement or indentures) or Liens
permitted under its credit agreement or indentures or for such as
are described in the Time of Sale Prospectus or the Registration
Statement or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be
made of such property by the Company and its subsidiaries; and any
real property and buildings held under lease by the Company and its
subsidiaries are held by it under valid, subsisting and enforceable
leases with such exceptions as do not interfere with the use made
and proposed to be made of such property and buildings by the
Company and its subsidiaries or such as do not, singly or in the
aggregate, have or could not result in a material adverse effect on
the Company and its subsidiaries, taken as a whole, except in each
case as described in or contemplated by the Time of Sale
Prospectus.
(r) Except as described in the Time
of Sale Prospectus, the Company and its subsidiaries own or
possess, or can acquire on reasonable terms, all patents, patent
rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks,
service marks and trade names, currently employed by them in
connection with the business now operated by them, except where the
failure to own or possess or to have the right to acquire any of
the foregoing, singly or in the aggregate, does not have a material
adverse effect on the Company and its subsidiaries, taken as a
whole, and neither the
6
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 which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(s) Except as described in the Time
of Sale Prospectus, no material labor dispute with the employees of
the Company exists or, to the knowledge of the Company, is
imminent, except for disputes that do not or would not have a
material adverse effect on the Company and its subsidiaries, taken
as a whole; and the Company is not aware, but without any
independent investigation or inquiry, of any existing, threatened
or imminent labor disturbance by the employees of any of its
principal suppliers, manufacturers or contractors that could have a
material adverse effect on the Company and its subsidiaries, taken
as a whole.
(t) The Company and its subsidiaries
are insured by insurers that the Company reasonably believes to be
of recognized financial responsibility against such losses and
risks and in such amounts as are customary in the businesses in
which it is engaged; and neither the Company nor any of its
subsidiaries has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have
a material adverse effect on the Company and its subsidiaries,
taken as a whole, except as described in or contemplated by the
Time of Sale Prospectus.
(u) (i) The Company and its
subsidiaries possess all permits, licenses, rights of way,
approvals, consents and other authorizations (collectively issued
by the appropriate federal, state or local regulatory agencies or
bodies, (including the Federal Communications Commission (the
“ FCC ”), the public utilities commission, or
any equivalent body, of each state in which the Company and its
subsidiaries do business and any other relevant state or local
governmental department, commission, board, bureau, agency, court
or other authority thereof (the “ Local Authorities
”)) required for the conduct of the telecommunications
business now operated by the Company and its subsidiaries
(collectively, the “ Governmental Licenses ”),
except where the failure to possess any such Governmental Licenses
would not, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the
failure so to comply would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken
as a whole; all of the Governmental Licenses are valid and in full
force, except where the invalidity of such Governmental Licenses or
the failure of such Governmental Licenses to be in full force and
effect would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a
whole; there is no outstanding adverse judgment, decree or order
that has been issued by the FCC or any of the Local Authorities
against the Company or any of its subsidiaries and which, singly or
in the aggregate, would
7
have a material adverse effect of the Company
and its subsidiaries, taken as a whole; and neither the Company nor
any of its subsidiaries has received any notice of or is not aware
of proceedings relating to the revocation or modification of any
such Governmental Licenses or, except as set forth in the Time of
Sale Prospectus, that would otherwise affect the operations of the
Company or its subsidiaries and which, singly or in the aggregate,
would have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(v) There is, and has been, no
failure on the part of the Company or its subsidiaries, or any of
their directors or officers, in their capacities as such, to comply
in all material respects with any provision of the Sarbanes Oxley
Act of 2002 and the rules and regulations promulgated in connection
therewith including, without limitation, Section 402 related
to loans and Sections 302 and 906 related to
certifications.
(w) The Company maintains a system
of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations in all
material respects, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset
accountability and (iii) access to assets is permitted only in
accordance with management’s general or specific
authorization in all material respects, and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect
to any differences.
(x) Ernst & Young LLP, who
reported on the annual consolidated financial statements of the
Company incorporated by reference in the Registration Statement and
the Prospectus, are independent accountants as required by the
Securities Act.
2. Representations and Warranties
of the Selling Stockholders . Each Selling Stockholder
represents and warrants to, solely as to itself and not as to any
other Selling Stockholder, and agrees with each of the Underwriters
and the Company that:
(a) This Agreement has been duly
authorized, executed and delivered by or on behalf of such Selling
Stockholder.
