XXXX XXXXXX STORES, INC.
3,000,000 Shares/1/
Common Stock
UNDERWRITING AGREEMENT
----------------------
May ___, 1997
PRUDENTIAL SECURITIES INCORPORATED
XXXXXXXXX, XXXXXXXX & COMPANY LLC
XXXXXX & XXXXXXX, INC.
As Representatives of the several Underwriters
c/o Prudential Securities Incorporated
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Xxxx Xxxxxx Stores, Inc., an Indiana corporation (the "Company"), and The
Prudential Insurance Company of America (the "Selling Securityholder"), hereby
confirm their agreement with the several underwriters named in Schedule 1 hereto
(the "Underwriters"), for whom you have been duly authorized to act as
representatives (in such capacities, the "Representatives"), as set forth below.
If you are the only Underwriters, all references herein to the Representatives
shall be deemed to be to the Underwriters.
1. Securities. Subject to the terms and conditions herein contained, the
Company and the Selling Securityholder propose to sell to the several
Underwriters an aggregate of 3,000,000 shares (the "Firm Securities") of the
Company's Common Stock, without par value ("Common Stock"), of which 500,000
shares will be issued and sold by the Company (the
------------------
/1/ Plus an option to purchase from Xxxx Xxxxxx Stores, Inc. up to 450,000
additional shares to cover over-allotments.
"Company's Firm Securities") and 2,500,000 shares will be sold by the Selling
Securityholder (the "Selling Securityholder's Firm Securities"). The Company
also proposes to issue and sell to the several Underwriters not more than
450,000 additional shares of Common Stock if requested by the Representatives as
provided in Section 3 of this Agreement. Any and all shares of Common Stock to
be purchased by the Underwriters pursuant to such option are referred to herein
as the "Option Securities," and the Firm Securities and any Option Securities
are collectively referred to herein as the "Securities."
2. Representations and Warranties of the Company.
---------------------------------------------
(a) The Company represents and warrants to, and agrees with, each of the
several Underwriters that:
(i) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Act"). A registration statement on
such form (File No. 333-25053) with respect to the Securities, including a
prospectus subject to completion, has been filed by the Company with the
Securities and Exchange Commission (the "Commission") under the Act, and
one or more amendments to such registration statement may have been so
filed. After the execution of this Agreement, the Company will file with
the Commission either (A) if such registration statement, as it may have
been amended, has been declared by the Commission to be effective under the
Act, either (1) if the Company relies on Rule 434 under the Act, a Term
Sheet (as hereinafter defined) relating to the Securities, that shall
identify the Preliminary Prospectus (as hereinafter defined) that it
supplements and, if required to be filed pursuant to Rules 434(c)(2) and
424(b), an Integrated Prospectus (as hereinafter defined), in either case,
containing such information as is required or permitted by Rules 434, 430A
and 424(b) under the Act or (2) if the Company does not rely on Rule 434
under the Act, a prospectus in the form most recently included in an
amendment to such registration statement (or, if no such amendment shall
have been filed, in such registration statement), with such changes or
insertions as are required by Rule 430A under the Act or permitted by Rule
424(b) under the Act, and in the case of either clause (A)(1) or (A)(2) of
this sentence as have been provided to and approved by the Representatives
prior to the execution of this Agreement or (B) if such registration
statement, as it may have been amended, has not been declared by the
Commission to be effective under the Act, an amendment to such registration
statement, including a form of prospectus, a copy of which amendment has
been furnished to and approved by the Representatives prior to the
execution of this Agreement. The Company may also file a related
registration statement with the Commission pursuant to Rule 462(b) under
the Act for the purpose of registering certain additional Securities, which
registration shall be effective upon filing with the Commission. As used in
this Agreement, the term "Original Registration Statement" means the
registration statement initially filed relating to the Securities, as
amended at the time when it was or is declared effective, including (x) all
financial schedules and exhibits thereto, (Y) all documents incorporated by
reference therein filed under the
-2-
Securities Exchange Act of 1934, as amended (the "Exchange Act") and (Z)
any information omitted therefrom pursuant to Rule 430A under the Act and
included in the Prospectus (as hereinafter defined) or, if required to be
filed pursuant to Rules 434(c)(2) and 424(b), in the Integrated Prospectus;
the term "Rule 462(b) Registration Statement" means any registration
statement filed with the Commission pursuant to Rule 462(b) (including the
Original Registration Statement and any Preliminary Prospectus or
Prospectus incorporated therein at the time such Registration Statement
becomes effective); the term "Registration Statement" includes both the
Original Registration Statement and any Rule 462(b) Registration Statement;
the term "Preliminary Prospectus" means each prospectus subject to
completion filed with the Original Registration Statement or any amendment
thereto (including the prospectus subject to completion, if any, included
in the Registration Statement or any amendment thereto at the time it was
or is declared effective), including all documents incorporated by
reference therein filed under the Exchange Act; the term "Prospectus"
means:
(A) If the Company relies on Rule 434 under the Act, the Term
Sheet relating to the Securities that is first filed pursuant to Rule
424(b)(7) under the Act, together with the Preliminary Prospectus
identified therein that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434 under the Act, the
prospectus first filed with the Commission pursuant to Rule 424(b)
under the Act; or
(C) if the Company does not rely on Rule 434 under the Act and if
no prospectus is required to be filed pursuant to Rule 424(b) under
the Act, the prospectus included in the Registration Statement,
including, in the case of the immediately foregoing clauses (A), (B) or (C)
of this sentence, all documents incorporated by reference therein filed
under the Exchange Act; the term "Integrated Prospectus" means a prospectus
first filed with the Commission pursuant to Rules 434(c)(2) and 424(b)
under the Act; and the term "Term Sheet" means any abbreviated Term Sheet
that satisfies the requirements of Rule 434 under the Act. Any reference in
this Agreement to an "amendment or supplement" to any Preliminary
Prospectus, the Prospectus or any Integrated Prospectus or an "amendment"
to any registration statement (including the Registration Statement) shall
be deemed to include any document incorporated by reference therein that is
filed with the Commission under the Exchange Act after the date of such
Preliminary Prospectus, Prospectus or any Integrated Prospectus, or
registration statement, as the case may be; any reference herein to the
"date" of a Prospectus that includes a Term Sheet shall mean the date of
such Term Sheet. For purposes of the preceding sentence, any reference to
the "effective date" of an amendment to a registration statement shall, if
such amendment is effected by means of the filing with the Commission under
the Exchange Act of a document incorporated by
-3-
reference in such registration statement, be deemed to refer to the date on
which such document was filed with the Commission.
(ii) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus. When any Preliminary Prospectus and any
amendment or supplement thereto was filed with the Commission it (A) contained
all statements required to be stated therein in accordance with, and complied in
all material respects with the requirements of, the Act, the Exchange Act and
the rules and regulations of the Commission thereunder and (B) did not include
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. When the Registration
Statement or any amendment thereto was or is declared effective, it (A)
contained or will contain all statements required to be stated therein in
accordance with, and complied or will comply in all material respects with the
requirements of, the Act, the Exchange Act and the rules and regulations of the
Commission thereunder and (B) did not or will not include any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein not misleading. When the Prospectus or any Term Sheet that
is a part thereof or any Integrated Prospectus or any amendment or supplement to
the Prospectus is filed with the Commission pursuant to Rule 424(b) (or, if the
Prospectus or part thereof or such amendment or supplement is not required to be
so filed, when the Registration Statement or the amendment thereto containing
such amendment or supplement to the Prospectus was or is declared effective) on
the date when the Prospectus is otherwise amended or supplemented and on the
Firm Closing Date and any Option Closing Date (both as hereinafter defined),
each of the Prospectus and, if required to be filed pursuant to Rules 434(c)(2)
and 424(b) under the Act, the Integrated Prospectus, as amended or supplemented
at any such time, (A) contained or will contain all statements required to be
stated therein in accordance with, and complied or will comply in all material
respects with the requirements of, the Act, the Exchange Act and the respective
rules and regulations of the Commission thereunder and (B) did not or will not
include any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The foregoing
provisions of this paragraph (ii) do not apply to statements or omissions made
in any Preliminary Prospectus or any amendment or supplement thereto, the
Registration Statement or any amendment thereto, the Prospectus or, if required
to be filed pursuant to Rules 434(c)(2) and 424(b) under the Act, the Integrated
Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives specifically for use therein.
(iii) If the Company has elected to rely on Rule 462(b) and the Rule
462(b) Registration Statement has not been declared effective (A) the Company
has filed a Rule 462(b) Registration Statement in compliance with and that is
effective upon filing
-4-
pursuant to Rule 462(b) and has received confirmation of its receipt and (B) the
Company has given irrevocable instructions for transmission of the applicable
filing fee in connection with the filing of the Rule 462(b) Registration
Statement, in compliance with Rule 111 promulgated under the Act or the
Commission has received payment of such filing fee.
(iv) The Company has been duly organized and is validly existing as a
corporation under the laws of Indiana and is duly qualified to transact business
as a foreign corporation and is in good standing under the laws of all other
jurisdictions where the ownership or leasing of its properties or the conduct of
its business requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the condition (financial
or otherwise), business prospects, net worth or results of operations of the
Company.
(v) The Company has full power (corporate and other) to own or lease
its properties and conduct its business as described in the Registration
Statement, the Prospectus and any Integrated Prospectus (or, if the Prospectus
and any required Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus); and the Company has full power (corporate and other) to
enter into this Agreement and to carry out all the terms and provisions hereof
to be carried out by it.
(vi) The Company does not directly or indirectly own any shares of
stock or any other equity securities of any corporation or have any direct or
indirect equity interest in any firm, partnership, association or other entity,
which corporation, firm, partnership, association or other entity would,
individually or when aggregated with all such other corporations, firms,
partnerships, associations or other entities, be considered a "significant
subsidiary" within the meaning of Rule 1-02 of Regulation S-X under the Act.
