EXHIBIT 1.1
THE READER'S DIGEST ASSOCIATION, INC.
DEBT SECURITIES
Underwriting Agreement
[ ], 2001
To the Representatives named
in Schedule I hereto of the
Underwriters named in
Schedule II hereto
Ladies and Gentlemen:
The Reader's Digest Association, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the underwriters named in Schedule II
hereto (the "Underwriters"), for whom you are acting as representatives (the
"Representatives"), the principal amount of its debt securities identified in
Schedule I hereto (the "Securities"), to be issued under the indenture specified
in Schedule I hereto (the "Indenture") between the Company and the Trustee
identified in such Schedule (the "Trustee"). If the firm or firms listed in
Schedule II hereto include only the firm or firms listed in Schedule I hereto,
then the terms "Underwriters" and "Representatives", as used herein, shall each
be deemed to refer to such firm or firms.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement (the file number of which is set forth in Schedule I hereto) on Form
S-3, relating to certain debt securities (the "Shelf Securities") to be issued
from time to time by the Company. The Company also has filed with, or proposes
to file with, the Commission pursuant to Rule 424 under the Securities Act a
prospectus supplement specifically relating to the Securities. The registration
statement, including all exhibits thereto, as amended to the date of this
Agreement is hereinafter referred to as the "Registration Statement" and the
related prospectus covering the Shelf Securities in the form first used to
confirm sales of the Securities is hereinafter referred to as the "Basic
Prospectus". The Basic Prospectus as supplemented by the prospectus supplement
specifically relating to the Securities in the form first used to confirm sales
of the Securities is hereinafter referred to as the "Prospectus". If the Company
has filed an abbreviated registration statement pursuant to Rule 462(b) under
the Securities Act (the "Rule 462 Registration Statement"), then any reference
herein to the term "Registration Statement" shall be deemed to include such Rule
462 Registration Statement. Any reference in this Agreement to the Registration
Statement, the Basic Prospectus, any preliminary form of
Prospectus (a "preliminary prospectus") previously filed with the Commission
pursuant to Rule 424 or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Securities Act which were filed under the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Exchange Act") on or before the date of this Agreement or
the date of the Basic Prospectus, any preliminary prospectus or the Prospectus,
as the case may be; and any reference to "amend", "amendment" or "supplement"
with respect to the Registration Statement, the Basic Prospectus, any
preliminary prospectus or the Prospectus shall be deemed to refer to and include
any documents filed under the Exchange Act after the date of this Agreement, or
the date of the Basic Prospectus, any preliminary prospectus or the Prospectus,
as the case may be, which are deemed to be incorporated by reference therein.
The Company hereby agrees with the Underwriters as follows:
1. The Company agrees to issue and sell the Securities to the several
Underwriters as hereinafter provided, and each Underwriter, on the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees to purchase, severally and not jointly, from the
Company the respective principal amount of Securities set forth opposite such
Underwriter's name in Schedule II hereto at the purchase price set forth in
Schedule I hereto plus accrued interest, if any, from the date specified in
Schedule I hereto to the date of payment and delivery.
2. The Company understands that the several Underwriters intend (i) to
make a public offering of their respective portions of the Securities and (ii)
initially to offer the Securities upon the terms set forth in the Prospectus.
3. Payment for the Securities shall be made by wire transfer in
immediately available federal funds to the account specified by the Company to
the Representatives, no later than noon the Business Day (as defined below)
prior to the Closing Date (as defined below), on the date and at the time and
place set forth in Schedule I hereto (or at such other time and place on the
same or such other date, not later than the fifth Business Day (as defined
below) thereafter, as you and the Company may agree in writing). As used herein,
the term "Business Day" means any day other than a day on which banks are
permitted or required to be closed in New York City. The time and date of such
payment and delivery with respect to the Securities are referred to herein as
the "Closing Date".
Payment for the Securities shall be made against delivery to the
nominee of The Depository Trust Company for the respective accounts of the
several Underwriters of the Securities of one or more global notes (the "Global
Note") representing the Securities, with any transfer taxes payable in
connection with the transfer to the Underwriters of the Securities duly paid by
the Company. The Global Note will be made available for inspection by the
Representatives at the office of [THE TRUSTEE, ADDRESS] [▇.▇. ▇▇▇▇▇▇ SECURITIES
INC. AT THE ADDRESS SET FORTH ABOVE] not later than 1:00 P.M., New York City
time, on the Business Day prior to the Closing Date.