(b) The execution and delivery by
such Selling Stockholder of, and the performance by such Selling
Stockholder of its obligations under, this Agreement, will not
contravene any provision of applicable law, or the certificate of
incorporation or by-laws of such Selling Stockholder, or any
agreement or other instrument binding upon such Selling Stockholder
that is material to such Selling Stockholder or any judgment, order
or decree of any governmental body, agency or court having
jurisdiction over such Selling Stockholder, and no consent,
approval, authorization or order of, or qualification with, any
governmental body
8
or agency is required for the performance by
such Selling Stockholder of its obligations under this Agreement,
except such 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.
(c) Such Selling Stockholder has,
and on the Closing Date will have, valid title to, or a valid
“security entitlement” within the meaning of
Section 8-501 of the New York Uniform Commercial Code in
respect of, the Shares to be sold by such Selling Stockholder free
and clear of all security interests, claims, liens, equities or
other encumbrances and the legal right and power, and all
authorization and approval required by law, to enter into this
Agreement and to sell, transfer and deliver the Shares to be sold
by such Selling Stockholder or a security entitlement in respect of
such Shares.
(d) Upon payment for the Shares to
be sold by such Selling Stockholder pursuant to this Agreement,
delivery of such Shares, as directed by the Underwriters, to
Cede & Co. (“ Cede ”) or such other
nominee as may be designated by the Depository Trust Company
(“ DTC ”), registration of such Shares in the
name of Cede or such other nominee and the crediting of such Shares
on the books of DTC to securities accounts of the Underwriters
(assuming that neither DTC nor any such Underwriter has notice of
any adverse claim (within the meaning of Section 8-105 of the
New York Uniform Commercial Code (the “ UCC ”))
to such Shares), (A) DTC shall be a “protected
purchaser” of such Shares within the meaning of
Section 8-303 of the UCC, (B) under Section 8-501 of
the UCC, the Underwriters will acquire a valid security entitlement
in respect of such Shares and (C) no action based on any
“adverse claim”, within the meaning of
Section 8-102 of the UCC, to such Shares may be asserted
against the Underwriters with respect to such security entitlement;
for purposes of this representation, such Selling Stockholder may
assume that when such payment, delivery and crediting occur,
(x) such Shares will have been registered in the name of Cede
or another nominee designated by DTC, in each case on the
Company’s share registry in accordance with its certificate
of incorporation, bylaws and applicable law, (y) DTC will be
registered as a “clearing corporation” within the
meaning of Section 8-102 of the UCC and (z) appropriate
entries to the accounts of the several Underwriters on the records
of DTC will have been made pursuant to the UCC.
(e) (i) The Registration Statement,
when it became effective, did not contain, and, as amended or
supplemented, if applicable, will not, as of the Closing Date,
contain any 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, (ii) the Time of Sale
Prospectus and the Prospectus do not contain and, as amended or
supplemented, if applicable, will not contain, as of the Closing
Date, any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading, except that the representations and warranties set
forth in this paragraph are limited to statements or omissions
based
9
upon information relating to such Selling
Stockholder furnished to the Company in writing by such Selling
Stockholder expressly for use in the Registration Statement, the
Time of Sale Prospectus and the Prospectus or any amendments or
supplements thereto (such information, the “ Selling
Stockholder Information ”).
3. Agreements to Sell and
Purchase . Each Selling Stockholder, severally and not jointly,
hereby agrees to sell to the several Underwriters the number of
Firm Shares set forth opposite its name on Schedule III hereto and
each Underwriter, upon the basis of the representations and
warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase
from the Selling Stockholders the respective number of Firm Shares
set forth in Schedule II hereto opposite its name at a purchase
price of $13.99865 per share (the “ Purchase Price
”).
On the basis of the representations
and warranties contained in this Agreement, and subject to its
terms and conditions, each Selling Stockholder, severally and not
jointly, agrees to sell to the Underwriters the number of
Additional Shares set forth opposite its name on Schedule III
hereto, and the Underwriters shall have the right to purchase,
severally and not jointly, up to an aggregate of 2,910,000
Additional Shares. You may exercise these rights on behalf of the
Underwriters in whole or from time to time in part by giving
written notice of each election to exercise the option not later
than 30 days after the date of this Agreement. Any exercise
notice shall specify the number of Additional Shares to be
purchased by the Underwriters and the date on which such securities
are to be purchased. Each purchase date must be at least one
business day after the written notice is given and may not be
earlier than the Closing Date for the Firm Shares nor later than
ten business days after the date of such notice. On each day,
if any, that Additional Shares are to be purchased (each, an
“ Option Closing Date ”), each Underwriter
agrees, severally and not jointly, to purchase the number of
Additional Shares (subject to such adjustments to eliminate
fractional securities as you may determine) that bears the same
proportion to the total number of Additional Shares to be purchased
on such Option Closing Date as the number of Firm Shares set forth
in Schedule II hereto opposite the name of such Underwriter
bears to the total number of Firm Shares.