(vii) The Company has an authorized, issued and outstanding
capitalization as set forth in each of the Prospectus and any Integrated
Prospectus (or, if the Prospectus and any required Integrated Prospectus are not
in existence, the most recent Preliminary Prospectus). All of the issued shares
of capital stock of the Company (including but not limited to the Securities
being sold by the Selling Securityholder) have been duly authorized and validly
issued, are fully paid and nonassessable and have been issued in compliance with
all applicable federal and state securities laws. The Firm Securities and
Option Securities being issued and sold by the Company have been duly authorized
and at the Firm Closing Date or Option Closing Date (as the case may be), after
payment therefor in accordance herewith, will be validly issued, fully paid and
nonassessable. No holders of outstanding shares of capital stock of the Company
are entitled as such to any preemptive or other rights to subscribe for any of
the Securities, and no holder of securities of the Company has any right which
has not been fully exercised or waived to
-5-
require the Company to register the offer or sale of any securities owned by
such holder under the Act in the public offering contemplated by this Agreement.
(viii) The capital stock of the Company conforms to the description
thereof contained in each of the Prospectus and any Integrated Prospectus (or,
if the Prospectus and any required Integrated Prospectus are not in existence,
the most recent Preliminary Prospectus).
(ix) The consolidated financial statements and schedules of the
Company and its consolidated subsidiaries included in the Registration Statement
and each of the Prospectus and any Integrated Prospectus (or, if the Prospectus
and any required Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus) fairly present the financial position of the Company and
its consolidated subsidiaries and the results of operations and cash flows as of
the dates and periods therein specified. Such financial statements and schedules
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as otherwise noted
therein). The selected consolidated financial data set forth under the caption
"Selected Consolidated Financial and Operating Data" in each of the Prospectus
and any Integrated Prospectus (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary Prospectus) and in
the Company's Annual Report on Form 10-K for the fiscal year ended February 1,
1997 fairly present, on the basis stated in each of the Prospectus, any
Integrated Prospectus and such Annual Report (or such Preliminary Prospectus),
the information included therein.
(x) Price Waterhouse LLP, who have audited certain financial
statements of the Company and its consolidated subsidiaries and delivered their
report with respect to the audited consolidated financial statements and
schedules included in the Registration Statement and each of the Prospectus and
any Integrated Prospectus (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary Prospectus), are
independent public accountants as required by the Act, the Exchange Act and the
applicable rules and regulations thereunder.
(xi) The execution and delivery of this Agreement have been duly
authorized by the Company, and this Agreement has been duly executed and
delivered by the Company and is the valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
(xii) No legal or governmental proceedings are pending to which the
Company is a party or to which the property of the Company is subject that are
required to be described in the Registration Statement, the Prospectus or any
Integrated Prospectus and are not described therein (or, if the Prospectus or
any required Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus), and, no such proceedings have been threatened against
the Company or with respect to any of its properties; and no
-6-
contract or other document is required to be described in the Registration
Statement, the Prospectus or any Integrated Prospectus or to be filed as an
exhibit to the Registration Statement that is not described therein (or, if the
Prospectus or any required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus) or filed as required.
(xiii) The issuance, offering and sale of the Securities being issued
and sold by the Company to the Underwriters pursuant to this Agreement, the
compliance by the Company with the other provisions of this Agreement and the
consummation of the other transactions herein contemplated do not (A) require
the consent, approval, authorization, registration or qualification of or with
any governmental authority, except such as have been obtained, such as may be
required under state securities or blue sky laws and, if the registration
statement filed with respect to the Securities (as amended) is not effective
under the Act as of the time of the execution hereof, such as may be required
(and shall be obtained as provided in this Agreement) under the Act or (B)
conflict with or result in a breach or violation of any terms and provisions of,
or constitute a default under, any indenture, mortgage, deed of trust, lease or
other agreement or instrument to which the Company is a party or by which the
Company or any of its properties are bound, or the charter documents or bylaws
of the Company, or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any arbitrator
applicable to the Company.
(xiv) Subsequent to the respective dates as of which information is
given in the Registration Statement, the Prospectus and any Integrated
Prospectus (or, if the Prospectus and any required Integrated Prospectus are not
in existence, the most recent Preliminary Prospectus), (A) the Company has not
sustained any material loss or interference with its business or properties from
fire, flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental proceeding and
there has not been any material adverse change, or any development involving a
prospective material adverse change, in the condition (financial or otherwise),
business prospects, net worth or results of operations of the Company; (B) the
Company has not incurred any material liability or obligation, directly or
contingent, nor entered into any material transaction not in the ordinary course
of business; (C) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock; and (D) there has not been any material change in the
capital stock, short-term debt or long-term debt of the Company and its
consolidated subsidiaries, except in each case as described in or contemplated
by each of the Prospectus and any Integrated Prospectus (or, if the Prospectus
and any required Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus.)
(xv) The Company has not, directly or indirectly, (A) taken any action
designed to cause or to result in, or that has constituted or which might
reasonably be
-7-
expected to constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities or
(B) since the filing of the Registration Statement (1) sold, bid for, purchased
or paid anyone any compensation for soliciting purchases of, the Securities or
(2) paid or agreed to pay to any person any compensation for soliciting another
to purchase any other securities of the Company (except for the sale of
Securities by the Selling Security holder under this Agreement.
(xvi) The Company has good and marketable title in fee simple to all
items of real property and marketable title to all personal property owned by
it, free and clear of any security interests, liens, encumbrances, equities,
claims and other defects, except such as do not materially and adversely affect
the value of such property and do not interfere with the use made or proposed to
be made of such property by the Company, and any real property and buildings
held under lease by the Company are held under valid, subsisting and enforceable
leases, with such exceptions as are not material and do not interfere with the
use made or proposed to be made of such property and buildings by the Company,
in each case except as described in or contemplated by each of the Prospectus
and any Integrated Prospectus (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary Prospectus).
(xvii) No labor dispute with the employees of the Company exists or is
threatened or imminent that could result in a material adverse change in the
condition (financial or otherwise), business prospects, net worth or results of
operations of the Company, except as described in or contemplated by each of the
Prospectus and any Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus).
(xviii) The Company owns or possesses, or can acquire on reasonable
terms, all material patents, patent applications, trademarks, service marks,
trade names, licenses, copyrights and proprietary or other confidential
information currently employed by it in connection with its businesses, and the
Company has not received any notice of, or has any reasonable belief that its
use constitutes, an infringement of or conflict with asserted rights of any
third party with respect to any of the foregoing which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
result in a material adverse change in the condition (financial or otherwise),
business prospects, net worth or results of operations of the Company, except as
described in or contemplated by each of the Prospectus and any Integrated
Prospectus (or, if the Prospectus and any required Integrated Prospectus are not
in existence, the most recent Preliminary Prospectus).
(xix) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the business in which it is engaged; the Company has not been
refused any insurance coverage sought or applied for; and the Company has no any
reason to believe
-8-
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not materially and
adversely affect the condition (financial or otherwise), business prospects, net
worth or results of operations of the Company, except as described in or
contemplated by each of the Prospectus and any Integrated Prospectus (or, if the
Prospectus and any required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus).
(xx) The Company possesses all certificates, authorizations and
permits issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct its business, and the Company has not received
any notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
material adverse change in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company, except as
described in or contemplated by each of the Prospectus and any Integrated
Prospectus (or, if the Prospectus and any required Integrated Prospectus are not
in existence, the most recent Preliminary Prospectus).
(xxi) The Company will conduct its operations in a manner that will not
subject it to registration as an investment company under the Investment Company
Act of 1940, as amended (the "Investment Company Act"), and this transaction
will not cause the Company to become an investment company subject to
registration under the Investment Company Act.
(xxii) The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or have requested extensions thereof
(except in any case in which the failure so to file would not have a material
adverse effect on the condition (financial or otherwise), business prospects,
net worth or results of operations of the Company) and has paid all taxes
required to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable, except
for any such assessment, fine or penalty that is currently being contested in
good faith or as described in or contemplated by each of the Prospectus and any
Integrated Prospectus (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary Prospectus).
(xxiii) The Company is not in violation of any federal or state law or
regulation relating to (A) the environment or hazardous or toxic substances or
wastes, pollutants or contaminants or to the storage, handling or transportation
of hazardous or toxic material ("Environmental Laws") or (B) occupational safety
and health and the Company has received all permits, licenses or other approvals
required of it under applicable federal and state occupational safety and health
and Environmental Laws and regulations to conduct its business, and the Company
is in compliance with all terms and
-9-
conditions of any such permit, license or approval, except for any such
violation of law or regulation, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals which would not, singly or in the aggregate,
result in a material adverse change in the condition (financial or otherwise),
business prospects, net worth or results of operations of the Company, except as
described in or contemplated by each of the Prospectus and any Integrated
Prospectus (or, if the Prospectus and any required Integrated Prospectus are not
in existence, the most recent Preliminary Prospectus). The Company has no
pending or threatened Environmental Law or occupational safety and health claims
against it nor are there circumstances with respect to any property or
operations of the Company that could reasonably be anticipated to form the basis
of an Environmental Law or occupational safety and health claim against the
Company which, singly or in the aggregate, would result in a material adverse
change in the condition (financial or otherwise), business prospects, net worth
or results of operations of the Company, except as described in or contemplated
by each of the Prospectus and any Integrated Prospectus (or, if the Prospectus
and any required Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus).
(xxiv) Each certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters pursuant to
this Agreement shall be deemed to be a representation and warranty by the
Company to each Underwriter as to the matters covered thereby.
(xxv) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (A) transactions are executed in
accordance with management's general or specific authorizations; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (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.
(xxvi) No default exists, and no event has occurred which, with notice
or lapse of time or both, would constitute a default in the due performance and
observance of any term, covenant or condition of any indenture, mortgage, deed
of trust, lease or other agreement or instrument to which the Company is a party
or by which the Company or any of its properties is bound.
