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Exhibit 1.1
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7/16/98
CAMELOT MUSIC HOLDINGS, INC.
(a Delaware corporation)
__________ Shares of Common Stock
U.S. PURCHASE AGREEMENT
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Dated: August , 1998
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TABLE OF CONTENTS
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U.S. PURCHASE AGREEMENT...........................................................................................1
SECTION 1. REPRESENTATIONS AND WARRANTIES..............................................................4
(a) Representations and Warranties by the Company and CMI..................................................4
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS.....................................................4
(ii) INDEPENDENT ACCOUNTANTS.......................................................................5
(iii) FINANCIAL STATEMENTS..........................................................................5
(iv) NO MATERIAL ADVERSE CHANGE IN BUSINESS........................................................6
(v) GOOD STANDING OF THE COMPANY..................................................................6
(vi) GOOD STANDING OF SUBSIDIARIES.................................................................6
(vii) CAPITALIZATION................................................................................6
(viii) AUTHORIZATION OF AGREEMENTS...................................................................7
(ix) DESCRIPTION OF SECURITIES.....................................................................7
(x) ABSENCE OF DEFAULTS AND CONFLICTS.............................................................7
(xi) ABSENCE OF LABOR DISPUTES.....................................................................8
(xii) ABSENCE OF PROCEEDINGS........................................................................8
(xiii) ACCURACY OF EXHIBITS..........................................................................8
(xiv) POSSESSION OF INTELLECTUAL PROPERTY...........................................................8
(xv) ABSENCE OF FURTHER REQUIREMENTS...............................................................9
(xvi) POSSESSION OF LICENSES AND PERMITS............................................................9
(xvii) TITLE TO PROPERTY............................................................................10
(xviii) INVESTMENT COMPANY ACT.......................................................................10
(xix) ENVIRONMENTAL LAWS...........................................................................10
(xx) REGISTRATION RIGHTS..........................................................................11
(xxi) STABILIZATION OR MANIPULATION................................................................11
(xxii) ACCOUNTING CONTROLS..........................................................................11
(xxiii) TAX RETURNS..................................................................................11
(xxiv) YEAR 2000....................................................................................11
(b) Representations and Warranties by the Selling Shareholders............................................12
(i) ACCURATE DISCLOSURE..........................................................................12
(ii) AUTHORIZATION OF AGREEMENTS..................................................................12
(iii) GOOD AND MARKETABLE TITLE....................................................................12
(iv) DUE EXECUTION OF AGREEMENTS..................................................................13
(v) ABSENCE OF MANIPULATION......................................................................13
(vi) ABSENCE OF FURTHER REQUIREMENTS..............................................................13
(vii) RESTRICTION ON SALE OF SECURITIES............................................................14
(viii) CERTIFICATES SUITABLE FOR TRANSFER...........................................................14
(ix) NO ASSOCIATION WITH NASD.....................................................................14
(x) POWER AND AUTHORITY..........................................................................14
(c) Officer's Certificates................................................................................14
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(c) Officer's Certificates................................................................................14
SECTION 2. SALE AND DELIVERY TO U.S. UNDERWRITERS; CLOSING..............................................15
(a) Initial Securities....................................................................................15
(b) Option Securities.....................................................................................15
(c) Payment...............................................................................................15
(d) Denominations; Registration...........................................................................16
(e) Appointment of Qualified Independent Underwriter......................................................16
SECTION 3. COVENANTS OF THE COMPANY.....................................................................17
(a) Compliance with Securities Regulations and Commission Requests........................................17
(b) Filing of Amendments..................................................................................17
(c) Delivery of Registration Statements...................................................................17
(d) Delivery of Prospectuses..............................................................................18
(e) Continued Compliance with Securities Laws.............................................................18
(f) Blue Sky Qualifications...............................................................................18
(g) Rule 158..............................................................................................19
(h) Listing...............................................................................................19
(i) Restriction on Sale of Securities.....................................................................19
(j) Reporting Requirements................................................................................19
(k) Compliance with NASD Rules............................................................................19
SECTION 4. PAYMENT OF EXPENSES..........................................................................20
(a) Expenses..............................................................................................20
(b) Expenses of the Selling Shareholders..................................................................20
(c) Termination of Agreement..............................................................................21
(d) Allocation of Expenses................................................................................21
SECTION 5. CONDITIONS OF U.S. UNDERWRITERS' OBLIGATIONS.................................................21
(a) Effectiveness of Registration Statement...............................................................21
(b) Opinion of Counsel for Company........................................................................21
(c) Opinion of Counsel for the Selling Shareholders.......................................................22
(d) Opinion of Counsel for U.S. Underwriters..............................................................22
(e) Officers' Certificate.................................................................................22
(f) Certificate of Selling Shareholders...................................................................23
(g) Accountants' Comfort Letters..........................................................................23
(h) Bring-down Comfort Letters............................................................................23
(i) Approval of Listing...................................................................................23
(j) No Objection..........................................................................................23
(k) Lock-up Agreements....................................................................................23
(l) Purchase of Initial International Securities..........................................................23
(m) Other Agreements......................................................................................23
(n) Conditions to Purchase of U.S. Option Securities......................................................24
(o) Additional Documents..................................................................................25
(p) Termination of Agreement..............................................................................25
SECTION 6. INDEMNIFICATION..............................................................................25
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(a) Indemnification of U.S. Underwriters..................................................................25
(b) Indemnification of Company, Directors and Officers and Selling Shareholders...........................27
(c) Actions against Parties; Notification.................................................................28
(d) Settlement without Consent if Failure to Reimburse....................................................29
(e) Indemnification for Reserved Securities...............................................................29
(f) Other Agreements with Respect to Indemnification......................................................29
SECTION 7. CONTRIBUTION.................................................................................29
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY...............................31
SECTION 9. TERMINATION OF AGREEMENT.....................................................................31
(a) Termination; General..................................................................................31
(b) Liabilities...........................................................................................31
SECTION 10. DEFAULT BY ONE OR MORE OF THE U.S. UNDERWRITERS..............................................31
SECTION 11. DEFAULT BY ONE OR MORE OF THE SELLING SHAREHOLDERS...........................................32
SECTION 12. NOTICES......................................................................................33
SECTION 13. PARTIES......................................................................................33
SECTION 14. GOVERNING LAW AND TIME.......................................................................33
SECTION 15. EFFECT OF HEADINGS...........................................................................33
SCHEDULES
Schedule A List of Underwriters.......................................................Sch A-1
Schedule B List of Selling Shareholders...............................................Sch B-1
Schedule C Pricing Information........................................................Sch C-1
Schedule D List of Persons Subject to Lock-up.........................................Sch D-1
EXHIBITS
Exhibit A-1 Form of Opinion of ▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ LLP...............................A-1
Exhibit A-2 Form of Opinion of Obermayer ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Hippel..........................A-6
Exhibit B-1 Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇...................................B-1
Exhibit B-2 Form of Opinion for the Selling Shareholders...................................B-4
Exhibit C Form of Lock-Up Letter.........................................................C-1
Exhibit D-1 Form of Comfort Letter of Coopers & ▇▇▇▇▇▇▇ L.L.P..............................D-1
Exhibit D-2 Form of Comfort Letter of Deloitte & Touche LLP................................D-4
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CAMELOT MUSIC HOLDINGS, INC.
(a Delaware corporation)
__________ Shares of Common Stock
(Par Value $.01 Per Share)
U.S. PURCHASE AGREEMENT
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August , ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇▇▇ & Company Securities, Inc.
as U.S. Representatives of the several U.S. Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Camelot Music Holdings, Inc., a Delaware corporation (the "Company"),
Camelot Music, Inc., a Pennsylvania corporation ("CMI"), and the persons listed
in Schedule B hereto (the "Selling Shareholders"), confirm their respective
agreements with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other U.S. Underwriters named in
Schedule A hereto (collectively, the "U.S. Underwriters," which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and ▇▇▇▇▇▇▇▇
& Company Securities, Inc. are acting as representatives (in such capacity, the
"U.S. Representatives"), with respect to (i) the sale by the Selling
Shareholders, acting severally and not jointly, and the purchase by the U.S.
Underwriters, acting severally and not jointly, of the respective numbers of
shares of Common Stock, par value $.01 per share, of the Company ("Common
Stock") set forth in Schedules A and B hereto, and (ii) the grant by the Selling
Shareholders to the U.S.
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Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of __________ additional shares
of Common Stock to cover over-allotments, if any. The aforesaid __________
shares of Common Stock (the "Initial U.S. Securities") to be purchased by the
U.S. Underwriters and all or any part of the __________ shares of Common Stock
subject to the option described in Section 2(b) hereof (the "U.S. Option
Securities") are hereinafter called, collectively, the "U.S. Securities."
It is understood that the Company, CMI and the Selling Shareholders are
concurrently entering into an agreement dated the date hereof (the
"International Purchase Agreement") providing for the offering by the Selling
Shareholders of an aggregate of __________ shares of Common Stock (the "Initial
International Securities") through arrangements with certain underwriters
outside the United States and Canada (the "International Managers") for which
▇▇▇▇▇▇▇ ▇▇▇▇▇ International, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited and
▇▇▇▇▇▇▇▇ & Company Securities, Inc. are acting as lead managers (the "Lead
Managers") and the grant by the Selling Shareholders to the International
Managers, acting severally and not jointly, of an option to purchase all or any
part of the International Managers' pro rata portion of up to __________
additional shares of Common Stock solely to cover over-allotments, if any (the
"International Option Securities" and, together with the U.S. Option Securities,
the "Option Securities"). The Initial International Securities and the
International Option Securities are hereinafter called the "International
Securities." It is understood that the Selling Shareholders are not obligated to
sell and the U.S. Underwriters are not obligated to purchase any Initial U.S.
Securities unless all of the Initial International Securities are
contemporaneously purchased by the International Managers.
The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters," the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities," and the U.S. Securities and the International Securities
are hereinafter collectively called the "Securities."
The Underwriters will concurrently enter into an Intersyndicate
Agreement of even date herewith (the "Intersyndicate Agreement") providing for
the coordination of certain transactions among the Underwriters under the
direction of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated (in such capacity, the "Global Coordinator").
The Company and the Selling Shareholders understand that the U.S.
Underwriters propose to make a public offering of the U.S. Securities as soon as
the U.S. Representatives deem advisable after this Agreement has been executed
and delivered.
The Company, the Selling Shareholders and the U.S. Underwriters agree
that up to _______ shares of the Initial U.S. Securities to be purchased by the
U.S. Underwriters (the "Reserved Securities") shall be reserved for sale by the
U.S. Underwriters to certain eligible employees and other persons, as part of
the distribution of the Securities by the U.S. Underwriters, subject to the
terms of this Agreement, the applicable rules, regulations and
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interpretations of the National Association of Securities Dealers, Inc. and all
other applicable laws, rules and regulations. To the extent that such Reserved
Securities are not orally confirmed for purchase by such eligible employees and
other persons by the end of the first business day after the date of this
Agreement, such Reserved Securities may be offered to the public as part of the
public offering contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-56811) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). Two
forms of prospectus are to be used in connection with the offering and sale of
the Securities: one relating to the U.S. Securities (the "Form of U.S.
Prospectus") and one relating to the International Securities (the "Form of
International Prospectus"). The Form of U.S. Prospectus is identical to the Form
of International Prospectus, except for the front cover pages, the back cover
pages and the information under the caption "Underwriting." The information
included in any such prospectus or in any such Term Sheet, as the case may be,
that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each Form of U.S. Prospectus and Form of
International Prospectus used before such registration statement became
effective, and any prospectus that omitted, as applicable, the Rule 430A
Information or the Rule 434 Information, that was used after such effectiveness
and prior to the execution and delivery of this Agreement, is herein called a
"preliminary prospectus." Such registration statement, including the exhibits
thereto and schedules thereto at the time it became effective and including the
Rule 430A Information and the Rule 434 Information, as applicable, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final Form
of U.S. Prospectus and the final Form of International Prospectus in the forms
first furnished to the Underwriters for use in connection with the offering of
the Securities are herein called the "U.S. Prospectus" and the "International
Prospectus," respectively, and collectively, the "Prospectuses." If Rule 434 is
relied on, the terms "U.S. Prospectus" and "International Prospectus" shall
refer to the preliminary U.S. Prospectus dated July _____, 1998 and the
preliminary International Prospectus dated July ______, 1998, respectively, each
together with the applicable Term Sheet, and all references in this Agreement to
the date of such Prospectuses shall mean the date of the applicable Term Sheet.