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4. The Company represents and warrants to each Underwriter that:
(a) the Registration Statement has been declared effective by
the Commission under the Securities Act; no order preventing or
suspending the effectiveness of the Registration Statement has been
issued and no proceeding for that purpose has been instituted or, to
the knowledge of the Company, threatened by the Commission; and the
Registration Statement and Prospectus (as amended or supplemented if
the Company shall have furnished any amendments or supplements thereto)
comply, or will comply when they become effective or are filed with the
Commission, as the case may be, in all material respects with the
Securities Act and the Trust Indenture Act of 1939, as amended, and the
rules and regulations of the Commission thereunder (collectively, the
"Trust Indenture Act"), and do not and will not, as of the applicable
effective date as to the Registration Statement and any amendment
thereto and as of the date of the Prospectus and any amendment or
supplement thereto, 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 were made, not misleading, and the
Prospectus, as amended or supplemented at the Closing Date, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that the foregoing representations and
warranties shall not apply to (i) that part of the Registration
Statement which constitutes the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of the Trustee,
and (ii) statements or omissions in the Registration Statement or the
Prospectus made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Representatives expressly for use therein;
(b) the documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements of
the Securities Act or the Exchange Act, as applicable, and the rules
and regulations of the Commission thereunder and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further amendment or
supplement thereto, when such documents become effective or are filed
with the Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange Act,
as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the
foregoing representations and warranties shall not apply to statements
or omissions made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Representatives expressly for use therein;
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(c) the financial statements, and the related notes thereto,
included or incorporated by reference in the Registration Statement and
the Prospectus present fairly the consolidated financial position of
the Company and its consolidated subsidiaries as of the dates indicated
and the results of their operations and the changes in their
consolidated cash flows for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis, and the supporting
schedules included or incorporated by reference in the Registration
Statement present fairly the information required to be stated therein;
(d) since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any material change in the capital stock of the Company (other
than in connection with the issuance of capital stock in the ordinary
course of business pursuant to the Company 1989 Key Employee Long Term
Incentive Plan, the 1994 Key Employee Long Term Incentive Plan, the
Employee Ownership Plan and 401(K) Partnership, the Employee Stock
Purchase Plans, The Reader's Digest Association, Inc. Director
Compensation Plan and the All-Employee Stock Ownership Plan described
in the Prospectus and any stock repurchases by the Company or any of
its subsidiaries pursuant to the stock repurchase program announced in
May 2001 and described in the Prospectus), any material change in the
long-term debt of the Company and its subsidiaries taken as a whole, or
any material adverse change in or affecting the general affairs,
business, prospects, management, financial position, stockholders'
equity or results of operations of the Company and its subsidiaries,
taken as a whole, otherwise than as set forth or contemplated in the
Prospectus; and except as set forth or contemplated in the Prospectus
neither the Company nor any of its subsidiaries has entered into any
transaction or agreement (whether or not in the ordinary course of
business), except for such transactions or agreements which would not,
either individually or in the aggregate, have a material adverse effect
on the general affairs, business, prospects, management, financial
position, stockholders' equity or results of operations of the Company
and its subsidiaries taken as a whole (a "Material Adverse Effect");
(e) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority (corporate and other) necessary
to own its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would not have
a Material Adverse Effect; and the Company has an authorized
capitalization as set forth in the Prospectus and all the outstanding
shares of capital stock of the Company have been duly authorized and
validly issued, are fully-paid and non-assessable;
(f) each of The Reader's Digest Association Limited and Books
Are Fun, Ltd. (each a "Designated Subsidiary" and collectively, the
"Designated Subsidiaries") has been duly incorporated and is validly
existing as a corporation under the laws of its jurisdiction of
incorporation, or, in jurisdictions outside of the United States, the
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substantive equivalent thereto, with power and authority (corporate and
other) to own its properties and conduct its business as described in
the Prospectus, and has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws
of each jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification, other than where the
failure to be so qualified or in good standing would not have a
Material Adverse Effect; the Designated Subsidiaries are the only
subsidiaries of the Company whose total assets, in the case of each
Designated Subsidiary, exceed 5% of the consolidated total assets of
the Company and its subsidiaries taken as a whole; and all the
outstanding shares of capital stock of each Designated Subsidiary have
been duly authorized and validly issued, are fully-paid and
non-assessable, or the substantive equivalent thereto (to the extent
such concept applies under the applicable law with respect to any
Designated Subsidiary organized outside of the United States) and
(except in the case of foreign subsidiaries, for qualifying shares
owned or held by directors or other related persons as required by
statute and except as described in the Prospectus) are owned by the
Company, directly or indirectly, free and clear of all liens,
encumbrances, security interests and claims, except that no
representation is made with respect to any currently inactive
subsidiary of the Company;
(g) this Agreement has been duly authorized, executed and
delivered by the Company;
(h) the Securities have been duly authorized, and, assuming
due authentication thereof by the Trustee, when issued and delivered
pursuant to this Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and
binding obligations of the Company entitled to the benefits provided by
the Indenture (subject, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium or other