(xxvii) All offers and sales of the Company's capital stock from
September 15, 1992 through the date hereof, were at all relevant times either
registered pursuant to the Act or exempt from the registration requirements of
the Act, and were the
-10-
subject of an available exemption from the registration requirements of all
applicable state securities or blue sky laws.
(xxviii) Except as disclosed in each of the Prospectus and any Integrated
Prospectus (or, if the Prospectus and any required Integrated Prospectus are not
in existence, the most recent Preliminary Prospectus), there are no outstanding
(A) securities or obligations of the Company convertible into or exchangeable
for any capital stock of the Company, (B) warrants, rights or options to
subscribe for or purchase from the Company any such capital stock or any such
convertible or exchangeable securities or obligations or (C) obligations of the
Company to issue any shares of capital stock, any such convertible or
exchangeable securities or obligations, or any such warrants, rights or options.
(xxix) The Company has not distributed and, prior to the later of (A)
the Firm Closing Date and (B) the completion of the distribution of the
Securities, will not distribute any offering material in connection with the
offering and sale of the Securities other than the Registration Statement or any
amendment thereto, any Preliminary Prospectus, the Prospectus or any Integrated
Prospectus or any supplement or amendment thereto, or any materials, if any
permitted by the Act.
(xxx) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida) to the extent such provisions
are applicable to the Company.
(b) The Selling Securityholder represents and warrants to, and agrees with,
each of the several Underwriters that:
(i) The Selling Securityholder has full corporate power to enter into this
Agreement and to sell, assign, transfer and deliver to the Underwriters the
Securities to be sold by the Selling Securityholder hereunder in accordance with
the terms of this Agreement; the execution and delivery of this Agreement have
been duly authorized by all necessary corporate actions of the Selling
Securityholder; and this Agreement has been duly executed and delivered by the
Selling Securityholder and is the valid and binding agreement of such Selling
Securityholder, enforceable against such Selling Securityholder in accordance
with its terms.
(ii) The Selling Securityholder has duly executed and delivered a custody
agreement (the "Custody Agreement") in the form heretofore delivered to the
Representatives, appointing The First National Bank of Boston, as custodian
thereunder (the "Custodian"). Certificates in negotiable form, endorsed in
blank or accompanied by blank stock powers duly executed, with signatures
appropriately guaranteed, representing the Securities to be sold by the Selling
Securityholder hereunder have been deposited with the Custodian pursuant to the
Custody Agreement for the purpose of delivery
-11-
pursuant to this Agreement. The Selling Securityholder has full corporate power
to enter into the Custody Agreement and to perform its obligations under the
Custody Agreement. The Custody Agreement has been duly executed and delivered by
the Selling Securityholder and, assuming due authorization, execution and
delivery by the Custodian, is the valid and binding agreement of the Selling
Securityholder, enforceable against the Selling Securityholder in accordance
with its terms.
(iii) The Selling Securityholder agrees that each of the Securities
represented by the certificates on deposit with the Custodian is subject to the
interests of the Underwriters hereunder, that the arrangements made for such
custody are to that extent irrevocable and that the obligations of the Selling
Securityholder hereunder shall not be terminated, except as provided in this
Agreement or the Custody Agreement, by any act of the Selling Securityholder, by
operation of law or otherwise. If the Selling Securityholder shall liquidate or
dissolve, or if any other event should occur, before the delivery of such
Securities hereunder, the certificates for such Securities deposited with the
Custodian shall be delivered by the Custodian in accordance with the respective
terms and conditions of this Agreement as if such termination, liquidation or
dissolution or other event had not occurred, regardless of whether or not the
Custodian shall have received notice thereof.
(iv) The Selling Securityholder is the lawful record and beneficial
owner of the Securities to be sold by the Selling Securityholder hereunder and
upon sale and delivery of, and payment for, such Securities as provided herein,
the Selling Securityholder will convey good and marketable title to such
Securities, free and clear of any security interests, liens, encumbrances,
equities, claims or other defects.
(v) The Selling Securityholder has not, directly or indirectly, (A)
taken any action designed to cause or 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
or resale of the Securities or (B) since the filing of the Registration
Statement (1) sold, bid for, purchased or paid anyone any compensation for
soliciting purchases of, the Securities or (2) paid or agreed to pay to any
person any compensation for soliciting another to purchase any other securities
of the Company (except for the sale of Securities by the Selling Securityholder
under this Agreement).
(vi) The sale by the Selling Securityholder of Securities pursuant
hereto is not prompted by any adverse information concerning the Company that is
not set forth in the Registration Statement or the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
(vii) The sale of the Securities to the Underwriters by the Selling
Securityholder pursuant to this Agreement, the compliance by the Selling
Securityholder with the other provisions of this Agreement and the Custody
Agreement and the
-12-
consummation of the other transactions herein contemplated do not (A) require
the consent, approval, authorization, registration or qualification of or with
any governmental authority, except such as has been obtained, such as may be
required under state securities or blue sky laws and, if the registration
statement filed with respect to the Securities (as amended) is not effective
under the Act as of the time of execution hereof, such as may be required (and
shall be obtained as provided in this Agreement) under the Act or (B) conflict
with or result in a breach or violation of any of the terms and provisions of,
or constitute a default under any indenture, mortgage, deed of trust, lease or
other agreement or instrument to which the Selling Securityholder is a party or
by which the Selling Securityholder or any of the Selling Securityholder's
properties are bound, or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any arbitrator
applicable to the Selling Securityholder.
(viii) To the extent that any statements or omissions are made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
Integrated Prospectus, or any amendment or supplement thereto in reliance upon
and in conformity with written information furnished to the Company by the
Selling Securityholder specifically for use therein, such information in the
Preliminary Prospectus, the Registration Statement, the Prospectus or any
Integrated Prospectus, and any amendments or supplements thereto, when they
become effective or are filed with the Commission, as the case may be, did and
will conform in all material respects to the requirements of the Act, the
Exchange Act and the respective rules and regulations of the Commission
thereunder and will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they are
made, not misleading. The Selling Securityholder has reviewed each of the
Prospectus and any Integrated Prospectus (or if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus) and the Registration Statement, and the information regarding the
Selling Securityholder set forth therein under the caption "Principal and
Selling Shareholders" is complete and accurate; provided, that for purposes of
the foregoing, the information regarding the Selling Securityholder under such
caption shall only consist of the following items of information: (i) the
information set forth under the column entitled "Name and Address of Beneficial
Owner", (ii) the information set forth under the column entitled "Shares
Beneficially Owned Prior to the Offering -- Number", (iv) the information set
forth under the column entitled "Shares Being Offered", (v) the information set
forth under the column entitled "Shares Beneficially Owned After the Offering --
Number" and (vi) footnote one under such caption.
(ix) The Selling Securityholder has not distributed and, prior to the
later of (A) the Firm Closing Date and (B) the completion of the distribution of
the Securities, will not distribute any offering material in connection with the
offering and sale of the Securities other than the Registration Statement or any
amendment thereto, any
-13-
Preliminary Prospectus, the Prospectus and any Integrated Prospectus or any
supplement or amendment thereto, or any materials, if any permitted by the
Act.
3. Purchase, Sale and Delivery of the Securities.
---------------------------------------------
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein set
forth, the Company agrees to issue and sell to, and the Selling Securityholder
agrees to sell to, each of the Underwriters, and each of the Underwriters,
severally and not jointly, agrees to purchase from the Company and the Selling
Securityholder at a purchase price of $______ per share, the number of Firm
Securities set forth opposite the name of such Underwriter in Schedule 1 hereto.
The Company's Firm Securities shall consist of 500,000 shares of Common Stock
and the Selling Securityholder's Firm Securities shall consist of 2,500,000
shares of Common Stock. The number of Firm Securities to be purchased by each
Underwriter from the Company and the Selling Securityholder shall be as nearly
as practicable in the same proportion to the total number of Firm Securities
being sold by the Company and the Selling Securityholder as the total number of
Firm Securities to be purchased by such Underwriter bears to the total number of
Firm Securities to be purchased by the Underwriters hereunder. The obligations
of the Company and of the Selling Securityholder shall be several and not
joint. One or more certificates in definitive form for the Firm Securities that
the several Underwriters have agreed to purchase hereunder, and in such
denomination or denominations and registered in such name or names as the
Representatives request upon notice to the Company and the Selling
Securityholder at least 48 hours prior to the Firm Closing Date, shall be
delivered by or on behalf of the Company and the Selling Securityholder to the
Representatives for the respective accounts of the Underwriters, against payment
by or on behalf of the Underwriters of the purchase price therefor by wire
transfer payable in same-day funds (the "Wired Funds") to the order of the
Company in the case of the Company's Firm Securities and to the order of the
Custodian in the case of the Selling Securityholder's Firm Securities. At the
election of the several Underwriters, which election shall be made by the
Representatives on behalf of such Underwriters, delivery of the Firm Securities
may be made through the book-entry facilities of The Depository Trust Company on
behalf of the Company to Prudential Securities Incorporated for the account of
such Underwriters. Such delivery of and payment for the Firm Securities shall
be made at the offices of King & Spalding, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 at 9:30 A.M., New York time, on May __, 1997; or at such other place,
time or date as the Representatives and the Company may agree upon or as the
Representatives may determine pursuant to Section 9 hereof, such time and date
of delivery against payment being herein referred to as the "Firm Closing Date."
The Company and the Selling Securityholder will make such certificate or
certificates for the Firm Securities available for checking and packaging by the
Representatives at the offices in New York, New York of the Company's transfer
agent or registrar or of Prudential Securities Incorporated at least 24 hours
prior to the Firm Closing Date.