For purposes of this Agreement,
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all references to the Registration Statement, any preliminary prospectus, the
U.S. Prospectus, the International Prospectus or any Term Sheet or any amendment
or supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("▇▇▇▇▇").
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) Representations and Warranties by the Company and CMI. The Company
and CMI, jointly and severally, represent and warrant to each U.S. Underwriter
as of the date hereof, as of the Closing Time referred to in Section 2(c)
hereof, and as of each Date of Delivery (if any) referred to in Section 2(b)
hereof, and agree with each U.S. Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and
any request on the part of the Commission for additional information
has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any U.S. Option
Securities are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments
and supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
the Prospectuses, any preliminary prospectuses and any supplement
thereto or prospectus wrapper prepared in connection therewith, at
their respective times of issuance and at the Closing Time, complied
and will comply in all material respects with any applicable laws or
regulations of foreign jurisdictions in which the Prospectuses and such
preliminary prospectuses, as amended or supplemented, if applicable,
are distributed in connection with the offer and sale of Reserved
Securities. Neither of the Prospectuses nor any amendments or
supplements thereto (including any prospectus wrapper), at the time the
Prospectuses or any amendments or supplements thereto were issued and
at the Closing Time (and, if any U.S. Option Securities are purchased,
at the Date of Delivery), included or will include an untrue statement
of a material fact or omitted or will omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Rule 434
is used, the Company will comply with the requirements of Rule 434 and
the Prospectuses shall not be "materially different," as such term is
used in Rule 434, from the prospectuses included in the Registration
Statement at the time it became effective. The
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representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or the
Prospectuses made in reliance upon and in conformity with information
furnished to the Company in writing by any Underwriter through the U.S.
Representatives or the Lead Managers expressly for use in the
Registration Statement or the Prospectuses.
Each preliminary prospectus and the prospectuses filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectuses
delivered to the Underwriters for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted
by Regulation S-T.
(ii) INDEPENDENT ACCOUNTANTS. the accountants who certified
the financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required
by the 1933 Act and the 1933 Act Regulations.
(iii) FINANCIAL STATEMENTS. The financial statements included
in the Registration Statement and the Prospectuses, together with the
related schedules and notes, present fairly the financial position of
the Company and its consolidated subsidiaries and of the Company's
predecessors and their consolidated subsidiaries at the dates indicated
and the statement of operations, stockholders' equity and cash flows of
the Company and its consolidated subsidiaries and of the Company's
predecessors and their consolidated subsidiaries for the periods
specified; said financial statements have been prepared in conformity
with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved (except as otherwise
noted therein). The financial statements included in the Registration
Statement and the Prospectuses, together with the related schedules and
notes, present fairly the financial position of The Wall Music, Inc. at
the dates indicated and the statement of operations, stockholders'
equity and cash flows of The Wall Music, Inc. for the periods
specified; said financial statements have been prepared in conformity
with GAAP applied on a consistent basis throughout the periods
involved. The supporting schedules included in the Registration
Statement present fairly in accordance with GAAP the information
required to be stated therein. The selected financial data and the
summary financial information included in the Prospectuses present
fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in
the Registration Statement. The pro forma financial statements and the
related notes thereto included in the Registration Statement and the
Prospectuses present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in
the preparation thereof are
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reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
(iv) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses, except as otherwise stated therein, (A)
there has been no material adverse change in the condition (financial
or otherwise), earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or
not arising in the ordinary course of business (a "Material Adverse
Effect"), (B) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the Company and
its subsidiaries considered as one enterprise, and (C) there has been
no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(v) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectuses and to enter into and perform
its obligations under this Agreement; and the Company is duly qualified
as foreign corporation to transact business and is in good standing in
each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect.
(vi) GOOD STANDING OF SUBSIDIARIES. Each subsidiary of the
Company (each a "Subsidiary" and, collectively, the "Subsidiaries") has
been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectuses and is
duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to
be in good standing would not result in a Material Adverse Effect;
except as otherwise disclosed in the Registration Statement, all of the
issued and outstanding capital stock of each such Subsidiary has been
duly authorized and validly issued, is fully paid and non-assessable
and is owned by the Company, directly or through subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity; none of the outstanding shares of capital stock of any
Subsidiary was issued in violation of the preemptive or similar rights
of any securityholder of such Subsidiary. The only subsidiaries of the
Company are the subsidiaries listed on Exhibit 21 to the Registration
Statement.
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(vii) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectuses under
the caption "Capitalization" (except for subsequent issuances, if any,
pursuant to reservations, agreements or employee benefit plans referred
to in the Prospectuses or pursuant to the exercise of convertible
securities or options referred to in the Prospectuses). The shares of
issued and outstanding capital stock of the Company, including the
Securities to be purchased by the U.S. Underwriters and the
International Managers from the Selling Shareholders, have been duly
authorized and validly issued and are fully paid and non-assessable;
none of the outstanding shares of capital stock of the Company,
including the Securities to be purchased by the U.S. Underwriters from
the Selling Shareholders, was issued in violation of the preemptive or
other similar rights of any securityholder of the Company.
(viii) AUTHORIZATION OF AGREEMENTS. This Agreement and the
International Purchase Agreement have been duly authorized, executed
and delivered by the Company and CMI. The Merger Agreement, dated as of
June 3, 1998, between the Company and Spec's Music, Inc. (the "Merger
Agreement") has been authorized, executed and delivered by the Company
and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject,
as to enforceability, to bankruptcy, insolvency, moratorium, stay and
other laws affecting creditors rights generally and to general
principles of equity. The First Amendment and Waiver dated as of June
12, 1998 to the New Working Capital Facility, dated as of January 27,
1998, among CMI, as Borrower, The Lenders Party thereto and The Chase
Manhattan Bank, as Agent (the "Credit Facility Amendment"), has been
authorized, executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency, moratorium, stay and other laws affecting
creditors rights generally and to general principles of equity.
(ix) DESCRIPTION OF SECURITIES. The Common Stock conforms to
all statements relating thereto contained in the Prospectuses and such
description conforms to the rights set forth in the instruments
defining the same; no holder of the Securities will be subject to
personal liability solely by reason of being such a holder; and the
issuance of the Securities is not subject to the preemptive or other
similar rights of any securityholder of the Company.
(x) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor
any of its subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement
or instrument to which the Company or any of its subsidiaries is a
party or by which it or any of them may be bound, or to which any of
the property or assets of the Company or any subsidiary is subject
(collectively, "Agreements and Instruments") except for such defaults
that would not result in a Material Adverse Effect; and the
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execution, delivery and performance of this Agreement, the
International Purchase Agreement, the Merger Agreement and the Credit
Facility Amendment and the consummation of the transactions
contemplated in this Agreement, the International Purchase Agreement,
the Merger Agreement and the Credit Facility Amendment and in the
Registration Statement and compliance by the Company and CMI, as the
case may be, with their obligations under this Agreement, the
International Purchase Agreement, the Merger Agreement and the Credit
Facility Amendment have been duly authorized by all necessary corporate
action and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach
of, or default or Repayment Event (as defined below) under, or result
in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any subsidiary pursuant to,
the Agreements and Instruments, nor will such action result in any
violation of the provisions of the charter or by-laws of the Company or
any subsidiary or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
the Company or any subsidiary or any of their assets, properties or
operations. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or
a portion of such indebtedness by the Company or any subsidiary.
(xi) ABSENCE OF LABOR DISPUTES. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge
of the Company or CMI, is imminent, and neither the Company nor CMI is
aware of any existing or imminent labor disturbance by the employees of
any of its or any subsidiary's principal suppliers, vendors, customers
or contractors, which, in either case, may reasonably be expected to
result in a Material Adverse Effect.
(xii) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company or CMI, threatened, against or affecting
the Company or any subsidiary, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or, except as
disclosed in the Registration Statement, which might reasonably be
expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the
consummation of the transactions contemplated in this Agreement and the
International Purchase Agreement or the performance by the Company and
CMI of their obligations hereunder or thereunder; the aggregate of all
pending legal or governmental proceedings to which the Company or any
subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material
Adverse Effect.
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13
(xiii) ACCURACY OF EXHIBITS. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectuses or to be filed as exhibits thereto which
have not been so described and filed as required.
(xiv) POSSESSION OF INTELLECTUAL PROPERTY. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them, and neither the Company
nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others
with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(xv) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company or
CMI of their obligations hereunder, in connection with the offering,
issuance or sale of the Securities under this Agreement and the
International Purchase Agreement or the consummation of the
transactions contemplated by this Agreement, the International Purchase
Agreement, the Merger Agreement and the Credit Facility Amendment,
except (i) such as have been already obtained under the 1933 Act or the
1933 Act Regulations or as may be required under state securities or
blue sky laws, (ii) such as have been obtained under the Securities
Exchange Act of 1934 (the "1934 Act") or the rules and regulations of
the Commission under the 1934 Act and (iii) such as have been obtained
under the laws and regulations of jurisdictions outside the United
States in which the Reserved Securities are offered.
(xvi) POSSESSION OF LICENSES AND PERMITS. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them; except
for such Governmental Licenses the failure of which to obtain would
not, singly or in the aggregate, have a Material Adverse Effect; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full
force and effect would not have a Material Adverse
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Effect; and neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
(xvii) TITLE TO PROPERTY. The Company and its subsidiaries
have good and marketable title to all real property owned by the
Company and its subsidiaries and good title to all other properties
owned by them, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any
kind except such as (a) are described in the Prospectuses or (b) do
not, singly or in the aggregate, materially affect the value of such
property and do not interfere with the use made and proposed to be made
of such property by the Company or any of its subsidiaries; and all of
the leases and subleases material to the business of the Company and
its subsidiaries, considered as one enterprise, and under which the
Company or any of its subsidiaries holds properties described in the
Prospectuses, are in full force and effect, and neither the Company nor
any subsidiary has any notice of any claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any
subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or such subsidiary
to the continued possession of the leased or subleased premises under
any such lease or sublease, except for such claims as would not, singly
or in the aggregate, have a Material Adverse Effect.
(xviii) INVESTMENT COMPANY ACT. Neither the Company nor CMI is
or upon the issuance and sale of the Securities as herein contemplated
will be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment
Company Act of 1940, as amended (the "1940 Act").
(xix) ENVIRONMENTAL LAWS. Except as described in the
Registration Statement and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its subsidiaries is in violation of any federal, state,
local or foreign statute, law, rule, regulation, ordinance, code,
policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent, decree or judgment, relating to pollution or protection of
human health, the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum
or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company and its subsidiaries have all
permits, licenses, authorizations and approvals required under any
applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened administrative,
regulatory or judicial actions, suits, demands,
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demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against
the Company or any of its subsidiaries and (D) there are no events,
facts or circumstances that might reasonably be expected to form the
basis of any liability or obligation of the Company or any of its
subsidiaries, including, without limitation, any order, decree, plan or
agreement requiring clean-up or remediation, or any action, suit or
proceeding by any private party or governmental body or agency, against
or affecting the Company or any of its subsidiaries relating to any
Hazardous Materials or any Environmental Laws.
(xx) REGISTRATION RIGHTS. Except as described in the
Prospectus, there are no persons with registration rights or other
similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under the
1933 Act other than persons who have waived such rights.
(xxi) STABILIZATION OR MANIPULATION. Neither the Company, CMI
nor any of their officers, directors or controlling persons has taken,
directly or indirectly, any action designed to cause or to result in,
or that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale of the Securities.
(xxii) ACCOUNTING CONTROLS. The Company and its subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance
with management's general or specific authorization; (B) transactions
are recorded as necessary to permit preparation of financial statements
in conformity with GAAP and to maintain accountability for assets; (C)
access to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded accountability
for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(xxiii) TAX RETURNS. The Company and its subsidiaries have
filed all federal, state, local and foreign tax returns that are
required to have been filed by them pursuant to applicable foreign,
federal, state, local or other law or have duly requested extensions
thereof, except insofar as the failure to file such returns or request
such extensions would not reasonably be expected to result in a
Material Adverse Effect, and has paid all taxes due pursuant to such
returns or pursuant to any assessment received by the Company and its
Subsidiaries, except for such taxes or assessments, if any, as are
being contested in good faith and as to which adequate reserves have
been provided. The charges, accruals and reserves on the books of the
Company in respect of any income and corporation tax liability of the
Company and each subsidiary for any years not finally determined are
adequate to meet any assessments or re-assessments for additional
income tax for any years not finally determined, except to the extent
of any inadequacy that would not reasonably be expected to result in a
Material Adverse Effect.