To the extent the Underwriters elect
to purchase less than the full number of Additional Shares, such
shares shall be sold pro rata, subject to rounding, based on the
ratio that the number of Additional Shares set forth opposite the
name of such Selling Stockholder bears to 2,910,000; provided,
however, that solely for the purposes of allocating the sale of
such Additional Shares as between American Television and
Communications Corporation (“ ATC ”) and TW/TAE,
Inc. (“ TW/TAE ” and, together with ATC, the
“ Time Warner Selling Stockholders ”), such
Additional Shares shall be sold first by ATC and, only after ATC
shall have sold all of its Additional Shares, then by
TW/TAE.
The Company and each Selling
Stockholder hereby agrees that, without the written consent of the
Underwriters listed on Schedule IV hereto on behalf of
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the Underwriters, it will not, during the period
ending 90 days after the date of the Prospectus,
(i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of
Class A Common Stock or any securities convertible into or
exercisable or exchangeable for Class A Common Stock,
(ii) file any registration statement with the Commission
relating to the offering of any shares of Class A Common Stock
or (iii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic
consequences of ownership of the Class A Common Stock, whether
any such transaction described in clause (i), (ii) or
(iii) above is to be settled by delivery of Class A
Common Stock or such other securities, in cash or
otherwise.
The foregoing sentence shall not
apply to (i) the Shares to be sold hereunder, (ii) the
issuance by the Company of shares of Class A Common Stock upon
the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and as described in the
Prospectus (or filing a registration statement with the Commission
related to the issuance or resale of such Class A Common
Stock), (iii) the issuance by the Company of any shares of
Class A Common Stock, options or other securities to or for
the benefit of employees of the Company on or after the date hereof
pursuant to the Company’s employee stock ownership plan or
equity incentive plans as described in the Time of Sale Prospectus
or the Registration Statement and the issuance by the Company of
shares of Class A Common Stock upon the exercise of any such
options (or filing a registration statement with the Commission
related to the issuance or resale of such Class A Common
Stock), (iv) direct or indirect transfers or disposals by any
of the Selling Stockholders of shares of the Company’s Common
Stock or any security convertible into or exercisable or
exchangeable for Common Stock of the Company, provided that each
transferee shall enter into a written agreement accepting the
restrictions set forth in the preceding paragraph and this
paragraph as if it were a Selling Stockholder, (v) the tender
by any of the Selling Stockholders of shares of the Company’s
common stock into a tender offer for all of the shares of the
Company’s common stock or the indirect transfer or disposal
of share of the Company’s common stock or any security
convertible into or exercisable or exchangeable for the
Company’s common stock as part of a business combination
transaction involving the Company, and (vi) transactions by
the Selling Stockholders relating to shares of common stock or
other securities acquired in open market transactions after the
completion of the Offering.
In addition, each Selling
Stockholder, agrees that, without the prior written consent of the
Underwriters listed on Schedule IV hereto on behalf of the
Underwriters, it will not, during the period ending 90 days after
the date of the Prospectus, make any demand for, or exercise any
right with respect to, the registration of any shares of
Class A Common Stock or any security convertible into or
exercisable or exchangeable for Class A Common Stock. Each
Selling Stockholder consents to the entry of stop transfer
instructions with the Company’s
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transfer agent and registrar against the
transfer of any Shares held by such Selling Stockholder except in
compliance with the foregoing restrictions.
4. Public Offering . The
Selling Stockholders and the Company are advised by the
Underwriters that the Underwriters propose to make a public
offering of their respective portions of the Shares as soon after
the Registration Statement and this Agreement have become effective
as in their judgment is advisable. The Selling Stockholders and the
Company are further advised by the Underwriters that the Shares are
to be offered to the public upon the terms set forth in the
Prospectus.
5. Payment and Delivery .
Payment for the Firm Shares shall be made to each Selling
Stockholder in Federal or other funds immediately available in New
York City against delivery of such Firm Shares for the respective
accounts of the several Underwriters on the date and time set forth
in Schedule I hereto, or at such other time on the same or
such other date, not later than the fifth business day thereafter,
as may be designated by you in writing. The time and date of such
payment are hereinafter referred to as the “ Closing
Date .”
Payment for any Additional Shares
shall be made to the Selling Stockholders in Federal or other funds
immediately available in New York City against delivery of such
Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date
specified in the corresponding notice described in Section 3
or at such other time on the same or on such other date, in any
event not later than May 8, 2006, as shall be designated in
writing by you. The time and date of such payment are hereinafter
referred to as the “ Option Closing Date
.”