(b) For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Securities as contemplated by the Prospectus,
the Company hereby grants to the several Underwriters an option to purchase,
severally and not jointly, the
-14-
Option Securities. The purchase price to be paid for any Option Securities shall
be the same price per share as the price per share for the Firm Securities set
forth above in paragraph (a) of this Section 3. The option granted hereby may be
exercised as to all or any part of the Option Securities from time to time
within thirty days after the date of the Prospectus (or, if such 30th day shall
be a Saturday or Sunday or a holiday, on the next business day thereafter when
the Nasdaq National Market is open for trading). The Underwriters shall not be
under any obligation to purchase any of the Option Securities prior to the
exercise of such option. The Representatives may from time to time exercise the
option granted hereby by giving notice in writing or by telephone (confirmed in
writing) to the Company setting forth the aggregate number of Option Securities
as to which the several Underwriters are then exercising the option and the date
and time for delivery of and payment for such Option Securities. Any such date
of delivery shall be determined by the Representatives but shall not be earlier
than two business days or later than five business days after such exercise of
the option and, in any event, shall not be earlier than the Firm Closing Date.
The time and date set forth in such notice, or such other time on such other
date as the Representatives and the Company may agree upon or as the
Representatives may determine pursuant to Section 9 hereof, is herein called the
"Option Closing Date" with respect to such Option Securities. Upon exercise of
the option as provided herein, the Company shall become obligated to sell to
each of the several Underwriters, and, subject to the terms and conditions
herein set forth, each of the Underwriters (severally and not jointly) shall
become obligated to purchase from the Company, the same percentage of the total
number of the Option Securities as to which the several Underwriters are then
exercising the option as such Underwriter is obligated to purchase of the
aggregate number of Firm Securities, as adjusted by the Representatives in such
manner as they deem advisable to avoid fractional shares. If the option is
exercised as to all or any portion of the Option Securities, one or more
certificates in definitive form for such Option Securities, and payment
therefor, shall be delivered on the related Option Closing Date in the manner,
and upon the terms and conditions, set forth in paragraph (a) of this Section 3
with respect to the sale of the Firm Securities, except that reference therein
to the Firm Securities and the Firm Closing Date shall be deemed, for purposes
of this paragraph (b), to refer to such Option Securities and Option Closing
Date, respectively.
(c) The Company and the Selling Securityholder hereby acknowledge that the
wire transfer by or on behalf of the Underwriters of the purchase price for any
Securities does not constitute the closing of a purchase and sale of the
Securities. Only execution and delivery of a receipt for Securities by the
Underwriters indicates completion of the closing of a purchase of the Securities
from the Company and the Selling Securityholder. Furthermore, in the event that
the Underwriters wire funds to the Company and the Selling Securityholder prior
to the completion of the closing of a purchase of the Securities, the Company
and the Selling Securityholder hereby acknowledge that until the Underwriters
execute and deliver a receipt for the Securities, by facsimile or otherwise, the
Company and the Selling Securityholder will not be entitled to the Wired Funds
and shall return the Wired Funds to the Underwriters as soon as practicable (by
wire transfer of same-day funds) upon demand. In the event that the closing of a
purchase of the Securities is not completed and the Wired Funds are not returned
by the Company and the Selling Securityholder to the Underwriters on the same
day the Wired Funds were received by
-15-
the Company and the Selling Securityholder, the Company and the Selling
Securityholder agree to reimburse the Underwriters for each day the Wired Funds
are not returned, in same-day funds, interest on the amount of Wired Funds in an
amount equal to each day's interest, based on an annual interest rate, simple
interest, representing the Underwriters' cost of financing as reasonably
determined by Prudential Securities Incorporated. Upon satisfactory receipt of
the Securities by the Underwriters in accordance with all the terms of this
Agreement and the compliance by the Company and the Selling Securityholder with
all the terms of this Agreement to be performed on or before the Closing Date,
the Underwriters shall execute the receipt described above for the Securities.
(d) It is understood that either of you, individually and not as one of
the Representatives, may (but shall not be obligated to) make payment on behalf
of any Underwriter or Underwriters for any of the Securities to be purchased by
such Underwriter or Underwriters. No such payment shall relieve such Underwriter
or Underwriters from any of its or their obligations hereunder.
4. Offering by the Underwriters. Upon your authorization of the release
of the Firm Securities, the several Underwriters propose to offer the Firm
Securities for sale to the public upon the terms set forth in the Prospectus.
5. Covenants of the Company and the Selling Securityholder.
(a) The Company covenants and agrees with each of the Underwriters that:
(i) The Company will use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement, and
any amendments thereto to become effective as promptly as possible. If
required, the Company will file the Prospectus or any Term Sheet that
constitutes a part thereof, any Integrated Prospectus and any amendment or
supplement thereto with the Commission in the manner and within the time
period required by Rules 434 and 424(b) under the Act. During any time when
a prospectus relating to the Securities is required to be delivered under
the Act, the Company (A) will comply with all requirements imposed upon it
by the Act, the Exchange Act and the respective rules and regulations of
the Commission thereunder to the extent necessary to permit the continuance
of sales of or dealings in the Securities in accordance with the provisions
hereof and each of the Prospectus and any Integrated Prospectus, as then
amended or supplemented and (B) will not file with the Commission the
Prospectus, Term Sheet or Integrated Prospectus or the amendment referred
to in the second sentence of Section 2(a)(i) hereof, any amendment or
supplement to such Prospectus, Term Sheet, Integrated Prospectus or any
amendment to the Registration Statement or any Rule 462(b) Registration
Statement of which the Representatives shall not previously have been
advised and furnished with a copy for a reasonable period of time prior to
the proposed filing and as to which filing the Representatives shall not
have given their consent. The Company will prepare and file with the
Commission, in
-16-
accordance with the rules and regulations of the Commission, promptly upon
request by the Representatives or counsel for the Underwriters, any
amendments to the Registration Statement or any Rule 462(b) Registration
Statement or amendments or supplements to the Prospectus any Integrated
Prospectus that may be necessary or advisable in connection with the
distribution of the Securities by the several Underwriters, and will use
its best efforts to cause any such amendment to the Registration Statement
to be declared effective by the Commission as promptly as possible. The
Company will advise the Representatives, promptly after receiving notice
thereof, of the time when the Registration Statement or any amendment
thereto has been filed or declared effective or the Prospectus and any
Integrated Prospectus or any amendment or supplement thereto has been filed
and will provide evidence satisfactory to the Representatives of each such
filing or effectiveness.
(ii) The Company will advise the Representatives, promptly after
receiving notice or obtaining knowledge thereof, of (A) the issuance by the
Commission of any stop order suspending the effectiveness of the Original
Registration Statement or any Rule 462(b) Registration Statement or any
amendment thereto or any post-effective amendment thereto or any order
directed at any document incorporated by reference in the Registration
Statement, the Prospectus or any required Integrated Prospectus or any
amendment or supplement thereto or any order preventing or suspending the
use of any Preliminary Prospectus, the Prospectus or any Integrated
Prospectus or any amendment or supplement thereto, (B) the suspension of
the qualification of the Securities for offering or sale in any
jurisdiction, (C) the institution, threatening or contemplation of any
proceeding for any such purpose or (D) any request made by the Commission
for amending the Original Registration Statement or any Rule 462(b)
Registration Statement, for amending or supplementing any Preliminary
Prospectus, the Prospectus or any Integrated Prospectus or for additional
information. The Company will use its best efforts to prevent the issuance
of any such stop order and, if any such stop order is issued, to obtain the
withdrawal thereof as promptly as possible.
(iii) The Company will arrange for the qualification of the
Securities for offering and sale (with the assistance of counsel for the
Underwriters) under the securities or blue sky laws of such jurisdictions
as the Representatives may designate and will continue such qualifications
in effect for as long as may be necessary to complete the distribution of
the Securities; provided, however, that in connection therewith the Company
shall not be required to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction.
(iv) If, at any time prior to the later of (A) the final date when a
prospectus relating to the Securities is required to be delivered under the
Act or (B) the Option Closing Date, any event occurs as a result of which
the Prospectus or any Integrated Prospectus, as then amended or
supplemented, would include any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
-17-
therein, in the light of the circumstances under which they were made, not
misleading, or if for any other reason it is necessary at any time to amend
or supplement the Prospectus or any Integrated Prospectus to comply with
the Act, the Exchange Act or the respective rules or regulations of the
Commission thereunder, the Company will promptly notify the Representatives
thereof and, subject to Section 5(a)(i) hereof, will prepare and file with
the Commission, at the Company's expense, an amendment to the Registration
Statement or an amendment or supplement to the Prospectus or any Integrated
Prospectus that corrects such statement or omission or effects such
compliance.
(v) The Company will, without charge, provide (A) to the
Representatives and to counsel for the Underwriters three signed copies of
the registration statement originally filed with respect to the Securities
and each amendment thereto and any Rule 462(b) Registration Statement (in
each case including exhibits thereto) as the Representatives and counsel to
the Underwriters may reasonably request, (B) to each other Underwriter, a
conformed copy of such registration statement and any Rule 462(b)
Registration Statement and each amendment thereto (in each case without
exhibits thereto) and (C) so long as a prospectus relating to the
Securities is required to be delivered under the Act, as many copies of
each Preliminary Prospectus, the Prospectus or any Integrated Prospectus or
any amendment or supplement thereto as the Representatives may reasonably
request; without limiting the application of clause (C) of this sentence,
the Company, not later than (1) 6:00 PM, New York City time, on the date of
determination of the public offering price, if such determination occurred
at or prior to 10:00 AM, New York City time, on such date or (2) 2:00 PM,
New York City time, on the business day following the date of determination
of the public offering price, if such determination occurred after 10:00
AM, New York City time, on such date, will deliver to the Underwriters,
without charge, as many copies of the Prospectus and any amendment or
supplement thereto as the Representatives may reasonably request for
purposes of confirming orders that are expected to settle on the Firm
Closing Date.
(vi) The Company, as soon as practicable, will make generally
available to its securityholders and to the Representatives a consolidated
earnings statement of the Company and its subsidiaries that satisfies the
provisions of Section 11(a) of the Act and Rule 158 thereunder.