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(xxiv) YEAR 2000. All disclosure regarding year 2000
compliance that is required to be described under the 1933 Act and 1933
Regulations (including disclosures required by Staff Legal Bulletin No.
5) has been included in the Prospectus. Neither the Company nor any of
its subsidiaries will incur significant operating expenses or costs to
ensure that its information systems will be year 2000 compliant, other
than as disclosed in the Prospectus.
(b) Representations and Warranties by the Selling Shareholders. Each
Selling Shareholder, severally and not jointly, represents and warrants to each
U.S. Underwriter as of the date hereof, as of the Closing Time, and, if the
Selling Shareholder is selling Option Securities on a Date of Delivery, as of
each such Date of Delivery, and agrees with each U.S. Underwriter, as follows:
(i) ACCURATE DISCLOSURE. The Selling Shareholder has reviewed
and is familiar with the Registration Statement and the Prospectuses
and neither of the Prospectuses nor any amendments or supplements
thereto (including any prospectus wrapper) includes any untrue
statement of a material fact with respect to such Selling Shareholder
or omits to state a material fact with respect to such Selling
Shareholder necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
such Selling Shareholder is not prompted to sell the Securities to be
sold by such Selling Shareholder hereunder by any information
concerning the Company or any subsidiary of the Company which is not
set forth in the Prospectuses.
(ii) AUTHORIZATION OF AGREEMENTS. Such Selling Shareholder has
the full right, power and authority to enter into this Agreement, the
International Purchase Agreement and the Power of Attorney and Custody
Agreement and to sell, transfer and deliver the Securities to be sold
by such Selling Shareholder hereunder. The execution and delivery of
this Agreement, the International Purchase Agreement and the Power of
Attorney and Custody Agreement and the sale and delivery of the
Securities to be sold by such Selling Shareholder and the consummation
of the transactions contemplated herein and compliance by such Selling
Shareholder with its obligations hereunder have been duly authorized by
such Selling Shareholder and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default under, or result in the creation
or imposition of any tax, lien, charge or encumbrance upon the
Securities to be sold by such Selling Shareholder or any property or
assets of such Selling Shareholder pursuant to any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, license, lease
or other agreement or instrument to which such Selling Shareholder is a
party or by which such Selling Shareholder may be bound, or to which
any of the property or assets of such Selling Shareholder is subject,
nor will such action result in any violation of the provisions of the
charter or by-laws or other organizational instrument of such Selling
Shareholder, if applicable, or any
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applicable treaty, law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over such Selling Shareholder
or any of its properties.
(iii) GOOD AND MARKETABLE TITLE. Such Selling Shareholder has
and will at the Closing Time and, if any Option Securities are
purchased, on the Date of Delivery have good and marketable title to
the Securities to be sold by such Selling Shareholder hereunder, free
and clear of any security interest, mortgage, pledge, lien, charge,
claim, equity or encumbrance of any kind, other than pursuant to this
Agreement and the International Purchase Agreement; and upon delivery
of such Securities and payment of the purchase price therefor as herein
contemplated, assuming each Underwriter has no notice of any adverse
claim, each of the Underwriters will receive good and marketable title
to the Securities purchased by it from such Selling Shareholder, free
and clear of any security interest, mortgage, pledge, lien, charge,
claim, equity or encumbrance of any kind.
(iv) DUE EXECUTION OF AGREEMENTS. Such Selling Shareholder has
duly executed and delivered, in the form heretofore furnished to the
U.S. Representatives, the Power of Attorney and Custody Agreement
(collectively, the "Power of Attorney and Custody Agreement") with the
attorneys-in-fact named therein (the "Attorney-in-Fact") and The Bank
of New York, as custodian (the "Custodian); the Custodian is authorized
by such Selling Shareholder to deliver the Securities to be sold by
such Selling Shareholder hereunder and to accept payment therefor; and
the Attorney-in-Fact is authorized to execute and deliver this
Agreement and the certificate referred to in Section 5(f) or that may
be required pursuant to Sections 5(n) and 5(o) on behalf of such
Selling Shareholder, to sell, assign and transfer to the U.S.
Underwriters the Securities to be sold by such Selling Shareholder
hereunder, to determine the purchase price to be paid by the U.S.
Underwriters to such Selling Shareholder, as provided in Section 2(a)
hereof, to authorize the delivery of the Securities to be sold by such
Selling Shareholder hereunder, to accept payment therefor, and
otherwise to act on behalf of such Selling Shareholder in connection
with this Agreement. This Agreement and the International Purchase
Agreement have been duly executed and delivered by or on behalf of such
Selling Shareholder.
(v) ABSENCE OF MANIPULATION. Such Selling Shareholder has not
taken, and will not take, directly or indirectly, any action which is
designed to or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of the Securities.
(vi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
consent, approval, authorization, order, registration, qualification or
decree of, any court or governmental
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authority or agency, domestic or foreign, is necessary or required for
the performance by each Selling Shareholder of its obligations
hereunder or in the International Purchase Agreement or the Power of
Attorney and Custody Agreement, or in connection with the sale and
delivery of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement and the International
Purchase Agreement except (i) such as may have previously been made or
obtained or as may be required under the 1933 Act or the 1933 Act
Regulations or under state securities laws and (ii) such as have been
obtained under the laws and regulations of jurisdictions outside the
United States in which the Reserved Securities are offered.
(vii) RESTRICTION ON SALE OF SECURITIES. During a period of
180 days from the date of the Prospectuses, such Selling Shareholder
will not, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (i)
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of,
directly or indirectly, any share of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or
file any registration statement under the 1933 Act with respect to any
of the foregoing or (ii) enter into any swap or any other agreement or
any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock,
whether any such swap or transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not
apply to the Securities to the extent they are sold hereunder.
(viii) CERTIFICATES SUITABLE FOR TRANSFER. Certificates for
all of the Securities to be sold by such Selling Shareholder pursuant
to this Agreement and the International Purchase Agreement, in suitable
form for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank with signatures
guaranteed, have been placed in custody with the Custodian with
irrevocable conditional instructions to deliver such Securities to the
U.S. Underwriters pursuant to this Agreement and to the International
Managers pursuant to the International Purchase Agreement.
(ix) NO ASSOCIATION WITH NASD. Neither such Selling
Shareholder nor any of his/her/its affiliates (within the meaning of
NASD Conduct Rule 2720(b)(1)(a)) directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common
control with, or is an associated person (within the meaning of Article
I, Section 1(q) of the By-laws of the National Association of
Securities Dealers, Inc.) of, any member firm of the National
Association of Securities Dealers, Inc., other than as described on an
appendix to the Power of Attorney and Custody Agreement to which such
Selling Shareholder is a party.
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(x) POWER AND AUTHORITY. If such Selling Shareholder is a
corporation, partnership or trust, such Selling Shareholder has been
duly organized or incorporated and is validly existing as a
corporation, partnership or limited partnership in good standing under
the laws of its jurisdiction of incorporation or organization, as
applicable.
(c) Officer's Certificates. Any certificate signed by any officer of
the Company, CMI or any of their respective subsidiaries delivered to the Global
Coordinator, the U.S. Representatives or to counsel for the U.S. Underwriters
shall be deemed a representation and warranty by the Company and CMI to each
U.S. Underwriter as to the matters covered thereby; and any certificate signed
by or on behalf of any Selling Shareholder as such and delivered to the U.S.
Representatives or to counsel for the U.S. Underwriters, pursuant to the terms
of this Agreement, shall be deemed a representation and warranty by such Selling
Shareholder to the U.S. Underwriters as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO U.S. UNDERWRITERS; CLOSING.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, each Selling Shareholder, severally and not jointly, agree to sell to
each U.S. Underwriter, severally and not jointly, and each U.S. Underwriter,
severally and not jointly, agrees to purchase from each Selling Shareholder, at
the price per share set forth in Schedule C, that proportion of the number of
Initial U.S. Securities set forth in Schedule B opposite the name of such
Selling Shareholder, as the case may be, which the number of Initial U.S.
Securities set forth in Schedule A opposite the name of such U.S. Underwriter,
plus any additional number of Initial U.S. Securities which such U.S.
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof, bears to the total number of Initial U.S. Securities,
subject, in each case, to such adjustments among the U.S. Underwriters as the
Global Coordinator in its sole discretion shall make to eliminate any sales or
purchases of fractional securities.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Selling Shareholders hereby grant an option to the U.S.
Underwriters, severally and not jointly, to purchase up to an additional
__________ shares of Common Stock, as set forth in Schedule B, at the price per
share set forth in Schedule C, less an amount per share equal to any dividends
or distributions declared by the Company and payable on the Initial U.S.
Securities but not payable on the U.S. Option Securities. The option hereby
granted will expire 30 days after the date hereof and may be exercised in whole
or in part from time to time on one or more occasions only for the purpose of
covering over-allotments which may be made in connection with the offering and
distribution of the Initial U.S. Securities upon notice by the Global
Coordinator to the Selling Shareholders setting forth the number of U.S. Option
Securities as to which the several U.S. Underwriters are then exercising the
option and the time and date of payment and delivery for such U.S. Option
Securities. Any such time and date of delivery for the U.S. Option Securities (a
"Date of Delivery") shall be determined by the Global Coordinator, but shall not
be
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later than seven full business days after the exercise of said option, nor in
any event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the U.S. Option Securities, each of the
U.S. Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of U.S. Option Securities then being purchased
which the number of Initial U.S. Securities set forth in Schedule A opposite the
name of such U.S. Underwriter bears to the total number of Initial U.S.
Securities, subject in each case to such adjustments as the Global Coordinator
in its discretion shall make to eliminate any sales or purchases of fractional
shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Fried,
Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
or at such other place as shall be agreed upon by the Global Coordinator and the
Company and the Selling Shareholders, at 9:00 A.M. (Eastern time) on the third
(fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given day)
business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Global Coordinator, the Company
and the Attorney-in-Fact on behalf of the Selling Shareholders (such time and
date of payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the U.S. Option Securities
are purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, such U.S. Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Company and the Attorney-in-Fact on behalf of the
Selling Shareholders, on each Date of Delivery as specified in the notice from
the Global Coordinator to the Company and the Attorney-in-Fact on behalf of the
Selling Shareholders.
Payment shall be made to the Selling Shareholders by wire transfer of
immediately available funds to bank accounts designated by the Custodian
pursuant to each Selling Shareholder's Power of Attorney and Custody Agreement,
against delivery to the U.S. Representatives for the respective accounts of the
U.S. Underwriters of certificates for the U.S. Securities to be purchased by
them. It is understood that each U.S. Underwriter has authorized the U.S.
Representatives, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Initial U.S. Securities and the U.S.
Option Securities, if any, which it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇,
individually and not as representative of the U.S. Underwriters, may (but shall
not be obligated to) make payment of the purchase price for the Initial U.S.
Securities or the U.S. Option Securities, if any, to be purchased by any U.S.
Underwriter whose funds have not been received by the Closing Time or the
relevant Date of Delivery, as the case may be, but such payment shall not
relieve such U.S. Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing
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Time or the relevant Date of Delivery, as the case may be. The certificates for
the Initial U.S. Securities and the U.S. Option Securities, if any, will be made
available for examination and packaging by the U.S. Representatives in The City
of New York not later than 10:00 A.M. (Eastern time) on the business day prior
to the Closing Time or the relevant Date of Delivery, as the case may be.
(e) Appointment of Qualified Independent Underwriter. The Company and
the Selling Shareholders hereby confirm their engagement of ▇▇▇▇▇▇▇▇ & Company
Securities, Inc. as, and ▇▇▇▇▇▇▇▇ & Company Securities, Inc. hereby confirms its
agreement with the Company and the Selling Shareholders to render services as, a
"qualified independent underwriter" within the meaning of Rule 2720 of the
Conduct Rules of the National Association of Securities Dealers, Inc. with
respect to the offering and sale of the Securities. ▇▇▇▇▇▇▇▇ & Company
Securities, Inc., solely in its capacity as qualified independent underwriter
and not otherwise, is referred to herein as the "Independent Underwriter."