The Firm Shares and Additional
Shares shall be registered in such names and in such denominations
as you shall request in writing not later than one full business
day prior to the Closing Date or the Option Closing Date, as the
case may be. The Firm Shares and Additional Shares shall be
delivered to you on the Closing Date or the Option Closing Date, as
the case may be, with any transfer taxes payable in connection with
the transfer of the Shares to you duly paid, against payment of the
Purchase Price therefor.
6. Conditions to the
Underwriters’ Obligations . The several obligations of
the Underwriters are subject to the following
conditions:
(a) Subsequent to the execution and
delivery of this Agreement and prior to the Closing Date
(i) there shall not have occurred
any downgrading, nor shall any notice have been given of any
intended or potential downgrading or of any review for a possible
change that does not indicate the direction of the possible change,
in the rating accorded the Company or any of the securities of the
Company or any of its subsidiaries or in the rating
outlook
12
for the Company by any
“nationally recognized statistical rating
organization,” as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred
any change, or any development involving a prospective change, in
the financial condition or in the earnings, business or operations
of the Company and its subsidiaries, taken as a whole, from that
set forth in the Time of Sale Prospectus that, in your judgment, is
material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner
contemplated in the Time of Sale Prospectus.
(b) The Underwriters shall have
received on the Closing Date a certificate, dated the Closing Date
and signed by an executive officer of the Company, to the effect
set forth in Section 6(a)(i) above and to the effect that the
representations and warranties of the Company contained in this
Agreement are true and correct in all material respects as of the
Closing Date and that the Company has complied in all material
respects with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or
before the Closing Date.
The officer signing and delivering
such certificate may rely upon the best of his or her knowledge as
to proceedings threatened.
(c) The Underwriters shall have
received on the Closing Date an opinion of Faegre & Benson
LLP, outside counsel for the Company, dated the Closing Date, to
the effect that:
(i) to such counsel’s
knowledge, (A) there are not any pending or threatened
governmental proceedings before any court or governmental agency or
authority or any arbitrator to which the Company is a party or to
which any of the properties of the Company is subject of a
character required to be disclosed in the Time of Sale Prospectus
which are not disclosed as required, and (B) there is no
contract, indenture, mortgage, loan agreement, note, lease or other
document of a character required to be described in the Time of
Sale Prospectus which is not described as required;
(ii) the outstanding shares of
capital stock of the Company (including the Shares to be sold by
the Selling Stockholders) have been duly authorized and are validly
issued and fully paid and non-assessable;
(iii) the Shares conform in all
material respects to the description thereof contained in the Time
of Sale Prospectus;
(iv) this Agreement has been duly
authorized, executed and delivered by the Company;
13
(v) the execution and delivery by
the Company of, and the performance by the Company of its
obligations under, this Agreement and the Shares will not
contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or, to the best of such
counsel’s knowledge, any agreement or other instrument
binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or,
to the best of such counsel’s knowledge, any judgment, order
or decree of any governmental body, agency or court having
jurisdiction over the Company or any subsidiary, and 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 and the Shares
except such 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 and as for such as may be required by the FCC or Local
Authorities, as to which such counsel expresses no
opinion;
(vi) the statements relating to
legal matters, documents or proceedings included in (A) the
Time of Sale Prospectus and the Prospectus under the captions
“Description of Capital Stock,” insofar as relevant to
the offering of the Shares, “Underwriters” (except
relating to price, stabilization, short positions and passive
market making activities, as to which such counsel need not express
an opinion) “Description of the Debt Securities,” and
“Description of Common Stock” and (B) the
Registration Statement in Item 15, in each case insofar as
such statements constitute summaries of the legal matters,
documents or proceedings referred to therein fairly summarize in
all material respects such matters, documents or
proceedings;
(vii) such counsel does not know of
any legal or governmental proceedings 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 that are required to be described in the Registration
Statement or the Prospectus and are not so described or of any
statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required, except for such
statutes, regulations, contracts or other documents relating to
telecommunications law, the FCC or Local Authorities, as to which
such counsel expresses no opinion;
(viii) the Company is not, and after
giving effect to the offering and sale of the Shares and the
application of the proceeds thereof as described in the Prospectus
will not be, required to register as an “investment
company” as such term is defined in the Investment Company
Act of 1940, as amended;
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(ix) (A) in the opinion of such
counsel (1) each document filed pursuant to the Exchange Act
and incorporated by reference in the Registration Statement and the
Prospectus (except for the financial statements and financial
schedules and other financial and statistical data included
therein, as to which such counsel need not express any opinion)
appeared on its face to be appropriately responsive as of its
filing date in all material respects to the requirements of the
Exchange Act and the applicable rules and