(vii) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Prospectus or any
Integrated Prospectus.
(viii) The Company will not, directly or indirectly, without the
prior written consent of Prudential Securities Incorporated, on behalf of
the Underwriters, offer, sell, offer to sell, contract to sell, pledge,
grant any option to purchase or otherwise sell or dispose (or announce any
offer, sale, offer of sale, contract of sale, pledge, grant of any option
to purchase or other sale or disposition) of any shares of Common Stock or
any securities convertible into, or exchangeable or exercisable for, Common
Stock or other
-18-
capital stock of the Company, or any right to purchase or acquire Common
Stock or other capital stock of the Company for a period of 120 days after
the date hereof, except pursuant to this Agreement, and except for
issuances of options pursuant to stock option plans and employment
agreements in existence on the date hereof.
(ix) The Company will not, directly or indirectly, (A) take 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 or resale of the Securities or (B) (1) sell, bid for, purchase, or pay
anyone any compensation for soliciting purchases of, the Securities or (2)
pay or agree to pay to any person any compensation for soliciting another
to purchase any other securities of the Company (except for the sale of
Securities by the Selling Securityholder under this Agreement).
(x) If at any time during the 25-day period after the Registration
Statement becomes effective or the period prior to the Option Closing Date,
any rumor, publication or event relating to or affecting the Company shall
occur as a result of which in your opinion the market price of the Common
Stock has been or is likely to be materially affected (regardless of
whether such rumor, publication or event necessitates a supplement to or
amendment of the Prospectus and any Integrated Prospectus), the Company
will, after written notice from you advising the Company to the effect set
forth above, forthwith, prepare, consult with you concerning the substance
of, and disseminate a press release or other public statement, reasonably
satisfactory to you, responding to or commenting on such rumor, publication
or event.
(xi) The Company will obtain the agreements described in Section 7(g)
hereof from all persons other than the Selling Securityholder prior to the
Firm Closing Date.
(xii) The Company, during the period when the Prospectus is required
to be delivered under the Act or the Exchange Act, will file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15
of the Exchange Act within the time periods required by the Exchange Act
and the rules and regulations thereunder.
(xiii) The Company will cause Firm Securities and Option Securities
to be issued and sold by it to be included in the Nasdaq National Market
prior to the Firm Closing Date. The Company will ensure that the Securities
remain included for trading on the Nasdaq National Market following the
Firm Closing Date.
(xiv) During a period of three years from the effective date of the
Registration Statement, the Company will furnish to you and, upon request,
to each of the other Underwriters, without charge, (A) copies of all
reports or other communications (financial or other) furnished to
securityholders, (B) as soon as they are available, copies of any reports
and financial statements furnished to or filed with the Commission or any
-19-
national securities exchange and (C) such additional publicly available
information concerning the business and financial condition of the Company, if
any, as you may reasonably request.
(xv) If the Company elects to rely on Rule 462(b), the Company shall
both file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) and pay the applicable fees in accordance with Rule 111
promulgated under the Act by the earlier of (A) 10:00 P.M. Eastern time on the
date of this Agreement and (B) the time confirmations are sent or given, as
specified by Rule 462(b)(2).
(b) The Selling Securityholder covenants and agrees with each of the
Underwriters that:
(i) The Selling Securityholder will not, directly or indirectly,
without the prior written consent of Prudential Securities Incorporated, on
behalf of the Underwriters, offer, sell, offer to sell, contract to sell,
pledge, grant any option to purchase or otherwise sell or dispose (or announce
any offer, sale, offer of sale, contract of sale, pledge, grant of any option to
purchase or other sale or disposition) of any shares of Common Stock or any
securities convertible into, or exchangeable or exercisable for, Common Stock or
other capital stock of the Company, or any right to purchase or acquire Common
Stock or other capital stock of the Company for a period of 120 days after the
date hereof, except (A) pursuant to this Agreement, (B) as required to comply
with the insurance law of the State of New Jersey, (C) in a transaction effected
other than on the Nasdaq National Market that is exempt from the registration
requirements of the Act or (D) as consented to in writing by Prudential
Securities Incorporated.
(ii) The Selling Securityholder will not, directly or indirectly, (A)
take 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
or resale of the Securities or (B) (1) sell, bid for, purchase, or pay anyone
any compensation for soliciting purchases of, the Securities or (2) pay or agree
to pay to any person any compensation for soliciting another to purchase any
other securities of the Company (except for the sale of Securities by the
Selling Securityholder under this Agreement).
(iii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Internal Revenue Code of 1986, as
amended, with respect to the transactions herein contemplated, the Selling
Securityholder agrees to deliver to the Representatives prior to or on the Firm
Closing Date a properly completed and executed United States Treasury Department
Form W-8 or W-9 (or other applicable form or statement specified by the Treasury
Department regulations in lieu thereof).
-20-
6. Expenses. The Company and the Selling Securityholder jointly and
severally will pay all costs and expenses incident to the performance of the
obligations of the Company and the Selling Securityholder under this Agreement,
whether or not the transactions contemplated herein are consummated or this
Agreement is terminated pursuant to Section 11 hereof, including all costs and
expenses incident to (a) the printing or other production of documents with
respect to the transactions, including any costs of printing the registration
statement originally filed with respect to the Securities and any amendment
thereto, any Rule 462(b) Registration Statement, any Preliminary Prospectus, the
Prospectus and any Integrated Prospectus and any amendment or supplement
thereto, this Agreement and any blue sky memoranda, (b) all arrangements
relating to the delivery to the Underwriters of copies of the foregoing
documents, (c) the fees and disbursements of the counsel, the accountants and
any other experts or advisors retained by the Company, (d) preparation, issuance
and delivery to the Underwriters of any certificates evidencing the Securities,
including transfer agent's and registrar's fees and the Custodian's fees, (e)
the qualification of the Securities under state securities and blue sky laws,
including filing fees and fees and disbursements of counsel for the Underwriters
relating thereto, (f) the filing fees of the Commission and the National
Association of Securities Dealers, Inc. relating to the Securities, (g) any
listing of the Securities on the Nasdaq National Market, (h) meetings with
prospective investors in the Securities (other than shall have been specifically
approved by the Representatives to be paid for by the Underwriters) and (i)
advertising relating to the offering of the Securities (other than as shall have
been specifically approved by the Representatives to be paid for by the
Underwriters). Any transfer taxes imposed on the sale of the Securities to the
several Underwriters will be paid by the Company and the Selling Securityholder
pro rata. If the sale of the Securities provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 7 hereof is not satisfied, because this Agreement is terminated pursuant
to Section 11 hereof or because of any failure, refusal or inability on the part
of the Company or the Selling Securityholder to perform all obligations and
satisfy all conditions on its part to be performed or satisfied hereunder other
than by reason of a default by any of the Underwriters, the Company and the
Selling Securityholder will jointly and severally reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including counsel fees and
disbursements) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities. The Company and the Selling
Securityholder shall not in any event be liable to any of the Underwriters for
the loss of anticipated profits from the transactions covered by this Agreement.
7. Conditions of the Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representatives' sole discretion, to the accuracy of the
representations and warranties of the Company and the Selling Securityholder
contained herein as of the date hereof and as of the Firm Closing Date, as if
made on and as of the Firm Closing Date, to the accuracy of the statements of
the Company's officers made pursuant to the provisions hereof, to the
performance by the Company and the Selling Securityholder of its covenants and
agreements hereunder and to the following additional conditions:
-21-
(a) If the Original Registration Statement or any amendment thereto filed
prior to the Firm Closing Date has not been declared effective as of the time of
execution hereof, the Original Registration Statement or such amendment and, if
the Company has elected to rely upon Rule 462(b), the Rule 462(b) Registration
Statement shall have been declared effective not later than the earlier of (i)
11:00 A.M., New York time, on the date on which the amendment to the
registration statement originally filed with respect to the Securities or to the
Registration Statement, as the case may be, containing information regarding the
initial public offering price of the Securities has been filed with the
Commission and (ii) the time confirmations are sent or given as specified by
Rule 462(b)(2) or, with respect to the Original Registration Statement, such
later time and date as shall have been consented to by the Representatives; if
required, the Prospectus or any Term Sheet that constitutes a part thereof and
any Integrated Prospectus and any amendment or supplement thereto shall have
been filed with the Commission in the manner and within the time period required
by Rules 434 and 424(b) under the Act; no stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto and no order directed at any document incorporated by reference in the
Registration Statement, the Prospectus or any Integrated Prospectus or any
amendment or supplement thereto shall have been issued, and no proceedings for
that purpose shall have been instituted or threatened or, to the knowledge of
the Company or the Representatives, shall be contemplated by the Commission; and
the Company shall have complied with any request of the Commission for
additional information (to be included in the Registration Statement, the
Prospectus or any Integrated Prospectus or otherwise).
(b) The Representatives shall have received an opinion, dated the Firm
Closing Date, of Xxxxx & Xxxxxxx, counsel for the Company, to the effect that:
(i) the Company has been duly organized and is validly existing as a
corporation in good standing under the laws of Indiana and is duly
qualified to transact business as a foreign corporation and is in good
standing under the laws of all other jurisdictions where the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company.