laws affecting creditors' rights generally from time to time in effect
and to general principles of equity); the Indenture has been duly
authorized and upon effectiveness of the Registration Statement will
have been duly qualified under the Trust Indenture Act and, when
executed and delivered by the Company and the Trustee, the Indenture
will constitute a valid and binding instrument (subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors' rights
generally from time to time in effect and to general principles of
equity); and the Securities and the Indenture will conform to the
descriptions thereof in the Prospectus;
(i) neither the Company nor any of its subsidiaries is, or
with the giving of notice or lapse of time or both would be, in
violation of or in default under, its Certificate of Incorporation or
By-Laws or any indenture, mortgage, deed of trust, lease, loan
agreement or other agreement or instrument to which the Company or any
of its subsidiaries is a party or by which it or any of them or any of
their respective properties is bound, except for violations and
defaults which, either individually or in the aggregate, would not have
a Material Adverse Effect; the issue and sale of the Securities and the
performance by the Company of all its obligations under the Securities,
the Indenture and this Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms
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or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, lease, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries
is subject, except for such conflicts, breaches, violations or defaults
which, either individually or in the aggregate, would not have a
Material Adverse Effect, nor will any such action result in any
violation of (i) the provisions of the Certificate of Incorporation or
the By-Laws of the Company or any applicable law or statute or (ii) any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company, its subsidiaries or any of their
respective properties, except, with respect to (ii), for such
conflicts, breaches, violations or defaults which, either individually
or in the aggregate, would not have a Material Adverse Effect; and no
consent, approval, authorization, order, license, registration or
qualification of or with any such court or governmental agency or body
is required for the consummation by the Company of the transactions
contemplated by this Agreement or the Indenture, except such consents,
approvals, authorizations, orders, licenses, registrations or
qualifications as have been obtained under the Securities Act, the
Trust Indenture Act and as may be required under state securities or
Blue Sky Laws in connection with the purchase and distribution of the
Securities by the Underwriters;
(j) other than as set forth or contemplated in the Prospectus,
there are no legal or governmental investigations, actions, suits or
proceedings pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries or any of
their respective properties or to which the Company or any of its
subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would have, either individually or
in the aggregate, a Material Adverse Effect;
(k) immediately after any sale of Securities by the Company
hereunder, the aggregate amount of Securities which have been issued
and sold by the Company hereunder and of any securities of the Company
(other than the Securities) that shall have been issued and sold
pursuant to the Registration Statement will not exceed the amount of
securities registered under the Registration Statement;
(l) KPMG LLP, who have certified certain financial statements
of the Company and its subsidiaries, are independent public accountants
as required by the Securities Act;
(m) the Company has good and marketable title in fee simple to
its headquarters and principal operating facilities in Westchester
County, New York, free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by
the Company and its subsidiaries; the Company and its subsidiaries have
good and marketable title in fee simple, or, in jurisdictions outside
of the United States, the substantive equivalent thereto, to all other
items of real property and good and marketable
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title to all personal property owned by them, in each case free and
clear of all liens, encumbrances and defects except such as are
described or referred to in the Prospectus or such as would not in the
aggregate have a Material Adverse Effect; and any real property and
buildings held under lease by the Company and its subsidiaries are held
by them under valid, existing and enforceable leases with such
exceptions as would not in the aggregate have a Material Adverse
Effect;
(n) the Company is not and, after giving effect to the
offering and sale of the Securities, will not be an "investment
company" or an entity "controlled" by an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended
(the "Investment Company Act");
(o) the Company has complied with all provisions of Section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida) relating to
doing business with the Government of Cuba or with any person or
affiliate located in Cuba;
(p) the Company owns, either directly or through a subsidiary,
all the patents, trademarks, service marks, trade names and copyrights
or licenses rights with respect to the foregoing necessary for the
present and planned future conduct of its business as described in the
Prospectus, except where the failure to own or license the same would
not have a Material Adverse Effect, without any known conflict with the
rights of others, the result of which conflict could have a Material
Adverse Effect; and to the knowledge of the Company there is no
infringement of such patents, trademarks, service marks, trade names
and copyrights by others, the result of which infringement could have a
Material Adverse Effect;
(q) each of the Company and its Designated Subsidiaries owns,
possesses or has obtained all licenses, permits, certificates,
consents, orders, approvals and other authorizations from, and has made
all declarations and filings with, all federal, state, local and other
governmental authorities (including foreign regulatory agencies), all
self-regulatory organizations and all courts and other tribunals,
domestic or foreign, necessary to own or lease, as the case may be, and
to operate its properties and to carry on its business as conducted as
of the date hereof, except to the extent that the failure to own,
possess or obtain any license, permit, certificate, order, approval or
authorization, or the failure to make any declaration or filing would
not have a Material Adverse Effect, and neither the Company nor any
such subsidiary has received any actual notice of any proceeding
relating to revocation or modification of any such license, permit,
certificate, consent, order, approval or other authorization, except as
described in the Registration Statement and the Prospectus;
(r) there are no existing or, to the best knowledge of the
Company, threatened labor disputes with the employees of the Company or
any of its subsidiaries which are likely to have a Material Adverse
Effect.
