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Exhibit 1: Form of Underwriting Agreement
[ ] Shares
METRIS COMPANIES INC.
Common Stock
UNDERWRITING AGREEMENT
[ ], 1996
XXXXX XXXXXX INC.
BEAR, XXXXXXX & CO. INC.
XXXXXXX XXXXX & COMPANY L.L.C.
As Representatives of the Several Underwriters
c/o XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Metris Companies Inc., a Delaware corporation (the
"Company") and an indirect wholly owned subsidiary of Fingerhut
Companies, Inc., a Minnesota Corporation ("FCI"), proposes to
issue and sell an aggregate of [ ] shares (the "Firm
Shares") of its Common Stock, par value $0.01 per share (the
"Common Stock"), to the several Underwriters named in Schedule
I hereto (the "Underwriters") for whom Xxxxx Xxxxxx Inc., Bear,
Xxxxxxx & Co. Inc. and Xxxxxxx Xxxxx & Company L.L.C. are
acting as representatives (the "Representatives"). The Company
also proposes to sell to the Underwriters, upon the terms and
conditions set forth in Section 2 hereof, up to an additional
[ ] shares (the "Additional Shares") of Common Stock.
The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the "Shares".
The Shares are being issued and sold in connection
with a reorganization (the "Reorganization") of the Company and
certain other subsidiaries of FCI pursuant to a transfer
agreement (the "Transfer Agreement") to be dated as of the
Closing Date (as defined herein) between FCI and the Company.
The relationship between and obligations of the Company and its
subsidiaries, on the one hand, and FCI and its subsidiaries, on
the other, will be governed by the Database Access Agreement,
Extended Service Plan Agreement, Co-brand Credit Card
Agreement, Data Sharing Agreement, Tax Sharing Agreement and
Administrative Services Agreement (together with the Transfer
Agreement, the "Transaction Documents"), each in the form
described in the Registration Statement (as defined herein) and
the Prospectus (as defined herein).
Each of the Company and FCI wishes to confirm as follows its
agreement with you and the other several Underwriters on whose behalf you
are acting, in connection with the several purchases of the Shares by the
Underwriters.
1. Registration Statement and Prospectus. 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 "Act"), a registration statement on Form S-1
under the Act (the "registration statement"), including a prospectus
subject to completion, relating to the Shares. The term "Registration
Statement" as used in this Agreement means the registration statement
referred to above (including all financial schedules and exhibits), and any
registration statement filed pursuant to Rule 462(b) under the Act, each as
amended at the time it becomes effective, and as thereafter amended by any
post-effective amendment. The term "Prospectus" as used in this Agreement
means the prospectus in the forms included in the Registration Statement
or, if the prospectus included in the Registration Statement omits
information in reliance on Rule 430A under the Act and such information is
included in a prospectus filed with the Commission pursuant to Rule 424(b)
under the Act, the term "Prospectus" as used in this Agreement means the
prospectus in the form included in the Registration Statement as
supplemented by the addition of the Rule 430A information contained in the
prospectus filed with the Commission pursuant to Rule 424(b). The term
"Prepricing Prospectus" as used in this Agreement means the prospectus
subject to completion in the form included in the Registration Statement at
the time of the initial filing of the Registration Statement with the
Commission, and as such prospectus shall have been amended from time to
time prior to the date of the Prospectus.
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2. Agreements to Sell and Purchase. Upon the basis of the
representations, warranties and agreements contained herein and subject to
all the terms and conditions set forth herein, the Company hereby agrees to
issue and sell to each Underwriter and each Underwriter agrees, severally
and not jointly, to purchase from the Company, at a purchase price of
$[ ] per share (the "purchase price per share"), the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto
(or such number of Firm Shares increased as set forth in Section 10
hereof).