(ii) the Company has the corporate power to own or lease its
properties and conduct its business as described in the Registration
Statement, the Prospectus and any Integrated Prospectus, and the Company
has the corporate power to enter into this Agreement and to carry out all
the terms and provisions hereof to be carried out by it;
-22-
(iii) the Company has an authorized, issued and outstanding
capitalization as set forth in each of the Prospectus and any Integrated
Prospectus; all of the issued shares of capital stock of the Company
(including but not limited to the Securities being sold by the Selling
Securityholder) have been duly authorized and validly issued and are fully
paid and nonassessable, and were not issued in violation of or subject to
any statutory or, to the best knowledge of such counsel, contractual
preemptive rights or other rights to subscribe for or purchase securities;
the Firm Securities and Option Securities being issued and sold by the
Company have been duly authorized and, when issued and delivered to and
paid for by the Underwriters pursuant to this Agreement, will be validly
issued, fully paid and nonassessable; the Securities being issued and sold
by the Company have been duly listed for trading on the Nasdaq National
Market; no holders of outstanding shares of capital stock of the Company
are entitled as such to any statutory or, to the best knowledge of such
counsel, contractual preemptive or other rights to subscribe for any of the
Securities; and, to the best knowledge of such counsel, no holders of
securities of the Company are entitled to have such securities registered
under the Registration Statement;
(iv) to the best knowledge of such counsel, the Company does not
directly or indirectly own any shares of stock or any other equity
securities of any corporation or have any direct or indirect equity
interest in any firm, partnership, association or other entity, which
corporation, firm, partnership, association or other entity would,
individually or when aggregated with all such other corporations, firms,
partnerships, associations or other entities, be considered a "significant
subsidiary" within the meaning of Rule 1-02 of Regulation S-X under the
Act.
(v) the statements set forth under the heading "Description of
Capital Stock" in each of the Prospectus and any Integrated Prospectus,
insofar as such statements purport to summarize certain provisions of the
capital stock of the Company, provide a fair summary of such provisions,
and the statements set forth under the headings "Business - Legal
Proceedings" in each of the Prospectus and any Integrated Prospectus,
insofar as such statements constitute a summary of the matters referred to
therein, provide a fair summary of such matters;
(vi) the execution and delivery of this Agreement have been duly
authorized by all necessary corporate action of the Company, and this
Agreement has been duly executed and delivered by the Company;
(vii) (A) to the best knowledge of such counsel, no legal or
governmental proceedings are pending to which the Company is a party or to
which the property of the Company is subject that are required to be
described in the Registration Statement, the Prospectus and any Integrated
Prospectus and are
-23-
not described therein, no such proceedings have been threatened against the
Company or with respect to any of its properties and (B) no contract or
other document known to such counsel is required to be described in the
Registration Statement, the Prospectus and any Integrated Prospectus or to
be filed as an exhibit to the Registration Statement that is not described
therein or filed as required;
(viii) the issuance, offering and sale of the Securities being issued
and sold by the Company to the Underwriters pursuant to this Agreement, the
compliance by the Company with the other provisions of this Agreement and
the consummation of the other transactions herein contemplated do not (A)
require the consent, approval, authorization, registration or qualification
of or with any governmental authority, except such as have been obtained
and such as may be required under state securities or blue sky laws or (B)
conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, lease or other agreement or instrument known to such counsel to
which the Company is a party or by which the Company or any of its
properties are bound, or the charter documents or the bylaws of the
Company, or any statute or any judgment, decree, order, rule or regulation
of any court or other governmental authority or any arbitrator known to
such counsel after investigation and applicable to the Company;
(ix) the Registration Statement is effective under the Act; any
required filing of the Prospectus or any Term Sheet that constitutes a part
thereof and of any Integrated Prospectus pursuant to Rules 434 and 424(b)
has been made in the manner and within the time period required by Rules
434 and 424(b); and no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto and no order
directed at any document incorporated by reference in the Registration
Statement, the Prospectus or any Integrated Prospectus or any amendment or
supplement thereto has been issued, and no proceedings for that purpose
have been instituted or threatened or, to the best knowledge of such
counsel, are contemplated by the Commission;
(x) the registration statement originally filed with respect to the
Securities and each amendment thereto, any Rule 462(b) Registration
Statement, the Prospectus and any Integrated Prospectus (in each case
including the documents incorporated by reference therein but not including
the financial statements and other financial information contained therein,
as to which such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act, the Exchange
Act and the respective rules and regulations of the Commission thereunder;
-24-
(xi) the Company is not an "investment company" under the Investment
Company Act of 1940, as amended, and consummation of the transactions
herein contemplated will not cause the Company to become an investment
company subject to registration under the Investment Company Act;
(xii) except as disclosed in each of the Prospectus and any
Integrated Prospectus (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary Prospectus)
there are no outstanding (A) securities or obligations of the Company
convertible into or exchangeable for any capital stock of the Company, (B)
warrants, rights or options to subscribe for or purchase from the Company
any such capital stock or any such convertible or exchangeable securities
or obligations, or (C) obligations of the Company to issue any shares of
capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
(xiii) If the Company elects to rely on Rule 434, the Prospectus is
not "materially different", as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time of its
effectiveness or any effective post-effective amendment thereto (including
such information that is permitted to be omitted pursuant to Rule 430A).
Such counsel shall also state that they have no reason to believe (A) that
the Registration Statement, as of its effective date, contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading and
(B) that each of the Prospectus and any Integrated Prospectus, as of its date or
the date of such opinion, included or includes any 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 any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials. The opinion shall also state that
as to matters of Indiana law, King & Spalding, counsel to the Underwriters,
shall be entitled to rely upon such opinion.
References to the Registration Statement and the Prospectus or any
Integrated Prospectus in this paragraph (b) shall include any amendment or
supplement thereto at the date of such opinion.
(c) The Representatives shall have received an opinion, dated the Firm
Closing Date of Xxxxxxx X. Xxxxxxxxx, Esq., counsel for the Selling
Securityholder, to the effect that:
-25-
(i) the Selling Securityholder has full corporate power to enter into
this Agreement and the Custody Agreement and to sell, assign, transfer and
deliver to the Underwriters the Securities to be sold by the Selling
Securityholder hereunder in accordance with the terms of this Agreement,
and to perform its obligations under the Custody Agreement; the execution
and delivery of this Agreement and the Custody Agreement have been duly
authorized by all necessary corporate action of the Selling Securityholder;
this Agreement and the Custody Agreement have been executed and delivered
by the Selling Securityholder; assuming due authorization, execution and
delivery by the Custodian, the Custody Agreement is the valid and binding
agreement of the Selling Securityholder, enforceable against such Selling
Securityholder in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, general equitable principles and the
discretion of courts in granting equitable remedies;
(ii) assuming that the Underwriters purchased the Securities being
sold hereunder in good faith without notice of any adverse claims as
defined in Section 8-302 of the Uniform Commercial Code, the delivery by
the Selling Securityholder to the Underwriters of certificates for the
Securities being sold hereunder by the Selling Securityholder against
payment therefor as provided herein, will convey good and marketable title
to the Securities to the several Underwriters, free and clear of any
security interests, liens, encumbrances, equities, claims or other defects;
and
(iii) the sale of the Securities to the Underwriters by the Selling
Securityholder pursuant to this Agreement, the compliance by the Selling
Securityholder with the other provisions of this Agreement and the Custody
Agreement and the consummation of the other transactions herein
contemplated do not (A) require the consent, approval, authorization,
registration or qualification of or with any governmental authority, except
such as has been obtained and such as may be required under state
securities or blue sky laws or (B) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default
under any indenture, mortgage, deed of trust, material lease or other
material agreement or instrument known to such counsel to which the Selling
Securityholder is a party or by which the Selling Securityholder or any of
such Selling Securityholder's properties are bound, or any statute or any
judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator known to such counsel applicable
to such Selling Securityholder.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company, the Selling Securityholder and public officials.
-26-
References to the Registration Statement and the Prospectus or any
Integrated Prospectus in this paragraph (c) shall include any amendment or
supplement thereto at the date of such opinion.
(d) The Representatives shall have received an opinion, dated the Firm
Closing Date, of King & Spalding, counsel for the Underwriters, with respect to
the issuance and sale of the Firm Securities, the Registration Statement, the
Prospectus or any Integrated Prospectus, and such other related matters as the
Representatives may reasonably require, and the Company shall have furnished to
such counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters. In rendering such opinion, such
counsel may rely as to all matters of Indiana law upon the opinion of Xxxxx &
Xxxxxxx.
(e) The Representatives shall have received from Price Waterhouse LLP a
letter or letters dated, respectively, the date hereof and the Firm Closing
Date, in form and substance satisfactory to the Representatives, to the effect
that:
(i) they are independent accountants with respect to the Company and
its subsidiaries (the "Subsidiaries") within the meaning of the Act, the
Exchange Act and the applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial statements
and schedules of the Company included in the Registration Statement, the
Prospectus and any Integrated Prospectus comply in form in all material
respects with the applicable accounting requirements of the Act, the
Exchange Act and the related published rules and regulations;
(iii) on the basis of (A) their review, in accordance with standards
established by the American Institute of Certified Public Accountants in
SAS 71, Interim Financial Information, of any interim unaudited
consolidated financial statements of the Company and its consolidated
subsidiaries included in the Registration Statement, the Prospectus and any
Integrated Prospectus (which do not constitute an examination made in
accordance with generally accepted auditing standards), (B) a reading of
the interim consolidated financial data for the period from the date of the
latest balance sheet included in the Registration Statement, Prospectus and
any Integrated Prospectus to the date of the latest available interim
consolidated financial data, (C) a reading of the minute books of the
shareholders, the board of directors and any committees thereof of the
Company and its Subsidiaries, from February 2, 1997 through a date not more
than five days prior to the date of such letter, and (D) inquiries of
certain officials of the Company who have responsibility for financial and
accounting matters, nothing came to their attention that caused them to
believe that:
-27-
(X) the interim unaudited consolidated financial statements, if
any, of the Company and its consolidated Subsidiaries included in the
Registration Statement, the Prospectus and any Integrated Prospectus
do not comply in form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations thereunder or that any material modifications should be
made to said interim unaudited consolidated financial statements for
them to be in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
consolidated financial statements included in the Registration
Statement, the Prospectus and any Integrated Prospectus;
(Y) at the date of the latest available interim consolidated
financial data and at a specific date not more than five business days
prior to the date of such letter, there was any change in long-term or
short-term debt of the Company and its Subsidiaries or any decreases
in net current assets (working capital) or shareholders' equity of the
Company and its Subsidiaries, in each case compared with amounts shown
on the February 1, 1997 audited consolidated balance sheet included in
the Registration Statement, the Prospectus and any Integrated
Prospectus, or for the period from February 2, 1997 to such specified
date there were any decreases, as compared with the prior comparable
period, in net sales or income before income taxes or total or per
share amounts of net income of the Company and its Subsidiaries,
except in all instances for changes, decreases or increases set forth
in such letter; and
(iv) they have carried out certain specified procedures (as requested
by the Representatives and which Price Waterhouse LLP is willing to perform
and report upon), not constituting an audit, with respect to certain
amounts, percentages and financial information that are derived from the
general accounting records of the Company and its Subsidiaries and are
included in the Registration Statement, the Prospectus and any Integrated
Prospectus and the documents incorporated by reference in the Registration
Statement, the Prospectus and any Integrated Prospectus, and have compared
such amounts, percentages and financial information with such records of
the Company and its Subsidiaries or with information derived from such
records and have found them to be in agreement, excluding any questions of
legal interpretation.