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
U.S. Underwriter as follows:
(a) Compliance with Securities Regulations and Commission
Requests. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify
the Global Coordinator immediately, and confirm the notice in writing,
(i) when any post-effective amendment to the Registration Statement
shall become effective, or any supplement to the Prospectuses or any
amended Prospectuses shall have been filed, (ii) of the receipt of any
comments from the Commission, (iii) of any request by the Commission
for any amendment to the Registration Statement or any amendment or
supplement to the Prospectuses or for additional information, and (iv)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing
or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale
in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect
the filings necessary pursuant to Rule 424(b) and will take such steps
as it deems necessary to ascertain promptly whether the form of
prospectus transmitted for filing under Rule 424(b) was received for
filing by the Commission and, in the event that it was not, it will
promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order
is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) Filing of Amendments. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment to
the Registration Statement (including any filing under Rule 462(b)),
any Term Sheet or any amendment, supplement or revision to either the
prospectus included in the Registration Statement at the time it became
effective or to the Prospectuses, will furnish the Global Coordinator
with copies
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of any such documents a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file or use
any such document to which the Global Coordinator or counsel for the
U.S. Underwriters shall object.
(c) Delivery of Registration Statements. The Company has
furnished or will deliver to the U.S. Representatives and counsel for
the U.S. Underwriters, without charge, signed copies of the
Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates
of experts, and will also deliver to the U.S. Representatives, without
charge, a conformed copy of the Registration Statement as originally
filed and of each amendment thereto (without exhibits) for each of the
U.S. Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the U.S. Underwriters will be identical
to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to
each U.S. Underwriter, without charge, as many copies of each
preliminary prospectus as such U.S. Underwriter reasonably requested,
and the Company hereby consents to the use of such copies for purposes
permitted by the 1933 Act. The Company will furnish to each U.S.
Underwriter, without charge, during the period when the U.S. Prospectus
is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the U.S. Prospectus (as amended or supplemented) as
such U.S. Underwriter may reasonably request. The U.S. Prospectus and
any amendments or supplements thereto furnished to the U.S.
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the
extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company
will comply with the 1933 Act and the 1933 Act Regulations so as to
permit the completion of the distribution of the Securities as
contemplated in this Agreement, the International Purchase Agreement
and in the Prospectuses. If at any time when a prospectus is required
by the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result
of which it is necessary, in the opinion of counsel for the U.S.
Underwriters or for the Company, to amend the Registration Statement or
amend or supplement any Prospectus in order that the Prospectuses will
not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion
of such counsel, at any such time to amend the Registration Statement
or amend or supplement any Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Company
will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or
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23
supplement as may be necessary to correct such statement or omission or
to make the Registration Statement or the Prospectuses comply with such
requirements, and the Company will furnish to the U.S. Underwriters
such number of copies of such amendment or supplement as the U.S.
Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best
efforts, in cooperation with the U.S. Underwriters, to qualify the
Securities for offering and sale under the applicable securities laws
of such states and other jurisdictions (domestic or foreign) as the
Global Coordinator may designate and to maintain such qualifications in
effect for a period of not less than one year from the later of the
effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that neither the Company nor
any of the Selling Shareholders shall be obligated to file any general
consent to service of process or to qualify as a foreign corporation or
as a dealer in securities in any jurisdiction in which it is not so
qualified or to subject itself to taxation in respect of doing business
in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by the
laws of such jurisdiction to continue such qualification in effect for
a period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally
available to its securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(h) Listing. The Company will use its best efforts to effect
the quotation of the Common Stock (including the Securities) on the
Nasdaq National Market.
(i) Restriction on Sale of Securities. During a period of 180
days from the date of the Prospectuses, the Company will not, without
the prior written consent of the Global Coordinator, (i) directly or
indirectly, offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or
dispose of any share of Common Stock or any securities convertible into
or exercisable or exchangeable for Common Stock or file any
registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock,
whether any such swap or transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not
apply to (A) the Securities to be sold hereunder or under the
International Purchase Agreement, (B) any shares of Common Stock issued
by the Company upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof and referred to
in
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the Prospectuses, (C) any shares of Common Stock issued or options to
purchase Common Stock granted pursuant to existing employee benefit
plans of the Company referred to in the Prospectuses or (D) any shares
of Common Stock issued pursuant to any non-employee director stock plan
or dividend reinvestment plan, or to any registration statement under
the 1933 Act filed with respect to shares of Common Stock issued or to
be issued in any such transactions.
(j) Reporting Requirements. The Company, during the period
when the Prospectuses are required to be delivered under the 1933 Act
or the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by
the 1934 Act and the rules and regulations of the Commission
thereunder.
(k) Compliance with NASD Rules. The Company hereby agrees that
it will ensure that the Reserved Securities will be restricted as
required by the National Association of Securities Dealers, Inc. (the
"NASD") or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of this
Agreement. The Underwriters will notify the Company as to which persons
will need to be so restricted. At the request of the Underwriters, the
Company will direct the transfer agent to place a stop transfer
restriction upon such securities for such period of time. Should the
Company release, or seek to release, from such restrictions any of the
Reserved Securities, the Company agrees to reimburse the Underwriters
for any reasonable expenses (including, without limitation, legal
expenses) they incur in connection with such release.
SECTION 4. PAYMENT OF EXPENSES. (a) Expenses. The Company and CMI will
pay or cause to be paid all expenses incident to the performance of their
obligations under this Agreement, including (i) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the
preparation, printing and delivery to the Underwriters of this Agreement, any
Agreement among Underwriters and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Underwriters, including any stock or other transfer taxes
and any stamp or other duties payable upon the sale, issuance or delivery of the
Securities to the Underwriters and the transfer of the Securities between the
U.S. Underwriters and the International Managers, (iv) the fees and
disbursements of the Company's counsel, accountants and other advisors, (v) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheets and of the Prospectuses and any
amendments or supplements thereto, (vii) the preparation, printing and delivery
to the Underwriters of copies of the Blue Sky Survey and any
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supplement thereto, (viii) the fees and expenses of any transfer agent or
registrar for the Securities, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the NASD of the terms of the sale of the Securities, (x) the
fees and expenses incurred in connection with the quotation of the Securities on
the Nasdaq National Market, (xi) all costs and expenses of the Underwriters,
including the fees and disbursements of counsel for the Underwriters, in
connection with matters related to the Reserved Securities which are designated
by the Company for sale to employees and others having a business relationship
with the Company and (xii) the fees and expenses of the Independent Underwriter
incurred in its capacity as the "qualified independent underwriter" with respect
to the transactions contemplated hereby. In connection with any roadshow, the
Company and the Underwriters will each bear 50% of the cost of an airplane.
(b) Expenses of the Selling Shareholders. The Selling Shareholders,
jointly and severally, will pay all expenses incident to the performance of
their respective obligations under, and the consummation of the transactions
contemplated by this Agreement, including (i) any stamp duties, capital duties
and stock transfer taxes, if any, payable upon the sale of the Securities to the
Underwriters, and their transfer between the Underwriters pursuant to an
agreement between such Underwriters, and (ii) the fees and disbursements of
their respective counsel and accountants, provided that the Company shall pay
the reasonable fees and disbursements of one single counsel for the Selling
Shareholders.
(c) Termination of Agreement. If this Agreement is terminated by the
U.S. Representatives in accordance with the provisions of Section 5, Section
9(a)(i) or Section 11 hereof, the Company and CMI shall reimburse the U.S.
Underwriters for all of their out-of-pocket expenses, including the reasonable
fees and disbursements of counsel for the U.S. Underwriters; provided that these
expenses shall be reimbursed by (i) the Selling Shareholders if the Agreement is
terminated due to failure to comply with Sections 5(c) and 5(f) hereof and (ii)
the defaulting Selling Shareholder if this Agreement is terminated pursuant to
Section 11 hereof.
(d) Allocation of Expenses. The provisions of this Section shall not
affect any agreement that the Company, CMI and the Selling Shareholders may make
for the sharing of such costs and expenses.
SECTION 5. CONDITIONS OF U.S. UNDERWRITERS' OBLIGATIONS. The
obligations of the several U.S. Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Company, CMI and the
Selling Shareholders contained in Section 1 hereof or in certificates of any
officer of the Company or any subsidiary of the Company or on behalf of any
Selling Shareholder, to the performance by the Company and CMI of their
respective covenants and other obligations hereunder, and to the following
further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have
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been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the U.S. Underwriters. A
prospectus containing the Rule 430A Information shall have been filed
with the Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the
Company has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 424(b).
(b) Opinion of Counsel for Company. At Closing Time, the U.S.
Representatives shall have received the favorable opinions, dated as of
Closing Time, of ▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ L.L.P., counsel for the
Company, and Obermayer ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Hippel LLP, Pennsylvania
counsel for CMI, in form and substance satisfactory to counsel for the
U.S. Underwriters, together with signed or reproduced copies of such
letter for each of the other U.S. Underwriters, to the effect set forth
in Exhibits A-1 and A-2 hereto, respectively, and to such further
effect as counsel to the U.S. Underwriters may reasonably request.
(c) Opinion of Counsel for the Selling Shareholders. At
Closing Time, the U.S. Representatives shall have received the
favorable opinions, dated as of Closing Time, of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel for the Selling Shareholders and of other counsel for
the Selling Shareholders as counsel for the U.S. Underwriters may deem
necessary, in form and substance satisfactory to counsel for the U.S.
Underwriters, together with signed or reproduced copies of such letter
for each of the other U.S. Underwriters to the effect set forth in
Exhibit B-1 and B-2 hereto, respectively, and to such further effect as
counsel to the U.S. Underwriters may reasonably request.
(d) Opinion of Counsel for U.S. Underwriters. At Closing Time,
the U.S. Representatives shall have received the favorable opinion,
dated as of Closing Time, of Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
counsel for the U.S. Underwriters, together with signed or reproduced
copies of such letter for each of the other U.S. Underwriters with
respect to certain matters set forth in clauses (i), (ii), (iv), (v)
(solely as to preemptive or other similar rights arising by operation
of law or under the charter or by-laws of the Company), (vii), (ix),
(x), (xii) and (xiv) (solely as to the information in the Prospectuses
under "Description of Capital Stock") and the penultimate paragraph of
Exhibit A-1 hereto and with respect to the matters set forth in
opinions (1) and (2) of Exhibit B-1 hereto. In giving such opinion such
counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York and the
federal law of the United States and the General Corporation Law of the
State of Delaware, upon the opinions of counsel satisfactory to the
U.S. Representatives. Such counsel may also state that, insofar as such
opinion involves factual matters, they have
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relied, to the extent they deem proper, upon certificates of officers
of the Company and its subsidiaries and of the Selling Shareholders and
certificates of public officials.
(e) Officers' Certificate. At Closing Time, there shall not
have been, since the date hereof or since the respective dates as of
which information is given in the Prospectuses, any material adverse
change in the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, and the U.S. Representatives shall have received a
certificate of the Chief Executive Officer or President of each of the
Company and CMI and of the chief financial or chief accounting officer
of each of the Company and CMI, dated as of Closing Time, to the effect
that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and
correct with the same force and effect as though expressly made at and
as of Closing Time, (iii) the Company and CMI, as the case may be, has
complied with all agreements and satisfied all conditions on their part
to be performed or satisfied at or prior to Closing Time, and (iv) no
stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been
instituted or are pending or are contemplated by the Commission.
(f) Certificate of Selling Shareholders. At Closing Time, the
U.S. Representatives shall have received a certificate of the
Attorney-in-Fact on behalf of each Selling Shareholder, dated as of
Closing Time, to the effect that (i) the representations and warranties
of each Selling Shareholder contained in Section 1(b) hereof are true
and correct in all respects with the same force and effect as though
expressly made at and as of Closing Time and (ii) each Selling
Shareholder has complied with all agreements and all conditions on its
part to be performed under this Agreement at or prior to Closing Time.
(g) Accountants' Comfort Letters. At the time of the execution
of this Agreement, the U.S. Representatives shall have received from
Coopers & ▇▇▇▇▇▇▇ L.L.P. a letter in the form of Exhibit D-1 hereto and
from Deloitte & Touche, LLP a letter in the form of Exhibits D-2 hereto
dated such date, in form and substance satisfactory to the U.S.