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5. The Company covenants and agrees with each of the several
Underwriters as follows:
(a) to file the Prospectus in a form reasonably approved by
you pursuant to Rule 424 under the Securities Act not later than the
Commission's close of business on the second Business Day following the
date of determination of the offering price of the Securities or, if
applicable, such earlier time as may be required by Rule 424(b);
(b) to furnish to each Representative and counsel for the
Underwriters, at the expense of the Company, a signed copy of the
Registration Statement (as originally filed) and each amendment
thereto, in each case including exhibits and documents incorporated by
reference therein and, during the period mentioned in paragraph (e)
below, to furnish each of the Underwriters as many copies of the
Prospectus (including all amendments and supplements thereto) and
documents incorporated by reference therein as you may reasonably
request;
(c) from the date hereof and prior to the Closing Date, to
furnish to you a copy of any proposed amendment or supplement to the
Registration Statement or the Prospectus, for your review, and not to
file any such proposed amendment or supplement to which you reasonably
object on a timely basis;
(d) to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long
as the delivery of a prospectus is required in connection with the
offering or sale of the Securities, and during such same period, to
advise you promptly after it receives notice, and to confirm such
advice in writing, (i) when any amendment to the Registration Statement
shall have become effective, (ii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for any additional information, (iii)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation or
threatening of any proceeding for that purpose, and (iv) of the receipt
by the Company of any notification with respect to any suspension of
the qualification of the Securities for offer and sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose; and to use its best efforts to prevent the issuance of
any such stop order or notification and, if issued, to obtain as soon
as possible the withdrawal thereof;
(e) if, during such period after the first date of the public
offering of the Securities as in the opinion of counsel for the
Underwriters a prospectus relating to the Securities is required by law
to be delivered in connection with sales by an Underwriter or dealer,
any event shall occur as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if it is necessary to amend or supplement
the Prospectus to comply with law or to file under the Exchange Act any
document incorporated by reference in the Prospectus in order to comply
with the Securities Act or the Exchange Act, forthwith to prepare and
furnish, at
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the expense of the Company, to the Underwriters and to the dealers
(whose names and addresses you will furnish to the Company) to which
Securities may have been sold by you on behalf of the Underwriters and
to any other dealers upon request, such amendments or supplements to
the Prospectus as may be necessary so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus will comply with law;
(f) to endeavor to qualify the Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you
shall reasonably request and to continue such qualification in effect
so long as reasonably required for distribution of the Securities;
provided that the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(g) to make generally available to its security holders and to
you as soon as practicable an earnings statement which shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule 158 of
the Commission promulgated thereunder covering a period of at least
twelve months beginning with the first fiscal quarter of the Company
occurring after the "effective date" (as defined in Rule 158) of the
Registration Statement;
(h) so long as the Securities are outstanding, upon request,
to furnish to you copies of all reports or other communications
(financial or other) furnished to holders of Securities, and copies of
any reports and financial statements furnished to or filed with the
Commission or any national securities exchange. Such financial
statements will be on a consolidated basis to the extent the accounts
of the Company and its subsidiaries are consolidated in reports
furnished to its stockholders generally or to the Commission;
(i) during the period beginning on the date hereof and
continuing to and including the Business Day following the Closing
Date, not to offer, sell, contract to sell or otherwise dispose of any
debt securities of or guaranteed by the Company which are substantially
similar to the Securities, without the prior written consent of the
Representatives;
(j) to use the net proceeds received by the Company from the
sale of the Securities pursuant to this Agreement in the manner
specified in the Prospectus under the caption "Use of Proceeds";
(k) whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all costs and expenses incident to the performance of
its obligations hereunder, including without limiting the generality of
the foregoing, all costs and expenses (i) incident to the preparation,
issuance, execution, authentication and delivery of the Securities,
including any expenses of the Trustee, (ii) incident to the
preparation, printing and filing under the Securities Act of the
Registration Statement, the Prospectus and any preliminary prospectus
(including in each case all exhibits, amendments and supplements
thereto), (iii) incurred in connection with the registration or
qualification and determination of
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eligibility for investment of the Securities under the laws of such
jurisdictions as the Underwriters may reasonably designate (including
reasonable fees of counsel for the Underwriters and their
disbursements), (iv) related to any filing with the National
Association of Securities Dealers, Inc., (v) in connection with the
printing (including word processing and duplication costs) and delivery
of this Agreement, the Indenture, the Preliminary and Supplemental Blue
Sky Memoranda and any Legal Investment Survey and the furnishing to
Underwriters and dealers of copies of the Registration Statement and
the Prospectus, including mailing and shipping, as herein provided,
(vi) payable to rating agencies in connection with the rating of the
Securities, (vii) any expenses incurred by the Company in connection
with a "road show" presentation to potential investors and (viii) the
cost and charges of any transfer agent.
6. The several obligations of the Underwriters hereunder shall be
subject to the following conditions:
(a) the representations and warranties of the Company
contained herein are true and correct on and as of the Closing Date as
if made on and as of the Closing Date and the Company shall have
complied with all agreements and all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date;
(b) the Prospectus shall have been filed with the Commission
pursuant to Rule 424 within the applicable time period prescribed for
such filing by the rules and regulations under the Securities Act; no
stop order suspending the effectiveness of the Registration Statement
shall be in effect, and no proceedings for such purpose shall be
pending before or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction;
(c) subsequent to the execution and delivery of this Agreement