Upon the basis of the representations, warranties and
agreements contained herein and subject to all the terms and conditions set
forth herein, the Company also agrees to sell to the Underwriters, and the
Underwriters shall have the right to purchase from the Company, solely for
the purpose of covering over-allotments in connection with sales of the
Firm Shares, at the purchase price per share, pursuant to an option (the
"over-allotment option") which may be exercised at any time and from time to
time prior to 9:00 P.M., New York City time, on the 30th day 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), up to an aggregate of [ ] Additional
Shares. Upon the exercise of the over-allotment option, each Underwriter,
severally and not jointly, agrees to purchase from the Company the number
of Additional Shares (subject to such adjustments as you may determine in
order to avoid fractional shares) that bears the same proportion to the
aggregate number of Additional Shares to be sold by the Company upon such
exercise of the over-allotment option as the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule I hereto (or such
number of Firm Shares increased as set forth in Section 10 hereof) bears to
the aggregate number of Firm Shares.
3. Terms of Public Offering. The Company has been advised
by you that the Underwriters propose to make a public offering of their
respective portions of the Shares as soon after the Registration Statement
and this Agreement have become effective as in your judgment is advisable
and initially to offer the Shares upon the terms set forth in the
Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to
the Underwriters of and payment for the Firm Shares shall be made at the
office of Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, at 9:00 A.M., New York City time, on [ ], 1996 (the "Closing
Date"). The place of closing for the Firm Shares and the Closing Date may
be varied by agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional
Shares to be purchased by the Underwriters shall be made at the
aforementioned office of Xxxxx Xxxxxx Inc. at such time on such date (the
"Option Closing Date"), which may be the same as the Closing Date but shall
in no event be earlier than the Closing Date nor earlier than two nor later
than ten business days after the giving of the notice hereinafter referred
to, as shall be specified in a written notice from you on behalf of the
Underwriters to the Company of the Underwriters' determination to purchase
a number, specified in such notice, of Additional Shares. The place of
closing for any Additional Shares and the Option Closing Date for such
Shares may be varied by agreement between you and the Company.
Certificates for the Firm Shares and for any Additional Shares
to be purchased hereunder shall be registered in such names and in such
denominations as you shall request prior to 9:30 A.M., New York City time,
on the second business day preceding the Closing Date or any Option Closing
Date, as the case may be. Such certificates shall be made available to you
in New York City for inspection and packaging not later than
9:30 A.M., New York City time, on the business day next preceding the
Closing Date or the Option Closing Date, as the case may be. The
certificates evidencing the Firm Shares and any Additional Shares to be
purchased hereunder shall be delivered to you on the Closing Date or the
Option Closing Date, as the case may be, against payment of the purchase
price therefor by wire transfer to or upon the order of the Company in
immediately available funds.
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5. Agreements of the Company. The Company and FCI agree
with the several Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered,
it is necessary for the Registration Statement or a post-effective
amendment thereto to be declared effective before the sale of the
Shares by the Underwriters may commence, the Company and FCI will
endeavor to cause the Registration Statement or such post-effective
amendment to become effective as soon as possible and will advise you
promptly and, if requested by you, will confirm such advice in
writing, when the Registration Statement or such post-effective
amendment has become effective.
(b) The Company and FCI will advise you promptly and, if
requested by you, will conform such advice in writing (i) of any
request by the Commission for amendment of or a supplement to the
Registration Statement, any Prepricing Prospectus or the Prospectus
or for additional information; (ii) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction or the initiation of any
proceeding for such purpose; and (iii) within the period of time
referred to in paragraph (f) below, of any change in the condition
(financial or otherwise), business, prospects, properties, net worth
or results of operations of the Company or its subsidiaries, or of
the happening of any event which makes any statement of a material
fact made in the Registration Statement or the Prospectus (as then
amended or supplemented) untrue or which requires the making of any
additions to or changes in the Registration Statement or the
Prospectus (as then amended or supplemented) in order to state a
material fact required by the Act to be stated therein or necessary
in order to make the statements therein not misleading, or of the
necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Act or any other law. If at any
time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, the Company and FCI will
make every reasonable effort to obtain the withdrawal of such order
at the earliest possible time.
(c) The Company will furnish to you, without charge, four
signed copies of the registration statement as originally filed with
the Commission and of each amendment thereto, including financial
statements and all exhibits thereto, and will also furnish to you,
without charge, such number of conformed copies of the registration
statement as originally filed and of each amendment thereto, but
without exhibits, as you may request.