Representatives, together with signed or reproduced copies of such
letter for each of the other U.S. Underwriters containing statements
and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the
Registration Statement and the Prospectuses.
(h) Bring-down Comfort Letters. At Closing Time, the U.S.
Representatives shall have received from Coopers & ▇▇▇▇▇▇▇ L.L.P. and
Deloitte & Touche LLP letters, dated as of Closing Time, to the effect
that they reaffirm the statements made in the letters furnished
pursuant to subsection (g) of this Section, except that the specified
date referred to shall be a date not more than three business days
prior to Closing Time.
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(i) Approval of Listing. At Closing Time, the Securities shall
have been approved for quotation on the Nasdaq National Market, subject
only to official notice of issuance.
(j) No Objection. The NASD shall have confirmed that it has
not raised any objection with respect to the fairness and
reasonableness of the underwriting terms and arrangements.
(k) Lock-up Agreements. At the date of this Agreement, the
U.S. Representatives shall have received an agreement substantially in
the form of Exhibit C hereto signed by the persons listed on Schedule D
hereto.
(l) Purchase of Initial International Securities.
Contemporaneously with the purchase by the U.S. Underwriters of the
Initial U.S. Securities under this Agreement, the International
Managers shall have purchased the Initial International Securities
under the International Purchase Agreement.
(m) Other Agreements. Prior to the Closing Time, (i) the U.S.
Representatives shall have received copies of a Custody Agreement and
Power of Attorney executed by each of the Selling Shareholders and (ii)
the Credit Facility Amendment shall remain in full force and effect.
(n) Conditions to Purchase of U.S. Option Securities. In the
event that the U.S. Underwriters exercise their option provided in
Section 2(b) hereof to purchase all or any portion of the U.S. Option
Securities, the representations and warranties of the Company, CMI and
the Selling Shareholders contained herein and the statements in any
certificates furnished by the Company or any subsidiary of the Company
and the Selling Shareholders hereunder shall be true and correct as of
each Date of Delivery and, at the relevant Date of Delivery, the U.S.
Representatives shall have received:
(i) OFFICERS' CERTIFICATE. A certificate, dated such
Date of Delivery, of the Chief Executive Officer or President
of each of the Company and CMI and of the chief financial or
chief accounting officer of each of the Company and CMI
confirming that the certificate delivered at the Closing Time
pursuant to Section 5(e) hereof remains true and correct as of
such Date of Delivery.
(ii) CERTIFICATE OF SELLING SHAREHOLDERS. A
certificate, dated such Date of Delivery, of an
Attorney-in-Fact on behalf of each Selling Shareholder
confirming that the certificate delivered at Closing Time
pursuant to Section 5(f) remains true and correct as of such
Date of Delivery.
(iii) OPINION OF COUNSEL FOR COMPANY. The favorable
opinions of ▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇, L.L.P., counsel for the
Company, and Obermayer
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Hippel LLP, Pennsylvania counsel for CMI, in
form and substance satisfactory to counsel for the U.S.
Underwriters, dated such Date of Delivery, relating to the
U.S. Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinions
required by Section 5(b) hereof.
(iv) OPINION OF COUNSEL FOR THE SELLING SHAREHOLDERS.
The favorable opinions of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel
for the Selling Shareholders, and of other counsel for the
Selling Shareholders as counsel for the U.S. Underwriters may
deem necessary, in form and substance satisfactory to counsel
for the Underwriters, dated such Date of Delivery, relating to
the U.S. Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion
required by Section 5(c) hereof.
(v) OPINION OF COUNSEL FOR U.S. UNDERWRITERS. The
favorable opinion of Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
counsel for the U.S. Underwriters, dated such Date of
Delivery, relating to the U.S. Option Securities to be
purchased on such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(d) hereof.
(vi) BRING-DOWN COMFORT LETTERS. Letters from Coopers
& ▇▇▇▇▇▇▇ L.L.P. and Deloitte & Touche LLP, in form and
substance satisfactory to the U.S. Representatives and dated
such Date of Delivery, substantially in the same form and
substance as the letter furnished to the U.S. Representatives
pursuant to Section 5(g) hereof, except that the "specified
date" in the letter furnished pursuant to this paragraph shall
be a date not more than five days prior to such Date of
Delivery.
(o) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the U.S. Underwriters shall have been furnished
with such documents and opinions as they may require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company
and the Selling Shareholders in connection with the issuance and sale
of the Securities as herein contemplated shall be satisfactory in form
and substance to the U.S. Representatives and counsel for the U.S.
Underwriters.
(p) Termination of Agreement. If any condition specified in
this Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of U.S. Option Securities, on a Date of Delivery which is
after the Closing Time, the obligations of the several U.S.
Underwriters to purchase the relevant Option Securities, may be
terminated by the U.S. Representatives
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by notice to the Company at any time at or prior to Closing Time or
such Date of Delivery, as the case may be, and such termination shall
be without liability of any party to any other party except as provided
in Section 4 and except that Sections 1, 6, 7 and 8 shall survive any
such termination and remain in full force and effect.
SECTION 6. INDEMNIFICATION.
(a)(1) Indemnification of U.S. Underwriters. (1) The Company and CMI,
jointly and severally, agree to indemnify and hold harmless each U.S.
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act to the
extent and in the manner set forth in clauses (i), (ii), (iii) and (iv) below
and in Section 6(a)(2). In addition, each Selling Shareholder, severally and not
jointly, agrees to indemnify and hold harmless each Underwriter and each person,
if any, who controls any U.S. Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act to the extent and in the manner set
forth in clauses (i), (iii) and (iv) below and in Section 6(a)(2):
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectuses (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of (A) the violation of
any applicable laws or regulations of foreign jurisdictions where
Reserved Securities have been offered and (B) any untrue statement or
alleged untrue statement of a material fact included in the supplement
or prospectus wrapper material distributed in connection with the
reservation and sale of the Reserved Securities to eligible employees
of the Company and other persons or the omission or alleged omission
therefrom of a material fact necessary to make the statements therein,
when considered in conjunction with the Prospectuses or preliminary
prospectuses, not misleading;
(iii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, or in
connection with any violation of the nature referred to in Section
6(a)(1)(ii)(A) hereof, provided that (subject
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31
to Section 6(d) below) any such settlement is effected with the written
consent of the Company and the Selling Shareholders; and
(iv) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇
▇▇▇▇▇), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission or in connection with any
violation of the nature referred to in Section 6(a)(1)(ii)(A) hereof,
to the extent that any such expense is not paid under (i), (ii), or
(iii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not (i) apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by any U.S. Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the U.S. Prospectus (or any amendment or supplement thereto) or
(ii) inure to the benefit of any U.S. Underwriter from whom the person asserting
any loss, liability, claim, damage or expense purchased Securities, or any
person controlling such U.S. Underwriter, if it shall be established that a copy
of the Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of such U.S. Underwriter to such person, if required by law to have been
so delivered, at or prior to the confirmation of the sale of such Securities to
such person in any case where the Company complied with its obligations under
Sections 3(a), 3(b) and 3(d), and if the Prospectus (as so amended or
supplemented) would have cured any defect giving rise to such loss, liability,
claim damage, or expense; PROVIDED, FURTHER, with respect to each Selling
Shareholder, the indemnification provision in this paragraph (1) shall be only
with respect to the information furnished in writing by or on behalf of such
Selling Shareholder expressly for use in the Registration Statement (or any
amendment thereto), including Rule 430A Information, if applicable, or any
preliminary prospectus or the Prospectuses (or any amendment or supplement
thereto) and each Selling Shareholder severally confirms, and each U.S.
Underwriter agrees, that the information (other than the percentage of shares
owned) pertaining to each Selling Shareholder under the caption "Principal and
Selling Stockholders" in the U.S. Prospectus constitutes the only information
furnished in writing by or on behalf of such Selling Shareholder expressly for
use in the Registration Statement and U.S. Prospectus; PROVIDED, FURTHER, that
the aggregate liability of any Selling Shareholder pursuant to this paragraph
(1) shall be limited to the net proceeds (after deducting the underwriting
discount but before deducting expenses) received by such Selling Shareholder
from the Securities purchased by the Underwriters from such Selling Shareholder
pursuant to this Agreement and the International Purchase Agreement.
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(2) In addition to and without limitation of the Company's, CMI's and
each Selling Shareholder's obligation to indemnify ▇▇▇▇▇▇▇▇ & Company
Securities, Inc. as an Underwriter, the Company, CMI and each Selling
Shareholder also, severally and not jointly, agree to indemnify and hold
harmless the Independent Underwriter and each person, if any, who controls the
Independent Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, as a result of the Independent
Underwriter's participation as a "qualified independent underwriter" within the
meaning of Rule 2720 of the Conduct Rules of the National Association of
Securities Dealers, Inc. in connection with the offering of the U.S. Securities;
PROVIDED, the aggregate liability of any Selling Shareholder pursuant to this
paragraph (2) shall be limited to the net proceeds (after deducting the
underwriting discount but before deducting expenses) received by such Selling
Shareholder from the Shares purchased by the Underwriters from such selling
Shareholder pursuant to this Agreement and the International Purchase Agreement.
(b) Indemnification of Company, Directors and Officers and Selling
Shareholders. Each U.S. Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, and
each Selling Shareholder and each person, if any, who controls any Selling
Shareholder within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a)(1) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any U.S. preliminary prospectus or the U.S.
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such U.S.
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement (or any amendment thereto) or such U.S. preliminary prospectus or the
U.S. Prospectus (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a)(1) above,
counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company and the Selling
Shareholders. An indemnifying party may participate at its own expense in the
defense of any such action; provided, however, that counsel to the indemnifying
party shall not (except with the consent of the indemnified party) also be
counsel to the indemnified party. In no event shall the
-28-
33
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances; provided, that, if indemnity is sought pursuant to
Section 6(a)(2), then, in addition to the fees and expenses of such counsel for
the indemnified parties, the indemnifying party shall be liable for the
reasonable fees and expenses of not more than one counsel (in addition to any
local counsel) separate from its own counsel and that of the other indemnified
parties for the Independent Underwriter in its capacity as a "qualified
independent underwriter" and all persons, if any, who control the Independent
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
1934 Act in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances if, in the reasonable judgment of the Independent Underwriter,
there may exist a conflict of interest between the Independent Underwriter and
the other indemnified parties. Any such separate counsel for the Independent
Underwriter and such control persons of the Independent Underwriter shall be
designated in writing by the Independent Underwriter. No indemnifying party
shall, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(1)(iii) effected without its written consent if (i) such settlement
is entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such indemnifying party shall have received notice
of the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(e) Indemnification for Reserved Securities. In connection with the
offer and sale of the Reserved Securities, the Company and CMI, jointly and
severally, agree, promptly upon a request in writing, to indemnify and hold
harmless the Underwriters from and against any and all losses, liabilities,
claims, damages and expenses incurred by them as a result of the failure of
eligible employees of the Company and its subsidiaries and other persons to pay
for and accept delivery of Reserved Securities which, by the end of the first
business day following the date of this Agreement, were subject to a properly
confirmed agreement to purchase.
-29-
34
(f) Other Agreements with Respect to Indemnification. The provisions of
this Section shall not affect any agreement among the Company, CMI and the
Selling Shareholders with respect to indemnification.
SECTION 7. CONTRIBUTION. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, CMI and
the Selling Shareholders on the one hand and the U.S. Underwriters on the other
hand from the offering of the U.S. Securities pursuant to this Agreement or (ii)
if the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company, CMI
and the Selling Shareholders on the one hand and of the U.S. Underwriters on the
other hand in connection with the statements or omissions, or in connection with
any violation of the nature referred to in Section 6(a)(1)(ii)(A) hereof, which
resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations.
The relative benefits received by the Company, CMI and the Selling
Shareholders on the one hand and the U.S. Underwriters on the other hand in
connection with the offering of the U.S. Securities pursuant to this Agreement
shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of the U.S. Securities pursuant to this Agreement
(before deducting expenses) received by the Company and the Selling Shareholders
and the total underwriting discount received by the U.S. Underwriters, in each
case as set forth on the cover of the U.S. Prospectus, or, if Rule 434 is used,
the corresponding location on the Term Sheet, bear to the aggregate initial
public offering price of the U.S. Securities as set forth on such cover.