and prior to the Closing Date, there shall not have occurred any
downgrading, nor shall any notice have been given of (i) any
downgrading, (ii) any intended or potential downgrading or (iii) any
review or possible change that does not indicate an improvement in the
rating accorded any securities of or guaranteed by the Company by any
"nationally recognized statistical rating organization", as such term
is defined for purposes of Rule 436(g)(2) under the Securities Act;
(d) since the respective dates as of which information is
given in the Prospectus there shall not have been any material adverse
change, in or affecting the general affairs, business, prospects,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole,
otherwise than as set forth or contemplated in the Prospectus, the
effect of which in the judgment of the Representatives is so material
and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Securities on the terms and
in the manner contemplated in the Prospectus;
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(e) the Representatives shall have received on and as of the
Closing Date a certificate of an executive officer of the Company, with
specific knowledge about the Company's financial matters, reasonably
satisfactory to you to the effect set forth in subsections (a) through
(c) (with respect to the respective representations, warranties,
agreements and conditions of the Company) of this Section;
(f) Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, special counsel for the
Company, shall have furnished to you their written opinion, dated the
Closing Date, in form and substance reasonably satisfactory to you, to
the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the State of Delaware, with power and authority (corporate and
other) necessary to own its properties and conduct its
business as described in the Prospectus as amended or
supplemented;
(ii) this Agreement has been duly authorized, executed and
delivered by the Company;
(iii) the Securities have been duly authorized, executed and
delivered by the Company and, assuming due authorization,
execution and delivery by the Trustee, when duly authenticated
in accordance with the terms of the Indenture and delivered to
and paid for by the Underwriters in accordance with the terms
of this Agreement, will constitute valid and binding
obligations of the Company entitled to the benefits provided
by the Indenture (subject, as to the enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally
from time to time in effect and to general principles of
equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing,
regardless of whether considered in a proceeding in equity or
at law);
(iv) the Indenture has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding
instrument of the Company (subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors'
rights generally from time to time in effect and to general
principles of equity, including, without limitation, concepts
of materiality, reasonableness, good faith and fair dealing,
regardless of whether considered in a proceeding in equity or
at law); and the Indenture has been duly qualified under the
Trust Indenture Act;
(v) the issue and sale of the Securities and the performance
by the Company of its obligations under the Securities, the
Indenture and this Agreement and the consummation of the
transactions herein and therein contemplated will not result
in any violation of the provisions of the Certificate of
Incorporation, or the By-Laws of the Company or any applicable
law of the United States or New York or the General
Corporation Law of the State of Delaware;
11
(vi) the statements in the Prospectus under "Description of
Debt Securities" and in the Registration Statement in Item 15,
insofar as such statements constitute a summary of the legal
matters, documents or proceedings referred to therein, fairly
summarize in all material respects the information called for
with respect to such legal matters, documents or proceedings;
(vii) in the course of the preparation by the Company of the
Registration Statement and the Prospectus, such counsel has
participated in conferences with certain of the officers and
other representatives of the Company, representatives of the
independent certified public accountants for the Company and
representatives of the Underwriters, at which the contents of
the Registration Statement and the Prospectus were discussed;
although we have not independently verified, and are not
passing upon and assume no responsibility for, the accuracy,
completeness or fairness of the statements made in the
Registration Statement and the Prospectus, other than as
provided in clause (vii) above, no facts have come to our
attention which lead us to believe that the Registration
Statement or Prospectus (other than the financial statements
and related notes thereto and the other financial,
statistical, reserve and accounting data included in or
omitted from the Registration Statement and the Prospectus,
all as to which we express no opinion), on the date thereof or
at the Closing Date contained an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading; such
counsel is of the opinion that the Registration Statement and
the Prospectus and any amendments and supplements thereto
(except for the financial statements included therein as to
which such counsel need express no opinion) comply as to form
in all material respects with the requirements of the
Securities Act and the Trust Indenture Act;
(viii) the Company is not and, after giving effect to the
offering and sale of the Securities, will not be an
"investment company" or entity "controlled" by an "investment
company", as such terms are defined in the Investment Company
Act.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United
States and the State of New York and the General Corporation Law of the
State of Delaware, to the extent such counsel deems proper and to the
extent specified in such opinion, if at all, upon an opinion or
opinions (in form and substance reasonably satisfactory to
Underwriters' counsel) of other counsel reasonably acceptable to the
Underwriters' counsel, familiar with the applicable laws; (B) as to
matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company and certificates or
other written statements of officials of jurisdictions having custody
of documents respecting the corporate existence or good standing of the
Company. The opinion of such counsel for the Company shall state that
the opinion of any such other counsel upon which they relied is in form
satisfactory to such counsel and, in such counsel's opinion, the
Underwriters and they are justified in relying thereon. With respect to
the matters to be
12
covered in subparagraph (vii) above counsel may state their opinion and
belief is based upon their participation in the preparation of the
Registration Statement and the Prospectus and any amendment or
supplement thereto (other than the documents incorporated by reference
therein) and review and discussion of the contents thereof (including
the documents incorporated by reference therein) but is without
independent check or verification except as specified. Such opinion may
contain customary assumptions, exceptions, limitations, qualifications
and comments, including a statement that Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
does not and has not acted for the Company as regular outside counsel
for litigation, ERISA, antitrust, intellectual property, commercial,
corporate or other matters.