(d) The Company will not (i) file any amendment to the
Registration Statement or make any amendment or supplement to the
Prospectus of which you shall not previously have been advised or to
which you shall object after being so advised or (ii) during such
period as, in the opinion of counsel for the Underwriters, a
Prospectus is required to be delivered in connection with sales by
any Underwriter or dealer, file any information, documents or reports
pursuant to the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder (collectively, the
"Exchange Act"), without delivering a copy of such information,
documents or reports to you, as Representatives of the Underwriters,
prior to or concurrently with such filing.
(e) Prior to the execution and delivery of this Agreement,
the Company has delivered to you, without charge, in such quantities
as you have requested, copies of each form of the Prepricing
Prospectus. The Company consents to the use, in accordance with the
provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions in which the Shares are offered by the several
Underwriters and by dealers, prior to the date of the Prospectus, of
each Prepricing Prospectus so furnished by the Company.
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(f) As soon after the execution and delivery of this
Agreement as possible and thereafter from time to time for such
period as in the opinion of counsel for the Underwriters a Prospectus
is required by the Act to be delivered in connection with sales by
any Underwriter or dealer, the Company will expeditiously deliver to
each Underwriter and each dealer, without charge, as many copies of
the Prospectus (and of any amendment or supplement thereto) as you
may request. The Company consents to the use of the Prospectus (and
of any amendment or supplement thereto) in accordance with the
provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions in which the Shares are offered by the several
Underwriters and by all dealers to whom Shares may be sold, both in
connection with the offering and sale of the Shares and for such
period of time thereafter as the Prospectus is required by the Act to
be delivered in connection with sales by any Underwriter or dealer.
If during such period of time any event shall
occur that in the judgment of the Company or in the opinion of
counsel for the Underwriters is required to be set forth in the
Prospectus (as then amended or supplemented) or should be set forth
therein in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary to supplement or amend the Prospectus to comply with the
Act or any other law, the Company and FCI will forthwith prepare and,
subject to the provisions of paragraph (d) above, file with the
Commission an appropriate supplement or amendment thereto, and will
expeditiously deliver to each Underwriter and each dealer as many
copies thereof as you may reasonably request. In the event that the
Company and you, as Representatives of the several Underwriters,
agree that the Prospectus should be amended or supplemented, the
Company, if requested by you, will promptly issue a press release
announcing or disclosing the matters to be covered by the proposed
amendment or supplement.
(g) The Company and FCI will cooperate with you and with
counsel for the Underwriters in connection with the registration or
qualification of the Shares for offering and sale by the several
Underwriters and by dealers under the securities or Blue Sky laws of
such jurisdictions as you may designate and will file such consents
to service of process or other documents necessary or appropriate in
order to effect such registration or qualification; provided that in
no event shall the Company be obligated to qualify to do business in
any jurisdiction where it is not now so qualified or to take any
action which would subject it to service of process in suits, other
than those arising out of the offering or sale of the Shares, in any
jurisdiction where it is not now so subject.
(h) The Company will make generally available to its security
holders a consolidated earnings statement, which need not be audited,
covering a twelve-month period commencing after the effective date of
the Registration Statement and ending not later than 15 months
thereafter, as soon as practicable after the end of such period,
which consolidated earnings statement shall satisfy the provisions of
Section 11(a) of the Act.
(i) During the period of five years hereafter, the Company
will furnish to you, as soon as available, a copy of each report of
the Company mailed to stockholders or filed with the Commission or
the Nasdaq National Market.
(j) If this Agreement shall terminate or shall be terminated
after execution pursuant to any provisions hereof (otherwise than
pursuant to the second paragraph of Section 10 hereof or by notice
given by you terminating this Agreement pursuant to Section 10 or
Section 11 hereof) or if this Agreement shall be terminated by the
Underwriters because of any failure or refusal on the part of the Company
to comply with the terms or fulfill any of the conditions of this
Agreement, the Company agrees to reimburse the Representatives for
all out-of-pocket expenses (including fees and expenses of counsel
for the Underwriters) incurred by you in connection herewith.
(k) The Company will apply the net proceeds from the sale of
the Shares substantially in accordance with the description set forth
in the Prospectus.
(l) If Rule 430A of the Act is employed, the Company will
timely file the Prospectus pursuant to Rule 424(b) under the Act and
will advise you of the time and manner of such filing.