The relative fault of the Company, CMI and the Selling Shareholders on
the one hand and the U.S. Underwriters on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company, CMI or the Selling
Shareholders or by the U.S. Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission or any violation of the nature referred to in Section
6(a)(1)(ii)(A) hereof.
The Company, CMI, the Selling Shareholders and the U.S. Underwriters
agree that ▇▇▇▇▇▇▇▇ & Company Securities, Inc. will not receive any additional
benefits hereunder for serving as the Independent Underwriter in connection with
the offering and sale of the Securities.
The Company, CMI, the Selling Shareholders and the U.S. Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation (even if the U.S. Underwriters
were treated as one entity for such purpose) or by
-30-
35
any other method of allocation which does not take account of the equitable
considerations referred to above in this Section 7. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 7 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no U.S. Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the U.S. Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such U.S. Underwriter has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls a
U.S. Underwriter within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company or any Selling Shareholder within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as
the Company or such Selling Shareholder, as the case may be. The U.S.
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial U.S. Securities set forth
opposite their respective names in Schedule A hereto and not joint.
The provisions of this Section shall not affect any agreement among the
Company, CMI and the Selling Shareholders with respect to contribution.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company, any of its subsidiaries
or the Selling Shareholders submitted pursuant hereto, shall remain operative
and in full force and effect, regardless of any investigation made by or on
behalf of any U.S. Underwriter or controlling person, or by or on behalf of the
Company or the Selling Shareholders, and shall survive delivery of the
Securities to the U.S. Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) Termination; General. The U.S. Representatives may terminate this
Agreement, by notice to the Company and the Attorney-in-Fact on behalf of the
Selling Shareholders, at any time at or prior to Closing Time (i) if there has
been, since the time of execution of this
-31-
36
Agreement or since the respective dates as of which information is given in the
U.S. Prospectus, any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Global Coordinator, impracticable to market the Securities or to enforce
contracts for the sale of the Securities, or (iii) if trading in any securities
of the Company has been suspended or materially limited by the Commission or the
New York Stock Exchange, or if trading generally on the American Stock Exchange
or the New York Stock Exchange or in the Nasdaq National Market has been
suspended or materially limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental authority, or
(iv) if a banking moratorium has been declared by either Federal or New York
authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE U.S. UNDERWRITERS. If one or
more of the U.S. Underwriters shall fail at Closing Time or a Date of Delivery
to purchase the U.S. Securities which it or they are obligated to purchase under
this Agreement (the "Defaulted Securities"), the Global Coordinator shall have
the right, within 24 hours thereafter, to make arrangements for one or more of
the non-defaulting U.S. Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the Global
Coordinator shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of U.S. Securities to be purchased on such date, each of
the non-defaulting U.S. Underwriters shall be obligated, severally and
not jointly, to purchase the full amount thereof in the proportions
that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting U.S. Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of U.S. Securities to be purchased on such date, this Agreement
or, with respect to any Date of Delivery which occurs after the Closing
Time, the obligation of the U.S. Underwriters to purchase and of the
Company to sell the Option Securities to be purchased and sold on
-32-
37
such Date of Delivery shall terminate without liability on the part of
any non-defaulting U.S. Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
U.S. Underwriters to purchase and the Company to sell the relevant U.S. Option
Securities, as the case may be, either (i) the U.S. Representatives or (ii) the
Company and the Attorney-in-Fact on behalf of the Selling Shareholders shall
have the right to postpone Closing Time or the relevant Date of Delivery, as the
case may be, for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectuses or in any other
documents or arrangements. As used herein, the term "U.S. Underwriter" includes
any person substituted for a U.S. Underwriter under this Section 10.
SECTION 11. DEFAULT BY ONE OR MORE OF THE SELLING SHAREHOLDERS. If a
Selling Shareholder shall fail at Closing Time or at a Date of Delivery to sell
and deliver the number of Securities which such Selling Shareholder is obligated
to sell hereunder, and the remaining Selling Shareholders do not exercise the
right hereby granted to increase, pro rata or otherwise, the number of
Securities to be sold by them hereunder to the total number to be sold by all
Selling Shareholders as set forth in Schedule B hereto, then the Underwriters
may, at the option of the U.S. Representatives, by notice from the U.S.
Representatives to the Company and the Attorney-in-Fact on behalf of the
non-defaulting Selling Shareholders, either (a) terminate this Agreement without
any liability or fault of any non-defaulting party except that the provisions of
Sections 1, 4, 6, 7 and 8 shall remain in full force and effect or (b) elect to
purchase the Securities which the non-defaulting Selling Shareholders have
agreed to sell hereunder. No action taken pursuant to this Section 11 shall
relieve any Selling Shareholder so defaulting from liability, if any, in respect
of such default.
In the event of a default by any Selling Shareholder as referred to in
this Section 11, the Global Coordinator, the Company and the non-defaulting
Selling Shareholders shall have the right to postpone Closing Time or Date of
Delivery for a period not exceeding seven days in order to effect any required
change in the Registration Statement or Prospectuses or in any other documents
or arrangements.
SECTION 12. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the U.S.
Underwriters shall be directed to the U.S. Representatives at North Tower, World
Financial Center, New York, New York 10281-1201, attention of ▇▇▇▇▇ ▇▇▇▇▇▇, with
a copy to Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇▇ ▇▇▇▇ Jacob; and notices to the
-33-
38
Company and CMI shall be directed to it at Camelot Music Holdings, Inc., ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention of ▇▇▇▇ ▇. ▇▇▇▇▇▇,
with a copy to ▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ L.L.P., 1400 ▇▇▇▇▇▇▇▇ Investment
Center, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇. Notices to the Selling Shareholders shall be directed to
___________________.
SECTION 13. PARTIES. This Agreement shall each inure to the benefit of
and be binding upon the U.S. Underwriters, the Company, CMI and the Selling
Shareholders and their respective successors. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the U.S. Underwriters, the Company, CMI and the Selling
Shareholders and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the U.S. Underwriters, the Company, CMI, the Selling
Shareholders and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any U.S. Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. EFFECT OF HEADINGS. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
-34-
39
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Attorney-in-Fact for
the Selling Shareholders a counterpart hereof, whereupon this instrument, along
with all counterparts, will become a binding agreement among the U.S.
Underwriters, the Company, CMI and the Selling Shareholders in accordance with
its terms.
Very truly yours,
CAMELOT MUSIC HOLDINGS, INC.
CAMELOT MUSIC, INC.
By:_____________________________________
Title:
THE SELLING SHAREHOLDERS NAMED IN
SCHEDULE B HEREOF
By:_____________________________________
Title:
As Attorney-in-Fact acting on behalf of
the Selling Shareholders named in
Schedule B hereto
-35-
40
CONFIRMED AND ACCEPTED, as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
▇▇▇▇▇▇▇▇ & COMPANY SECURITIES, INC.
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By _____________________
Authorized Signatory
For themselves and as U.S. Representatives of the other U.S. Underwriters named
in Schedule A hereto.
-36-
41
SCHEDULE A
Number of
Initial U.S.
Name of U.S. Underwriter Securities
------------------------ ----------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated..................................................
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated........................................
▇▇▇▇▇▇▇▇ & Company Securities, Inc....................................... _________
Total....................................................................
=========
Sch A-1
42
SCHEDULE B
Maximum Number
Number of Initial U.S. of U.S. Option
Securities to be Sold Securities to Be Sold
--------------------- ---------------------
[Selling Shareholders]
Total....................
Sch B - 1
43
SCHEDULE C
CAMELOT MUSIC HOLDINGS, INC.
__________ Shares of Common Stock
(Par Value $.01 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $__________.
2. The purchase price per share for the U.S. Securities to be paid by
the several U.S. Underwriters shall be $__________, being an amount equal to the
initial public offering price set forth above less $__________ per share;
provided that the purchase price per share for any U.S. Option Securities
purchased upon the exercise of the over-allotment option described in Section
2(b) shall be reduced by an amount per share equal to any dividends or
distributions declared by the Company and payable on the Initial U.S. Securities
but not payable on the U.S. Option Securities.
Sch C - 1
44
SCHEDULE D
▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇ Prime Rate Income Trust
Fernwood Associates, ▇.▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
Oaktree Capital Management, LLC
Daystar Partners LLC
First Union National Bank
Yale University
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ III
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. Quick
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. Chance
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Other Selling Shareholders
Sch D - 1
45
Exhibit A-1
FORM OF OPINION OF ▇▇▇▇▇▇, HALTER & ▇▇▇▇▇▇▇▇
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware.
(ii) The Company has corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectuses and to enter into and perform its
obligations under the U.S. Purchase Agreement, the International
Purchase Agreement, the Merger Agreement and the Credit Facility
Amendment.
(iii) The Company is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in
which it owns or leases real property, except where the failure so to
qualify or to be in good standing would not result in a Material
Adverse Effect.
(iv) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectuses under the caption
"Capitalization" (except for subsequent issuances, if any, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectuses or pursuant to the exercise of convertible securities or
options referred to in the Prospectuses); the shares of issued and
outstanding capital stock of the Company, including the Securities to
be purchased by the Underwriters from the Selling Shareholders, have
been duly authorized and validly issued and are fully paid and
non-assessable; and none of the outstanding shares of capital stock of
the Company was issued in violation of statutory preemptive rights,
preemptive rights under the Company's charter and by-laws or, to the
best of our knowledge, other similar contractual rights of any
securityholder of the Company by which the Company is bound.
(v) The sale of the Securities by the Selling Shareholders is
not subject to statutory preemptive rights, preemptive rights under the
Company's charter and by-laws or, to the best of our knowledge, other
similar contractual rights of any securityholder of the Company by
which the Company is bound. No holder of the Securities is or will be
subject to personal liability solely by reason of being such a holder.
(vi) Each Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectuses and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which it owns or leases real property, except where the
failure so to qualify or to be in good standing would not result in a
Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, all of the issued and outstanding capital stock
of each Subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable and, to the best of our knowledge, is
owned by the Company, directly
A-1
46
or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.
(vii) The U.S. Purchase Agreement and the International
Purchase Agreement have been duly authorized, executed and delivered by
the Company and CMI.
(viii) The Merger Agreement has been authorized, executed and
delivered by the Company. The Credit Facility Amendment has been
authorized, executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency, moratorium, stay and other laws affecting
creditors rights generally and to general principles of equity.
(ix) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act;
any required filing of the Prospectuses pursuant to Rule 424(b) has
been made in the manner and within the time period required by Rule
424(b); and, to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or
threatened by the Commission.
(x) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable, the Prospectuses and each amendment or
supplement to the Registration Statement and Prospectuses as of their
respective effective or issue dates (other than the financial
statements and supporting schedules included therein or omitted
therefrom, as to which we need express no opinion) complied as to form
in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations.
(xi) If Rule 434 has been relied upon, the Prospectuses were
not "materially different," as such term is used in Rule 434, from the
prospectuses included in the Registration Statement at the time it
became effective.
(xii) The form of certificate used to evidence the Common
Stock complies in all material respects with all applicable statutory
requirements and with any applicable requirements of the charter and
by-laws of the Company and the requirements of the Nasdaq National
Market.
(xiii) To the best of our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to
which the Company, CMI or any of their respective subsidiaries is a
party, or to which the property of the Company, CMI or any of their
respective subsidiaries is subject, before or brought by any federal or
state court or governmental agency or body, which is required to be
described in the Registration Statement pursuant to Item 103 of
Regulation S-K promulgated under the 1933 Act, which is not described
as required, or which might reasonably be expected to materially and
adversely affect the consummation of the transactions contemplated in
the U.S. Purchase Agreement, the International Purchase
A-2
47
Agreement, the Merger Agreement and the Credit Facility Amendment or
the performance by the Company or CMI of its obligations thereunder.
(xiv) The information in the Prospectuses under "Risk
Factors--Internal Revenue Service Claim," "Description of Capital
Stock," "Description of Certain Indebtedness," "Shares Eligible for
Future Sale," "Business--Properties," "Business--Legal Proceedings,"
and "Certain Federal Income Tax Considerations" and in the Registration
Statement under Item 14, to the extent that it constitutes matters of
law, summaries of legal matters, the Company's charter and by-laws or
legal proceedings, or legal conclusions, has been reviewed by us and is
correct in all material respects.