The opinion of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇ described above
shall be rendered to the Underwriters at the request of the Company and
shall so state therein;
(g) ▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇, Vice President and Associate General
Counsel of the Company, shall have furnished to you his written
opinion, dated the Closing Date, in form and substance reasonably
satisfactory to you, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the State of Delaware, with power and authority (corporate and
other) necessary to own its properties and conduct its
business as described in the Prospectus;
(ii) the Company has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business, so as to
require such qualification, other than where the failure to be
so qualified or in good standing would not have a Material
Adverse Effect;
(iii) each of the Designated Subsidiaries has been duly
incorporated and is validly existing as a corporation under
the laws of its jurisdiction of incorporation or, in
jurisdictions outside of the United States, the substantive
equivalent thereto, with power and authority (corporate and
other) necessary to own its properties and conduct its
business as described in the Prospectus and has been duly
qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification,
other than where the failure to be so qualified and in good
standing would not have a Material Adverse Effect; and all of
the issued shares of capital stock of each Designated
Subsidiary have been duly and validly authorized and issued,
are fully paid and non-assessable or the substantive
equivalent thereto (to the extent such concept applies under
the applicable law with respect to any Designated Subsidiary
organized outside of the United States), and (except in the
case of foreign subsidiaries, for qualifying shares owned or
held by directors or other related persons as required by
statute and except as otherwise set forth in the
13
Prospectus) are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, security interests,
equities or claims;
(iv) other than as set forth or contemplated in the
Prospectus, there are no legal or governmental investigations,
actions, suits or proceedings pending or, to the best of such
counsel's knowledge, threatened against or affecting the
Company or any of its subsidiaries or any of their respective
properties or to which the Company or any of its subsidiaries
is or may be a party or to which any property of the Company
or its subsidiaries is or may be the subject which, if
determined adversely to the Company or any of its
subsidiaries, would, individually or in the aggregate, have a
Material Adverse Effect;
(v) neither the Company nor any of its Designated Subsidiaries
is, or with the giving of notice or lapse of time or both
would be, in violation of or in default under, its Certificate
of Incorporation or By-Laws or any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument
known to such counsel to which the Company or any of its
Designated Subsidiaries is a party or by which it or any of
them or any of their respective properties is bound, except
for violations and defaults which, either individually or in
the aggregate, would not have a Material Adverse Effect; the
issue and sale of the Securities and the performance by the
Company of its obligations under the Securities, the Indenture
and this Agreement and the consummation of the transactions
herein and therein contemplated will not conflict with or
result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known
to such counsel to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject,
except for such conflicts, breaches, violations or defaults
which, either individually or in the aggregate, would not have
a Material Adverse Effect, nor will any such action result in
any violation of the provisions of (i) the Certificate of
Incorporation, or the By-Laws of the Company or (ii) any
applicable law or statute or any order, rule or regulation
known to such counsel of any court or governmental agency or
body having jurisdiction over the Company, its subsidiaries or
any of their respective properties, except, with respect to
(ii), for such conflicts, breaches, violations or defaults
which, either individually or in the aggregate, would not have
a Material Adverse Effect;
(vi) such counsel (A) is of the opinion that each document
incorporated by reference in the Registration Statement and
the Prospectus as amended or supplemented (other than the
financial statements and related schedules therein and other
financial data derived from the financial statements or
accounting records of the Company therein, as to which such
counsel need express no opinion) complied as to form when
filed with the Commission in all material respects with the
Exchange Act, and the rules and regulations of the Commission
thereunder (B) has no reason to believe that any part of the
Registration Statement
14
(including the documents incorporated by reference therein)
(other than the financial statements included therein and
other financial data derived from the financial statements or
accounting records of the Company therein, and that part of
the Registration Statement which constitutes the Statement of
Eligibility and Qualification (Form T-1) as to which such
counsel need express no belief) filed with the Commission
pursuant to the Securities Act relating to the Securities,
when such part became effective, contained an untrue statement
of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading, (C) is of the opinion that
the Registration Statement and the Prospectus and any
amendments and supplements thereto (other than the financial
statements included therein and other financial data derived
from the financial statements or accounting records of the
Company therein as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Securities Act and the Trust Indenture Act
and (D) has no reason to believe that the Registration
Statement and the Prospectus (other than the financial
statements included therein and other financial data derived
from the financial statements or accounting records of the
Company therein as to which such counsel need express no
belief), on the date of this Agreement, contained any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading;
(vii) each of the Company and the Designated Subsidiaries
owns, possesses or has obtained all licenses, permits,
certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings
with, all federal, state, local and other governmental
authorities (including foreign regulatory agencies), all
self-regulatory organizations and all courts and other
tribunals, domestic or foreign, necessary to own or lease, as
the case may be, and to operate its properties and to carry on
its business as conducted as of the date hereof, except to the
extent that the failure to own, possess or obtain any license,
permit, certificate, order, approval or authorization, or the
failure to make any declaration or filing would not have a
Material Adverse Effect, and neither the Company nor any
Designated Subsidiary has received any actual notice of any
proceeding relating to revocation or modification of any such
license, permit, certificate, consent, order, approval or
other authorization, except as described in the Registration
Statement and the Prospectus;
(viii) to the knowledge of such counsel, the Company, either
directly or through a subsidiary, owns all the patents,
trademarks, service marks, trade names and copyrights, or
licenses rights with respect to the foregoing necessary for
the present and planned future conduct of its business as
described in the Prospectus, except where the failure to own
or license the same would not have a Material Adverse Effect,
without any conflict known to such counsel with the rights of
others, the result of which conflict could have a Material
Adverse Effect, and to the knowledge of such counsel, there is
no infringement of such patents,
15
trademarks, service marks trade names and copyrights by
others, the results of which infringement could have a
Material Adverse Effect;
(ix) no consent, approval, authorization, order, license,
registration or qualification of or with any court or
governmental agency or body is required for the issue and sale
of the Securities or the consummation of the other
transactions contemplated by this Agreement or the Indenture,
except such consents, approvals, authorizations, orders,
licenses, registrations or qualifications as have been
obtained under the Securities Act and the Trust Indenture Act
and as may be required under state securities or Blue Sky laws
in connection with the purchase and distribution of the
Securities by the Underwriter.