In the event that the letters referred to above set forth any such changes,
decreases or increases, it shall be a further condition to the obligations of
the Underwriters that (A) such letters shall be accompanied by a written
explanation from the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary and (B) such changes,
decreases or increases do not, in the sole judgment of the
-28-
Representatives, make it impractical or inadvisable to proceed with the purchase
and delivery of the Securities as contemplated by the Registration Statement, as
amended as of the date hereof.
References to the Registration Statement, the Prospectus and any Integrated
Prospectus in this paragraph (e) with respect to either letter referred to
above shall include any amendment or supplement thereto at the date of such
letter.
(f) The Representatives shall have received a certificate, dated the Firm
Closing Date, of the principal executive officer and the principal financial or
accounting officer of the Company to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Firm Closing
Date; the Registration Statement, as amended as of the Firm Closing Date,
does not include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading,
and each of the Prospectus and any Integrated Prospectus, as amended or
supplemented as of the Firm Closing Date, does not include any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and the Company has performed
all covenants and agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Firm Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement or any amendment thereto and no order directed at any document
incorporated by reference in the Registration Statement, the Prospectus or
any Integrated Prospectus, or any amendment or supplement thereto, has been
issued, and no proceedings for that purpose have been instituted or
threatened or, to the best of the Company's knowledge, are contemplated by
the Commission; and
(iii) subsequent to the respective dates as of which information is
given in the Registration Statement and each of the Prospectus and any
Integrated Prospectus, (A) the Company has not sustained any material loss
or interference with its business or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance,
or from any labor dispute or any legal or governmental proceeding and there
has not been any material adverse change, or any development involving a
prospective material adverse change, in the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company; (B) the Company has not incurred any material liability or
obligation, direct or contingent, nor entered into any material transaction
not in the ordinary course of business; (C) the Company has not purchased
any of its outstanding capital stock, nor declared, paid or otherwise
-29-
made any dividend or distribution of any kind on its capital stock; and (D)
there has not been any material change in the capital stock, short-term
debt or long-term debt of the Company and its consolidated subsidiaries,
except in each case as described in or contemplated by the Prospectus and
any Integrated Prospectus (exclusive of any amendment or supplement
thereto).
(g) The Representatives shall have received from the Selling
Securityholder and each executive officer and director of the Company an
agreement to the effect that such person or entity will not, directly or
indirectly, without the prior written consent of Prudential Securities
Incorporated, on behalf of the Underwriters, offer, sell, offer to sell,
contract to sell, pledge, grant any option to purchase or otherwise sell or
dispose (or announce any offer, sale, pledge, offer of sale, contract of sale,
grant of an option to purchase or other sale or disposition) of any shares of
Common Stock or any securities convertible into, or exchangeable or exercisable
for, shares of Common Stock or other capital stock of the Company, or any right
to purchase or acquire Common Stock or other capital stock of the Company for a
period of 120 days after the date of this Agreement, except (A) pursuant to this
Agreement, (B) for issuances of options pursuant to stock option plans and
employment agreements in existence on the date hereof and (C) with respect to
the Selling Securityholder, (i) as required to comply with the insurance law of
the State of New Jersey, (ii) in a transaction effected other than on the Nasdaq
National Market that is exempt from the registration requirements of the Act or
(iii) as consented to in writing by Prudential Securities Incorporated.
(h) On or before the Firm Closing Date, the Representatives and counsel
for the Underwriters shall have received such further certificates, documents or
other information as they may have reasonably requested from the Company.
(i) Prior to the commencement of the offering of the Securities, the
Securities to be issued and sold by the Company shall have been included in the
Nasdaq National Market.
(j) The Underwriters shall have received a certificate from the Selling
Securityholder, signed by the Selling Securityholder, dated the Firm Closing
Date, to the effect that:
(i) the representations and warranties of the Selling Securityholder
in this Agreement are true and correct as if made on and as of the Firm
Closing Date;
(ii) with respect to statements or omissions in (A) the Registration
Statement, as amended as of the Firm Closing Date, made in reliance upon
and in conformity with written information furnished to the Company by the
Selling Securityholder specifically for use in the Registration Statement
therein, the Registration Statement does not include any untrue statement
of a material fact or
-30-
omit to state any material fact necessary to make the statements therein
not misleading, and (B) either the Prospectus or any Integrated Prospectus,
as amended or supplemented as of the Firm Closing Date, made in reliance
upon and in conformity with written information furnished to the Company by
the Selling Securityholder specifically for use in the Registration
Statement therein does not include any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statement
therein, in the light of the circumstances under which they were made, not
misleading; and
(iii) the Selling Securityholder has performed all covenants and
agreements on his or its part to be performed or satisfied at or prior to
the Firm Closing Date.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representatives and counsel for the Underwriters shall
reasonably request.
The respective obligations of the several Underwriters to purchase and pay
for any Option Securities shall be subject, in their discretion, to each of the
foregoing conditions to purchase the Firm Securities, except that all references
to the Firm Securities and the Firm Closing Date shall be deemed to refer to
such Option Securities and the related Option Closing Date, respectively.
8. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless each Underwriter, the
Selling Securityholder and each person, if any, who controls any Underwriter or
the Selling Securityholder within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter, the Selling
Securityholder or such controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made by the
Company in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or any amendment
thereto, any Preliminary Prospectus, the Prospectus or any Integrated
Prospectus or any amendment or supplement thereto or (B) any application or
other document, or any amendment or supplement thereto, executed by the
Company or based upon written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify the Securities under
the
-31-
securities or blue sky laws thereof or filed with the Commission or any
securities association or securities exchange (each an "Application"),
(iii) the omission or alleged omission to state in the Registration
Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any Integrated Prospectus or any amendment or supplement
thereto, or any Application a material fact required to be stated therein
or necessary to make the statements therein not misleading, or
(iv) any untrue statement or alleged untrue statement of any material
fact contained in any audio or visual materials supplied by the Company to
be used in connection with the marketing of the Securities, including
without limitations, slides, videos, films and tape recordings,
and will reimburse, as incurred, each Underwriter, the Selling Securityholder
and each such controlling person for any legal or other expenses reasonably
incurred by such Underwriter, the Selling Securityholder or such controlling
person in connection with investigating, defending against or appearing as a
third-party witness in connection with any such loss, claim, damage, liability
or action; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement or any amendment thereto,
any Preliminary Prospectus, the Prospectus or any Integrated Prospectus or any
amendment or supplement thereto or any Application in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
or the Selling Securityholder, as the case may be, through the Representatives
specifically for use therein. This indemnity agreement will be in addition to
any liability which the Company may otherwise have. The Company will not,
without the prior written consent of the Underwriter or Underwriters purchasing,
in the aggregate, more than fifty percent (50%) of the Securities, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not any such Underwriter, the Selling
Securityholder or any person who controls any such Underwriter or the Selling
Securityholder, as the case may be, within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of the Selling Securityholder, all of the Underwriters and
such controlling persons from all liability arising out of such claim, action,
suit or proceeding. Notwithstanding anything to the contrary contained herein,
the liability of the Company to the Selling Securityholder and any person who
controls the Selling Securityholder within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act under the indemnity agreement contained in
this Section 8(a) shall be limited to $1,000,000.
(b) The Selling Securityholder (except as provided in Section 8(f)) agrees
to indemnify and hold harmless each Underwriter and each person, if any, who
controls any
-32-
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter or such controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment thereto, any
Preliminary Prospectus, the Prospectus or any Integrated Prospectus or any
amendment or supplement thereto; or
(ii) the omission or the alleged omission to state therein a material
fact required to be stated in the Registration Statement or any amendment
thereto, any Preliminary Prospectus, the Prospectus or any Integrated
Prospectus or any amendment or supplement thereto, or any Application or
necessary to make the statements therein not misleading;
but only to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Selling Securityholder for
use therein. This indemnity agreement will be in addition to any liability
which the Selling Securityholder may otherwise have. The Selling Securityholder
will not, without the prior written consent of the Underwriter or Underwriters
purchasing, in the aggregate, more than fifty percent (50%) of the Securities,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
may be sought hereunder (whether or not such Underwriter or any person who
controls such Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act is a party to such claim, action, suit or proceeding),
unless such settlement, compromise or consent includes an unconditional release
of the Underwriters and each such controlling person from all liability arising
out of such claim, action, suit or proceeding.