(xv) To the best of our knowledge, there are no statutes or
regulations that are required to be described in the Prospectuses that
are not described as required.
(xvi) All descriptions in the Registration Statement of
contracts and other documents to which the Company or its subsidiaries
are a party are accurate in all material respects; to the best of our
knowledge, there are no franchises, 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
or filed or incorporated by reference as exhibits thereto, and the
descriptions thereof or references thereto are correct in all material
respects.
(xvii) To the best of our knowledge, neither the Company nor
any subsidiary is in violation of its charter or by-laws and no default
by the Company or any subsidiary exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument that is described or referred to
in the Registration Statement or the Prospectuses or filed or
incorporated by reference as an exhibit to the Registration Statement.
(xviii) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any federal,
Ohio or Delaware court or governmental authority or agency (other than
under the 1933 Act and the 1933 Act Regulations, which have been
obtained, or as may be required under the securities or blue sky laws
of the various states, as to which we need express no opinion) is
necessary or required in connection with the due authorization,
execution and delivery of the U.S. Purchase Agreement, the
International Purchase Agreement, the Merger Agreement and the Credit
Facility Amendment or for the offering, issuance, sale or delivery of
the Securities.
(xix) The execution, delivery and performance of the U.S.
Purchase Agreement, the International Purchase Agreement, the Merger
Agreement and the Credit Facility Amendment and the consummation of the
transactions contemplated in the U.S. Purchase Agreement, the
International Purchase Agreement, the Merger Agreement and the Credit
Facility Amendment and in the Registration Statement and compliance by
the Company with its obligations under the U.S. Purchase Agreement, the
International Purchase Agreement, the Merger Agreement and the Credit
Facility Amendment do not and will not, whether with or without the
giving of notice or lapse of time or both, conflict with or constitute
a breach of, or default or Repayment Event (as defined in Section
1(a)(x) of the Purchase Agreements) under or result in the creation or
A-3
48
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any subsidiary pursuant to any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or any other agreement or instrument, to which the Company or any
subsidiary is a party or by which it or any of them may be bound or to
which any of the property or assets of the Company or any subsidiary is
subject and which is filed or incorporated by reference as an exhibit
to the Registration Statement [or included on Exhibit A to this
opinion], nor will such action result in any violation of the
provisions of the charter or by-laws of the Company or any subsidiary,
or any applicable federal, Ohio or Delaware law, statute, rule or
regulation or, to the best of our knowledge, any judgment, order, writ
or decree, of any federal or state government, government
instrumentality or court having jurisdiction over the Company or any
subsidiary or any of their respective properties, assets or operations.
(xx) To the best of our knowledge, except as disclosed in the
Registration Statement, there are no persons with registration rights
or other similar rights to have any securities registered pursuant to
the Registration Statement or otherwise registered by the Company under
the 1933 Act which have not otherwise been waived in connection
therewith.
(xxi) Neither Company nor CMI is, or upon the issuance and
sale of the Securities as contemplated by the U.S. Purchase Agreement
and the International Purchase Agreement will be an "investment
company," as such term is defined in the 1940 Act.
Nothing has come to our attention that would lead us to believe that
the Registration Statement or any amendment thereto, including the Rule 430A
Information and Rule 434 Information (if applicable) (except for financial
statements and schedules and other financial data included therein or omitted
therefrom, as to which we need make no statement), at the time such Registration
Statement or any such amendment 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
Prospectuses or any amendment or supplement thereto (except for financial
statements and schedules and other financial data included therein or omitted
therefrom, as to which we need make no statement), at the time the Prospectuses
were issued, at the time any such amended or supplemented prospectus was issued
or at the Closing Time, included or includes an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of the laws of Pennsylvania, upon the opinion of
Obermayer ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Hippel LLP, special counsel to CMI (which opinion
shall be dated and furnished to the Representatives at the Closing Time, shall
be satisfactory in form and substance to counsel for the Underwriters and shall
expressly state that ▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ LLP may rely on such opinion as
if it were addressed to them), provided that ▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ LLP shall
state in their opinion that they believe that they and the Underwriters are
justified in relying upon such opinion and (B) as to matters of fact (but not as
to legal conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. Such counsel may limit
such opinion to the federal laws of the United States and the laws of the States
of Delaware and Ohio. Such opinion shall not state that it is to be governed or
qualified by, or that it is otherwise subject to, any treatise, written policy
or other document relating to legal opinions, including, without limitation, the
Legal Opinion Accord of the ABA Section of Business Law (1991).
A-4
49
Exhibit A-2
FORM OF OPINION OF OBERMAYER ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & HIPPEL LLP
TO BE DELIVERED PURSUANT TO SECTION 5(b)
(i) Camelot Music, Inc. ("CMI") has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
Pennsylvania, has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectuses and to
enter into and perform its obligations under the U.S. Purchase Agreement and the
International Purchase Agreement and is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a material adverse effect on the
CMI's financial condition and results of operations.
(ii) All of the issued and outstanding shares of capital stock of CMI
have been duly authorized and validly issued and are fully paid and
non-assessable and, to the best of our knowledge, is owned by Camelot Music
Holdings, Inc., directly or indirectly, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity, and none of the
outstanding shares of capital stock of CMI was issued in violation of the
preemptive or similar rights of any securityholder of CMI.
(iii) The U.S. Purchase Agreement and the International Purchase
Agreement have been duly authorized, executed and delivered by CMI.
(iv) The Credit Facility Amendment has been duly authorized, executed
and delivered by CMI and constitutes the valid and binding obligation of CMI,
enforceable against CMI in accordance with its terms.
A-6
50
Exhibit B-1
FORM OF OPINION OF ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
TO BE DELIVERED PURSUANT TO SECTION 5(c)
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇▇▇ & Company Securities, Inc.
as U.S. Representatives of the several U.S. Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ International
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
▇▇▇▇▇▇▇▇ & Company Securities, Inc.
as Lead Managers for the several International Managers
c/o Merrill ▇▇▇▇▇ International
Ropemaker Place
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to certain selling stockholders (the
"Selling Stockholders") of Camelot Music Holdings, Inc., a Delaware corporation
(the "Company") named in Schedule B to each of the Underwriting Agreements (as
defined below) in connection with the purchase by you from the Selling
Stockholders of an aggregate of ________ shares of Common Stock, par value $.01
per share (the "Shares"), of the Company pursuant to the (i) the U.S. Purchase
Agreement dated July __, 1998 (the "U.S. Purchase Agreement") among you, the
Company and the Selling Stockholders and (ii) the International Purchase
Agreement dated July ___, 1998 (the "International Purchase Agreement"; together
with the U.S. Purchase Agreement, the "Underwriting Agreements") among you, the
Company and the Selling Stockholders.
B-1
51
We have examined each Underwriting Agreement and each
Irrevocable Power of Attorney and Custody Agreement (collectively, the "Custody
Agreements") between each of the Selling Stockholders, the Company, _________,
as custodian (the "Custodian"), and the attorneys-in-fact named therein (each,
an "Attorney-in-Fact"), relating to the Shares to be sold to you by such Selling
Stockholders. In addition, we have examined, and have relied as to matters of
fact upon, the documents delivered to you at the closing, and upon originals or
copies, certified or otherwise identified to our satisfaction, of such corporate
records, agreements, documents and other instruments and such certificates or
comparable documents of public officials and of officers and representatives of
the Company, and have made such other and further investigations, as we have
deemed relevant and necessary as a basis for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such latter documents. In addition, in
connection with our opinion set forth in paragraph 1 below, we have assumed that
the Underwriters do not have notice of any adverse claim (within the meaning of
the Uniform Commercial Code as in effect in the State of New York) to the
Shares.
For purposes of this opinion we have assumed the following:
1. Each Selling Stockholder is the sole registered owner of
Shares to be sold by such Selling Stockholder and has full corporate,
partnership, or trust, as applicable, power, right and authority to
sell such Shares;
2. Each Underwriting Agreement has been duly authorized by
each Selling Stockholder and the Custody Agreement to be executed by
each Selling Stockholder has been duly authorized, executed and
delivered by or on behalf of such Selling Stockholder;
3. The sale of the Shares by each Selling Stockholder and the
compliance by such Selling Stockholder with all of the provisions of
the Underwriting Agreements will not breach or result in a default
under any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to 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 action violate the Certificate of Incorporation, By-laws or other
organizational documents of such Selling Stockholder or, except to the
extent addressed in paragraph 3 below, any statute, law, rule or
regulation, or any order issued pursuant to any statute, law, rule or
regulation by any court or governmental agency or body or court having
jurisdiction over such Selling Stockholder or any of its properties.
Based upon the foregoing, and subject to the qualifications
and limitations stated herein, we are of the opinion that:
B-2
52
1. Upon registration of the Shares in the name of the
Underwriters (or their nominee) and payment for the Shares in
accordance with the Underwriting Agreement, the Underwriters will
acquire all of the rights of each Selling Stockholder in the Shares and
will also acquire their interest in such Shares free of any adverse
claim.
2. Each Underwriting Agreement has been duly executed and
delivered by or on behalf of each Selling Stockholder.
3. No consent, approval, authorization, order, registration or
qualification of or with any Federal or New York governmental agency or
body or any Delaware governmental agency or body acting pursuant to the
Delaware General Corporation Law or, to our knowledge, any Federal or
New York court or any Delaware court acting pursuant to the Delaware
General Corporation Law is required for the issue and sale of the
Shares by the Selling Stockholders and the compliance by the Selling
Stockholders with all of the provisions of the Underwriting Agreements,
except for the registration under the Act of the Shares, and such
consents, approvals, authorizations, registrations or qualifications as
may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the Underwriters.
We are members of the Bar of the State of New York, and we do
not express any opinion herein concerning any law other than the law of the
State of New York, the Federal law of the United States and the Delaware General
Corporation Law.
This opinion letter is rendered to you in connection with the
above described transactions. The opinion letter may not be relied upon by you
for any other purpose, or relied upon by, or furnished to, any other person,
firm or corporation without our prior written consent.
Very truly yours,
B-3
53
Exhibit B-2
FORM OF OPINION OF COUNSEL FOR EACH SELLING SHAREHOLDER
TO BE DELIVERED PURSUANT TO SECTION 5(c)
(i) No filing with, or consent, approval, authorization, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than the issuance of the order
of the Commission declaring the Registration Statement effective and such
authorizations, approvals or consents as may be necessary under state securities
laws, as to which we need express no opinion) is necessary or required to be
obtained by any of the Selling Shareholders for the performance by any Selling
Shareholder of its obligations under the U.S. Purchase Agreement, the
International Purchase Agreement or in the Power of Attorney and Custody
Agreement, or in connection with the offer, sale or delivery of the Securities.
(ii) Each Power of Attorney and Custody Agreement has been duly
executed and delivered by the respective Selling Shareholders named therein and
constitutes the legal, valid and binding agreement of such Selling Shareholder.
(iii) The U.S. Purchase Agreement and the International Purchase
Agreement have been duly authorized, executed and delivered by or on behalf of
each Selling Shareholder.
(iv) The Attorney-in-Fact has been duly authorized by the Selling
Shareholder(s) to deliver the Securities on behalf of the Selling Shareholder(s)
in accordance with the terms of the U.S. Purchase Agreement and the
International Purchase Agreement.
(v) The execution, delivery and performance of the U.S. Purchase
Agreement, the International Purchase Agreement and the Power of Attorney and
Custody Agreement and the sale and delivery of the Securities and the
consummation of the transactions contemplated in the U.S. Purchase Agreement,
the International Purchase Agreement and in the Registration Statement and
compliance by each Selling Shareholder with its obligations under the U.S.
Purchase Agreement and the International Purchase Agreement have been duly
authorized by all necessary action on the part of the Selling Shareholders and
do not and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default under or
result in the creation or imposition of any tax, lien, charge or encumbrance
upon the Securities or any property or assets of the Selling Shareholders
pursuant to, any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, license, lease or other instrument or agreement to which any
Selling Shareholder is a party or by which they may be bound, or to which any of
the property or assets of any of the Selling Shareholders may be subject nor
will such action result in any violation of the provisions of the charter or
by-laws of the Selling Shareholders, if applicable, or any law, administrative
regulation, judgment or order of any governmental agency or body or any
administrative or court decree having jurisdiction over the Selling Shareholders
or any of its properties.