In rendering such opinions, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the
United States and the State of New York and the General Corporation Law
of the State of Delaware, to the extent such counsel deems proper and
to the extent specified in such opinion, if at all, upon an opinion or
opinions (in form and substance reasonably satisfactory to
Underwriters' counsel) of other counsel reasonably acceptable to the
Underwriters' counsel, familiar with the applicable laws; (B) as to
matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company and certificates or
other written statements of officials of jurisdictions having custody
of documents respecting the corporate existence or good standing of the
Company. The opinion of such counsel for the Company shall state that
the opinion of any such other counsel upon which they relied is in form
satisfactory to such counsel and, in such counsel's opinion, the
Underwriters and they are justified in relying thereon. With respect to
the matters to be covered in subparagraph (vi) above counsel may state
their opinion and belief is based upon their participation in the
preparation of the Registration Statement and the Prospectus and any
amendment or supplement thereto but is without independent check or
verification except as specified. Such opinion may contain customary
assumptions, exceptions, limitations, qualifications and comments.
(h) on the date hereof and on the Closing Date, KPMG LLP shall
have furnished to you letters, dated such date, in form and substance
satisfactory to you, containing statements and information of the type
customarily included in accountants "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus;
(i) you shall have received on and as of the Closing Date an
opinion of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to the
Underwriters, with respect to the validity of the Indenture and the
Securities, the Registration Statement, the Prospectus and other
related matters as the Representatives may reasonably request, and such
counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters; and
16
(j) on or prior to the Closing Date, the Company shall have
furnished to the Representatives such further certificates and
documents as the Representatives shall reasonably request.
7. The Company agrees to indemnify and hold harmless each Underwriter,
each affiliate of any Underwriter which assists such Underwriter in the
distribution of the Securities and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities or actions in respect thereof (including without
limitation the reasonable legal fees and other reasonable expenses incurred in
connection with any suit, action or proceeding or any claim asserted) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided that such losses, claims, damages or
liabilities are not caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Representatives expressly for use therein and provided,
further, that such losses, claims, damages or liabilities are not caused by the
fact that an Underwriter sold Securities to a person to whom there was not sent
or given, at or prior to the written confirmation of such sale, a copy of the
Basic Prospectus or the Prospectus in any case where such delivery is required
by the Securities Act if the Company has previously furnished copies thereof to
such Underwriter and the losses, claims, damages or liabilities of such
Underwriter result from an untrue statement or omission of a material fact
contained in the preliminary prospectus which was corrected in the Basic
Prospectus or the Prospectus.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person who controls the Company within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act, to the same extent
as the foregoing indemnity from the Company to each Underwriter, but only with
reference to information relating to such Underwriter furnished to the Company
in writing by such Underwriter through the Representatives expressly for use in
the Registration Statement, the Prospectus, any amendment or supplement thereto,
or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing (, but the omission to so notify the indemnifying party
shall not relieve it from any liability which it may have to any Indemnified
Person otherwise than under such subsection), and the Indemnifying Person, upon
request of the Indemnified Person, shall retain counsel reasonably satisfactory
to the Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such
17
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed to the contrary, (ii) the Indemnifying Person
has failed within a reasonable time to retain counsel reasonably satisfactory to
the Indemnified Person or (iii) the named parties in any such proceeding
(including any impleaded parties) include both the Indemnifying Person and the
Indemnified Person and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred. Any such separate firm for the Underwriters,
each affiliate of any Underwriter which assists such Underwriter in the
distribution of the Securities and such control persons of Underwriters shall be
designated in writing by the first of the named Representatives on Schedule I
hereto and any such separate firm for the Company, its directors, its officers
who sign the Registration Statement and such control persons of the Company or
authorized representatives shall be designated in writing by the Company. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested an Indemnifying Person
to reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by the third sentence of this paragraph, the Indemnifying Person
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such Indemnifying Person of the aforesaid request and (ii)
such Indemnifying Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement. No
Indemnifying Person shall, without the prior written consent of the Indemnified
Person, effect any settlement of any pending or threatened proceeding in respect
of which any Indemnified Person is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Person, unless such
settlement includes an unconditional release of such Indemnified Person from all
liability on claims that are the subject matter of such proceeding and does not
include a statement as to or an admission of fault, culpability, or a failure to
act, by or on behalf of any Indemnified Person.
If the indemnification provided for in the first and second paragraphs
of this Section 7 is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities or actions in respect
thereof referred to therein, then each Indemnifying Person under such paragraph,
in lieu of indemnifying such Indemnified Person thereunder, shall contribute to
the amount paid or payable by such Indemnified Person as a result of such
losses, claims, damages or liabilities (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Securities or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law
or if the Indemnified Person failed to give the notice required under the
preceding paragraph, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the
18
Underwriters on the other in connection with the 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 on the one hand and the Underwriters on the
other shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of such Securities (before deducting expenses, but
after deducting discounts and commissions to the Underwriters) received by the
Company and the total underwriting discounts and the commissions received by the
Underwriters bear to the aggregate public offering price of the Securities. The
relative fault of the Company on the one hand and the Underwriters on the other
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 or by
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities (or actions in respect thereof) referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any reasonable legal or other expenses incurred by
such Indemnified Person in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, in no event
shall an Underwriter be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 7 are several in proportion
to the respective principal amount of the Securities set forth opposite their
names in Schedule I hereto, and not joint.