(c) Each Underwriter, severally and not jointly, will indemnify and hold
harmless the Company, each of its directors, each of its officers who signed the
Registration Statement, the Selling Securityholder and each person, if any, who
controls the Company or the Selling Securityholder within the meaning of Section
15 of the Act or Section 20 of the Exchange Act against any losses, claims,
damages or liabilities to which the Company, any such director or officer of the
Company, the Selling Securityholder or any such controlling person of the
Company or such Selling Securityholder may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or any amendment thereto, any Preliminary Prospectus, the Prospectus
or any Integrated Prospectus or any amendment or supplement thereto, or any
Application or (ii) the omission or the alleged omission to state therein a
material fact required to be stated in the Registration Statement or any
amendment thereto, any Preliminary Prospectus,
-33-
the Prospectus or any Integrated Prospectus or any amendment or supplement
thereto, or any Application necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives specifically for use
therein; and, subject to the limitation set forth immediately preceding this
clause, will reimburse, as incurred, any legal or other expenses reasonably
incurred by the Company or any such director, officer or controlling person or
the Selling Securityholder in connection with investigating or defending any
such loss, claim, damage, liability or any action in respect thereof. This
indemnity agreement will be in addition to any liability which such Underwriter
may otherwise have.
(d) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 8. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such indemnified
party; provided, however, that if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 8 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Representatives in the case of
paragraph (a) of this Section 8, representing the indemnified parties under such
paragraph (a) who are parties to such action or actions) or (ii) the
indemnifying party does not promptly retain counsel satisfactory to the
indemnified party or (iii) the indemnifying party has authorized the employment
of counsel for the indemnified party at the expense of the indemnifying party.
After such notice from the indemnifying party to such indemnified party, the
indemnifying party will
-34-
not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the consent of the indemnifying
party.
(e) In circumstances in which the indemnity agreement provided for in the
preceding paragraphs of this Section 8 is unavailable or insufficient, for any
reason, to hold harmless an indemnified party in respect of any losses, claims,
damages or liabilities (or actions in respect thereof), each indemnifying party,
in order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect (i) the relative benefits received by
the indemnifying party or parties on the one hand and the indemnified party on
the other from the offering of the Securities or (ii) if the allocation provided
by the foregoing clause (i) is not permitted by applicable law, not only such
relative benefits but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other in connection
with the statements or omissions or alleged statements or omissions that
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Securityholder on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total proceeds from the offering (before deducting expenses) received by
the Company and the Selling Securityholder bear to the total underwriting
discounts and commissions received by the Underwriters. The relative fault of
the parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, the Selling Securityholder or the Underwriters, the parties' relative
intents, knowledge, access to information and opportunity to correct or prevent
such statement or omission, and any other equitable considerations appropriate
in the circumstances. The Company, the Selling Securityholder and the
Underwriters agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation that does not take into account the equitable considerations
referred to above in this paragraph (e). Notwithstanding any other provision of
this paragraph (e), no Underwriter shall be obligated to make contributions
hereunder that in the aggregate exceed the total public offering price of the
Securities purchased by such Underwriter under this Agreement, less the
aggregate amount of any damages that such Underwriter has otherwise been
required to pay in respect of the same or any substantially similar claim, and
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute hereunder are several in proportion to their respective underwriting
obligations and not joint, and contributions among Underwriters shall be
governed by the provisions of the Prudential Securities Incorporated Master
Agreement Among Underwriters. For purposes of this paragraph (e), each person,
if any, who controls an Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act shall have the same rights to contribution as
such Underwriter, and each director of the Company, each officer of the Company
who signed the Registration Statement and each person, if any, who
-35-
controls the Company or any Selling Securityholder within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company or such Selling Securityholder, as the case may be.
(f) Notwithstanding anything contained herein to the contrary, the
liability of the Selling Securityholder under the indemnity and contribution
agreements contained in this Section 8 shall be limited to an amount equal to
the public offering price of the Securities to be sold by such Selling
Securityholder to the Underwriters minus the amount of the underwriting discount
paid thereon to the Underwriters by the Selling Securityholder.
9. Default of Underwriters. If one or more Underwriters default in their
obligations to purchase Firm Securities or Option Securities hereunder and the
aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, the other Underwriters may make
arrangements satisfactory to the Representatives for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm Securities or Option
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase. If one or more Underwriters so default with respect to an aggregate
number of Securities that is more than ten percent of the aggregate number of
Firm Securities or Option Securities, as the case may be, to be purchased by all
of the Underwriters at such time hereunder, and if arrangements satisfactory to
the Representatives are not made within 36 hours after such default for the
purchase by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives) of the Securities with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company other than as provided
in Section 10 hereof if the default is with respect to the Firm Closing Date and
without liability for the Option Shares if such default is with respect to the
Option Closing Date. In the event of any default by one or more Underwriters as
described in this Section 9, the Representatives shall have the right to
postpone the Firm Closing Date or the Option Closing Date, as the case may be,
established as provided in Section 3 hereof for not more than seven business
days in order that any necessary changes may be made in the arrangements or
documents for the purchase and delivery of the Firm Securities or Option
Securities, as the case may be. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 9. Nothing herein shall relieve any defaulting Underwriter from
liability for its default.
10. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company and its officers, the
Selling Securityholder and the several Underwriters set forth in this Agreement
or made by or on behalf of them, respectively, pursuant to this Agreement shall
remain in full force and effect, regardless of (i) any
-36-
investigation made by or on behalf of the Company, any of its officers or
directors, the Selling Securityholder, any Underwriter or any controlling person
referred to in Section 8 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 6 and 8 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
11. Termination.
(a) This Agreement may be terminated with respect to the Firm Securities or
any Option Securities in the sole discretion of the Representatives by notice to
the Company or the Selling Securityholder given prior to the Firm Closing Date
or the related Option Closing Date, respectively, in the event that the Company
or the Selling Securityholder shall have failed, refused or been unable to
perform all obligations and satisfy all conditions on their part to be performed
or satisfied hereunder at or prior thereto or, if at or prior to the Firm
Closing Date or such Option Closing Date, respectively,
(i) the Company shall have, in the sole judgment of the
Representatives, sustained any material loss or interference with its business
or properties from fire, flood, hurricane, accident or other calamity, whether
or not covered by insurance, or from any labor dispute or any legal or
governmental proceeding or there shall have been any material adverse change, or
any development involving a prospective material adverse change (including
without limitation a change in management or control of the Company), in the
condition (financial or otherwise), business prospects, net worth or results of
operations of the Company, except in each case as described in or contemplated
by each of the Prospectus and any Integrated Prospectus (exclusive of any
amendment or supplement thereto);
(ii) trading in the Common Stock shall have been suspended by the
Commission or the Nasdaq National Market;
(iii) trading in securities generally on the New York Stock Exchange
or the Nasdaq National Market shall have been suspended or minimum or maximum
prices shall have been established on any such exchange or market system;
(iv) banking moratorium shall have been declared by New York or
United States authorities; or
(v) there shall have been (A) an outbreak or escalation of hostilities
between the United States and any foreign power, (B) an outbreak or escalation
of any other insurrection or armed conflict involving the United States or (C)
any other calamity or crisis or material adverse change in general economic,
political or financial conditions having an effect on the United States
financial markets that, in the sole judgment of the Representatives, makes it
impractical or inadvisable to proceed with the public offering
-37-
or the delivery of the Securities as contemplated by the Registration Statement,
as amended as of the date hereof.
(b) Termination of this Agreement pursuant to this Section 11 shall be
without liability of any party to any other party except as provided in Section
10 hereof.
12. Information Supplied by Underwriters. The statements set forth in the
last paragraph on the front cover page and in the first and third paragraphs
under the heading "Underwriting" in any Preliminary Prospectus, the Prospectus
or any Integrated Prospectus (to the extent such statements relate to the
Underwriters) constitute the only information furnished by any Underwriter
through the Representatives to the Company for the purposes of Sections 2(a)(ii)
and 8 hereof. The Underwriters confirm that such statements (to such extent)
are correct.
13. Notices. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to Prudential Securities
Incorporated, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Equity
Transactions Group; if sent to the Company, shall be delivered or sent by mail,
telex or facsimile transmission and confirmed in writing to the Company at 0000
Xxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxx 00000, Attention: Chief Executive Officer and
President; if sent to the Selling Securityholder shall be delivered or sent by
mail, telex or facsimile transmission and confirmed in writing to the Selling
Securityholder at Xxxx Xxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000-0000, Attention:
Xxxx Xxxxxxx.
14. Successors. This Agreement shall inure to the benefit of and shall be
binding upon the several Underwriters, the Company, the Selling Securityholder
and their respective successors and legal representatives, and nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of such persons and for the benefit of no other person except
that (i) the indemnities of the Company and the Selling Securityholder contained
in Section 8 of this Agreement shall also be for the benefit of any person or
persons who control any Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act and (ii) the indemnities of the Underwriters
contained in Section 8 of this Agreement shall also be for the benefit of the
directors of the Company, the officers of the Company who have signed the
Registration Statement and any person or persons who control the Company or the
Selling Securityholder within the meaning of Section 15 of the Act or Section 20
of the Exchange Act. No purchaser of Securities from any Underwriter shall be
deemed a successor because of such purchase.
15. Applicable Law. The validity and interpretation of this Agreement,
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any provisions relating to conflicts of laws.
-38-
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
-39-
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute an agreement binding the Company, the Selling
Securityholder and each of the several Underwriters.
Very truly yours,
XXXX XXXXXX STORES, INC.
By:
________________________________________________
Name:
Title:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By:
________________________________________________
Name:
Title:
The foregoing Agreement
is hereby confirmed and
accepted as of the date
first above written.
PRUDENTIAL SECURITIES INCORPORATED
XXXXXXXXX, XXXXXXXX & COMPANY LLC
XXXXXX & XXXXXXX, INC.
By: PRUDENTIAL SECURITIES INCORPORATED
By: __________________________________
Name: Xxxx-Xxxxxx Canfin
Title: Managing Director
For itself and on behalf of the Representatives.
SCHEDULE 1
UNDERWRITERS
Number of Company's
Firm Securities to be
Underwriter Purchased
----------- ---------------------
Prudential Securities Incorporated.............
Xxxxxxxxx, Xxxxxxxx & Company LLC..............
Xxxxxx & Xxxxxxx, Inc..........................
Total................................. 500,000
-------