B-4
54
(vi) To the best of our knowledge, each Selling Shareholder has valid
and marketable title to the Securities to be sold by such Selling Shareholder
pursuant to the U.S. Purchase Agreement and the International Purchase
Agreement, free and clear of any pledge, lien, security interest, charge, claim,
equity or encumbrance of any kind, and has full right, power and authority to
sell, transfer and deliver such Securities pursuant to the U.S. Purchase
Agreement and the International Purchase Agreement. By delivery of a certificate
or certificates therefor the Selling Shareholders will transfer to the
Underwriters who have purchased such Securities pursuant to the U.S. Purchase
Agreement and the International Purchase Agreement (without notice of any defect
in the title of the Selling Shareholders and who are otherwise bona fide
purchasers for purposes of the Uniform Commercial Code) valid and marketable
title to such Securities, free and clear of any pledge, lien, security interest,
charge, claim, equity or encumbrance of any kind.
B-5
55
Exhibit C
_____________, 1998
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
▇▇▇▇▇▇▇▇ & COMPANY SECURITIES, INC.
as U.S. Representatives of the several
U.S. Underwriters to be named in the
within-mentioned U.S. Purchase Agreement
▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INTERNATIONAL LIMITED
▇▇▇▇▇▇▇▇ & COMPANY SECURITIES, INC.
as Lead Managers for the several
International Managers to be named in the
within-mentioned International Purchase Agreement
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Proposed Public Offering by Camelot Music Holdings, Inc.
---------------------------------------------------------
Dear Sirs:
The undersigned, a stockholder of Camelot Music Holdings, Inc., a
Delaware corporation (the "Company"), understands that ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.,
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated and ▇▇▇▇▇▇▇▇ & Company Securities, Inc. propose to
enter into a U.S. Purchase Agreement (the "U.S. Purchase Agreement") with the
Company, Camelot Music, Inc. ("CMI") and the Selling Shareholders identified in
Schedule B thereto, and that ▇▇▇▇▇▇▇ ▇▇▇▇▇ International, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
International Limited and ▇▇▇▇▇▇▇▇ & Company Securities, Inc. propose to enter
into an International Purchase Agreement (the "International Purchase
Agreement") with the Company, CMI and the Selling Shareholders, providing for
the public offering of shares (the "Securities") of the Company's common stock,
par value $.01 per share (the "Common Stock"). In recognition of the benefit
that such an offering will confer upon the undersigned as a stockholder of the
Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees with each
U.S. Underwriter to be named
C-1
56
in the U.S. Purchase Agreement and with each International Manager to be named
in the International Purchase Agreement that, during a period of 180 days from
the date of the U.S. Purchase Agreement and the International Purchase
Agreement, the undersigned will not, without the prior written consent of
▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or indirectly, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant for the sale of, or otherwise
dispose of or transfer any shares of the Company's Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether now owned or hereafter acquired by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of disposition, or
file any registration statement under the Securities Act of 1933, as amended,
with respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock, whether
any such swap or transaction is to be settled by delivery of Common Stock or
other securities, in cash or otherwise.
Nothing contained in this letter shall be construed to prohibit the
undersigned, to the extent the undersigned is a natural person, from making a
bona fide gift of any shares of the Company's Common Stock, provided that the
transferee agrees in writing to be bound by the terms and conditions of this
letter.
This letter shall be binding on the undersigned and the heirs, legal
representatives, successors and assigns of the undersigned. This letter shall be
construed in accordance with the laws of the State of New York.
Very truly yours,
Signature: __________________________________
Print Name: __________________________________
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇-▇
COOPERS & ▇▇▇▇▇▇▇ L.L.P.
FORM OF ACCOUNTANTS' COMFORT LETTER PURSUANT TO SECTION 5(g)
(i) We are independent public accountants with respect to the
Company within the meaning of the 1933 Act and the applicable published
1933 Act Regulations.
(ii) In our opinion, the audited financial statements and the
related financial statement schedules included in the Registration
Statement and the Prospectuses comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act
and the published rules and regulations thereunder.
(iii) On the basis of procedures (but not an examination in
accordance with generally accepted auditing standards) consisting of a
reading of the unaudited interim consolidated financial statements of
the Company for the three month period ended May ____, 1998 and May
____, 1997, included in the Registration Statement and the Prospectuses
(collectively, the "Quarterly Financials"), a reading of the latest
available unaudited interim consolidated financial statements of the
Company, a reading of the minutes of all meetings of the stockholders
and directors of the Company and its subsidiaries and the committees of
the Company's Board of Directors and any subsidiary committees since
February 28, 1998, inquiries of certain officials of the Company and
its subsidiaries responsible for financial and accounting matters, a
review of interim financial information in accordance with standards
established by the American Institute of Certified Public Accountants
in Statement on Auditing Standards No. 71, Interim Financial
Information ("SAS 71"), with respect to the Quarterly Financials and
such other inquiries and procedures as may be specified in such letter,
nothing came to our attention that caused us to believe that:
(1) the Quarterly Financials included in the
Registration Statement and the Prospectuses do not comply as
to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1933 Act
Regulations or any material modifications should be made to
the Quarterly Financials included in the Registration
Statement and the Prospectuses for them to be in conformity
with generally accepted accounting principles;
(2) at June _____, 1998 and at a specified date not
more than five days prior to the date of this Agreement, there
was any change in the total shareholder equity of the Company
and its subsidiaries or any decrease in the working capital,
total current assets, total assets or stockholders' equity of
the Company and its subsidiaries or any increase in the total
current liabilities or total liabilities of the Company and
its subsidiaries, in each case as compared with amounts shown
in
D-1
58
the latest balance sheet included in the Registration
Statement, except in each case for changes, decreases or
increases that the Registration Statement discloses have
occurred; or
(3) for the period from May ___, 1998 to June ___,
1998 and for the period from May ____, 1998 to a specified
date not more than five days prior to the date of this
Agreement, there was any decrease in total net sales,
operating income, income before reorganization expense and
income taxes, income before income tax expense, in each case
as compared with the comparable period in the preceding year,
except in each case for any decreases that the Registration
Statement discloses have occurred or may occur;
(iv) Based upon the procedures set forth in clause (ii) above
and a reading of the Selected Financial Data included in the
Registration Statement and a reading of the financial statements from
which such data were derived, nothing came to our attention that caused
us to believe that the Selected Financial Data included in the
Registration Statement do not comply as to form in all material
respects with the disclosure requirements of Item 301 of Regulation S-K
of the 1933 Act, that the amounts included in the Selected Financial
Data are not in agreement with the corresponding amounts in the audited
consolidated financial statements for the respective periods or that
the financial statements not included in the Registration Statement
from which certain of such data were derived are not in conformity with
generally accepted accounting principles.
(v) We have compared the information in the Registration
Statement under selected captions with the disclosure requirements of
Regulation S-K of the 1933 Act and on the basis of limited procedures
specified herein nothing came to our attention that caused us to
believe that this information does not comply as to form in all
material respects with the disclosure requirements of Items 302, 402
and 503(d), respectively, of Regulation S-K.
(vi) We are unable to and do not express any opinion on the
Pro Forma Condensed Consolidated Statement of Income (the "Pro Forma
Statement") included in the Registration Statement or on the pro forma
adjustments applied to the historical amounts included in the Pro Forma
Statement; however, for purposes of this letter we have:
(1) read the Pro Forma Statement;
(2) performed an audit of the Company's financial
statements to which the pro forma adjustments were applied;
(3) made inquiries of certain officials of the
Company who have responsibility for financial and accounting
matters about the basis for their determination of the pro
forma adjustments and whether the Pro Forma Statement complies
as to form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X; and
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(4) proved the arithmetic accuracy of the application
of the pro forma adjustments to the historical amounts in the
Pro Forma Statement;
and on the basis of such procedures and such other inquiries and
procedures as specified herein, with respect to the fresh start
adjustments, nothing came to our attention that caused us to believe
that the Pro Forma Statement included in the Registration Statement
does not comply as to form in all material respects with the applicable
requirements of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical amounts in
the compilation of those statements, and with respect to The Wall
adjustments, certain officials of the Company and of The Wall who have
responsibility for financial and accounting matters have informed us
that all significant assumptions regarding the business combination
have been reflected in the pro forma adjustments and the unaudited Pro
Forma Statement complies as to form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X.
(vii) In addition to the procedures referred to in clause (ii)
above, we have performed other procedures, not constituting an audit,
with respect to certain amounts, percentages, numerical data and
financial information appearing in the Registration Statement, which
are specified herein, and have compared certain of such items with, and
have found such items to be in agreement with, the accounting and
financial records of the Company.
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FORM OF COMFORT LETTER OF
DELOITTE & TOUCHE LLP PURSUANT TO SECTION 5(f)
(i) We are independent public accountants with respect to The Wall
Music, Inc. within the meaning of the 1933 Act and the applicable published 1933
Act Regulations.
(ii) In our opinion, the audited financial statements and the related
financial statement schedules of The Wall Music, Inc. included in the
Registration Statement and the Prospectuses comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and the
published rules and regulations thereunder.
(iii) With respect to the nine-month periods ended February 28, 1998
and March 1, 1997, we have:
(1) Performed the procedures specified by the
American Institute of Certified Public Accountants for a
review of interim financial information as described in their
Statement on Auditing Standards No. 71, Interim Financial
Information ("SAS 71"), on the unaudited combined statements
of operations of The Wall Music, Inc.; and
(2) Inquired of certain officials of The Wall Music,
Inc. who have responsibility for financial and accounting
matters whether (A) the unaudited statements of income
referred to in (iii)(1) above are in conformity with generally
accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements of The Wall Music, Inc. included in the
Registration Statement, and (B) comply as to form in all
material respects with the applicable accounting requirements
of the 1933 Act and the published rules and regulations
thereunder. Those officials stated that the unaudited
statements of income (a) are in conformity with generally
accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements of The Wall Music, Inc. included in the
Registration Statement, and (b) comply as to form in all
material respects with the applicable accounting requirements
of the 1933 Act and the published rules and regulations
thereunder.
(iv) On the basis of procedures described in paragraph (iii) above,
nothing came to our attention that caused us to believe that:
(1) Any material modifications should be made to the
unaudited financial statements described in paragraph (iii)(1)
above for them to be in conformity with generally accepted
accounting principles applied on a basis substantially
consistent with that of the audited financial statements of
The Wall Music, Inc. included in the Registration Statement,
and
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(2) the unaudited financial statements described in
(iii)(1) above do not comply as to form in all material
respects with the applicable accounting requirements of the
1933 Act and the published rules and regulations thereunder.
(v) With respect to the three-month periods ended June 1, 1998 and June
1, 1997, we have:
(1) Performed the procedures specified by the
American Institute of Certified Public Accountants for a
review of interim financial information as described their
Statement on Auditing Standards No. 71, Interim Financial
Information ("SAS 71"), on the unaudited combined statements
of operations of The Wall Music, Inc.; and
(2) Inquired of certain officials of The Wall Music,
Inc. who have responsibility for financial and accounting
matters whether (A) the unaudited statements of income
referred to in (v)(1) above are in conformity with generally
accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements of The Wall Music, Inc. included in the
Registration Statement, and (B) comply as to form in all
material respects with the applicable accounting requirements
of the 1933 Act and the published rules and regulations
thereunder. Those officials stated that the unaudited
statements of income (a) are in conformity with generally
accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements of The Wall Music, Inc. included in the
Registration Statement, and (b) comply as to form in all
material respects with the applicable accounting requirements
of the 1933 Act and the published rules and regulations
thereunder.
(vi) On the basis of procedures described in paragraph (v) above,
nothing came to our attention that caused us to believe that:
(1) Any material modifications should be made to the
unaudited financial statements described in paragraph (v)(1)
above for them to be in conformity with generally accepted
accounting principles applied on a basis substantially
consistent with that of the audited financial statements of
The Wall Music, Inc. included in the Registration Statement,
and
(2) the unaudited financial statements described in
(v)(1) above do not comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act
and the published rules and regulations thereunder.
(vii) In addition, we have performed other procedures, not constituting
an audit, with respect to certain amounts, percentages, numerical data and
financial information appearing in the Registration Statement, which are
specified herein, and have compared certain of such items with, and have found
such items to be in agreement with, the accounting and financial records of The
Wall Music, Inc.
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