The remedies provided for in this Section 7 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
Indemnified Person at law of in equity.
The indemnity and contribution agreements contained in this Section 7
and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter or by or on behalf
of the Company, its officers or directors or any other person controlling the
Company and (iii) acceptance of and payment for any of the Securities, provided,
however, that the representations and warranties of the Company shall be deemed
to be made as of the date hereof and the Closing Date only.
19
8. Notwithstanding anything herein contained, this Agreement may be
terminated in the absolute discretion of the Representatives, by notice given to
the Company, if after the execution and delivery of this Agreement and prior to
the Closing Date (i) trading generally shall have been suspended or materially
limited on or by, as the case may be, any of the New York Stock Exchange, the
American Stock Exchange, the National Association of Securities Dealers, Inc.,
the Chicago Board Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any securities of or guaranteed by the
Company shall have been suspended on any exchange or in any over-the-counter
market, (iii) a general moratorium on commercial banking activities in New York
shall have been declared by either Federal or New York State authorities, (iv)
there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions that in any such case, in the
judgment of the Representatives, is material and adverse and which, in the
judgment of the Representatives, makes it impracticable or inadvisable to market
the Securities on the terms and in the manner contemplated in the Prospectus.
9. If, on the Closing Date, any one or more of the Underwriters shall
fail or refuse to purchase Securities which it or they have agreed to purchase
under this Agreement, and the aggregate principal amount of Securities which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase is not more than one-tenth of the aggregate principal amount of the
Securities, the other Underwriters shall be obligated severally in the
proportions that the principal amount of Securities set forth opposite their
respective names in Schedule I hereto bears to the aggregate principal amount of
Securities set forth opposite the names of all such non-defaulting Underwriters,
or in such other proportions as the Representatives may specify, to purchase the
Securities which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase on such date; provided that in no event shall the
principal amount of Securities that any Underwriter has agreed to purchase
pursuant to Section 1 be increased pursuant to this Section 9 by an amount in
excess of one-tenth of such principal amount of Securities without the written
consent of such Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Securities and the aggregate
principal amount of Securities with respect to which such default occurs is more
than one-tenth of the aggregate principal amount of Securities to be purchased,
and arrangements satisfactory to you and the Company for the purchase of such
Securities are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case either you or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
10. If this Agreement shall be terminated by the Underwriters, or any
of them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement or any condition of the Underwriters' obligations cannot be fulfilled,
the Company agrees to reimburse the Underwriters or such Underwriters as have so
20
terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and expenses of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering of Securities.
11. This Agreement shall inure to the benefit of and be binding upon
the Company, each affiliate of any Underwriter which assists such Underwriter in
the distribution of the Securities, the Underwriters, any controlling persons
referred to herein and their respective successors and assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person, firm or corporation any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. No purchaser of Securities from any Underwriter shall be deemed to be
a successor by reason merely of such purchase.
12. Any action by the Underwriters hereunder may be taken by you
jointly or by the first of the named Representatives set forth in Schedule I
hereto alone on behalf of the Underwriters, and any such action taken by you
jointly or by the first of the named Representatives set forth in Schedule I
hereto alone shall be binding upon the Underwriters. All notices and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if mailed or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be given at the address set forth in Schedule
II hereto. Notices to the Company shall be given to it at Reader's Digest,
Reader's ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, (telex: 914-244-7816);
Attention: ▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇, Associate General Counsel.
13. This Agreement may be signed in counterparts, each of which shall
be an original and all of which together shall constitute one and the same
instrument.
14. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to the conflicts
of laws provisions thereof.
21
Very truly yours,
THE READER'S DIGEST ASSOCIATION, INC.
By:_________________________________
Name:
Title:
Accepted: [ ], 2001
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
[CO-MANAGER]
Acting severally on behalf of
[ITSELF/THEMSELVES] and the several
Underwriters listed in Schedule II
hereto.
By: ▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
By:________________________________
Name:
Title:
22
SCHEDULE I
Representatives(1): _________________________________________
Underwriting Agreement
dated: _________________________________________
Registration Statement No.: _________________________________________
Title of Securities: _________________________________________
Aggregate principal
amount: $________________________________________
Price to Public: __% of the principal amount of the Securities,
plus accrued interest, if any, from _______,
20__ to the Closing Date.
Indenture: Indenture dated as of _________ between the
Company and _____________________ as Trustee.
Maturity: _____________________________________________
Interest Rate: _____________________________________________
Interest Payment Dates: _____________________________________________
Optional Redemption
Provisions: _____________________________________________
Sinking Fund Provisions: _____________________________________________
--------
(1) Bookrunning Representative should be named first for purposes of
Sections 7 and 12.
Other Provisions: _____________________________________________
Closing Date and
Time of Delivery: _____________________________________________
Closing Location: _____________________________________________
Address for Notices
to Underwriters: _____________________________________________
2
SCHEDULE II
Principal Amount
of Securities
To Be Purchased
---------------
Underwriter
▇.▇. ▇▇▇▇▇▇ Securities Inc. ......... $__________
[CO-MANAGER] ........................ $__________
Total ...... $__________