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(m) Except as provided in this Agreement, the Company and FCI
will not sell, solicit an offer to buy, contract to sell, grant any
option to purchase or otherwise transfer or dispose of, or register
or announce the sale or offering of, any share of Common Stock of the
Company, or any securities that are convertible into, or exercisable
or exchangeable for, shares of Common Stock, for a period of 180 days
after the date of the Prospectus without the prior written consent to
Xxxxx Xxxxxx Inc., except pursuant to employee stock option plans or
in connection with other employee or non-employee director
compensation arrangements or agreements, in each case, in effect on
the date hereof.
(n) The Company has furnished or will furnish to you "lock-
up" letters, in form and substance satisfactory to you, signed by
each of its current officers and directors.
(o) Except as stated in this Agreement and in the Prepricing
Prospectus and Prospectus, the Company has not taken, nor will it
take, directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale
or resale of the Shares.
(p) The Company will use its best efforts to have the Shares
approved for quotation, subject to notice of issuance of Shares, on
the Nasdaq National Market concurrently with the effectiveness of the
Registration Statement.
6. Representations and Warranties. The Company and FCI
represent and warrant to each Underwriter that:
(a) Each Prepricing Prospectus included as part of the
registration statement as originally filed or as part
of any amendment or supplement thereto, or filed pursuant to Rule 424
under the Act, complied when so filed in all material respects with
the provisions of the Act, except that this representation and
warranty does not apply to statements in the Prepricing Prospectus
(or any amendment or supplement thereto) made in reliance upon and in
conformity with information relating to any Underwriter and furnished
in writing to the Company by or on behalf of any Underwriter through
you expressly for use therein. The Commission has not issued any
order preventing or suspending the use of any Prepricing Prospectus.
(b) The Registration Statement in the form in which it became
or becomes effective and also in such form as it may be when any
post-effective amendment thereto shall become effective and the
Prospectus and any supplement or amendment thereto when filed with
the Commission under Rule 424(b) under the Act, complied or will
comply in all material respects with the provisions of the Act and
did not or will not at any such times contain an untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; except that this representation and warranty does not
apply to statements in or omissions from 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 or on behalf of any Underwriter through you expressly for
use therein.
(c) The Company's authorized, issued and outstanding
capitalization on the Closing Date will be as set forth under the
caption "Capitalization" in the Registration Statement and the
Prospectus; all of the shares of capital stock of the Company
outstanding prior to the issuance of the Shares have been duly
authorized and validly issued, are fully paid and nonassessable and
are free of any preemptive or similar rights; the Shares have been
duly authorized and, when issued and delivered to the Underwriters
against payment therefor in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable and free of any
preemptive or similar rights; and the capital stock of the Company
conforms, in all material respects, to the description thereof in the
Registration Statement and the Prospectus.
(d) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware, with full corporate power and authority to own, lease and
operate its properties and conduct its business, as described in the
Registration Statement and the Prospectus, and is duly registered and
qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct
of such business requires such registration or qualification, except
where the failure so to register or qualify would not have a material
adverse effect on the condition (financial
or other), business, properties, net worth or results of operations
of the Company and the Subsidiaries, taken as a whole (any such
effect, a "Material Adverse Effect").
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(e) FCI is a corporation duly organized, validly existing and
in good standing under the laws of the State of Minnesota, with full
corporate power and authority to own, lease and operate its
properties and conduct its business.
(f) All of the Company's subsidiaries (each a "Subsidiary"
and collectively the "Subsidiaries") are listed on Exhibit 21.1 of
the Registration Statement. Each of the Subsidiaries is a
corporation or other legal entity duly organized, validly existing
and in good standing under the laws of its jurisdiction of
organization, with full power and authority to own, lease and operate
its properties and conduct its business as described in the
Registration Statement and Prospectus, and is duly registered and
qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the
conduct of such business requires such registration or qualification,
except where the failure so to register or qualify would not have a
Material Adverse Effect; all of the outstanding shares of capital
stock of each Subsidiary have been duly authorized and validly
issued, are fully paid and nonassessable, and are owned by the
Company directly, free and clear of any lien, adverse claim, security
interest, equity or other encumbrance; the Company does not own,
directly or indirectly, shares of capital stock of or other equity
interest in any corporation or other entity other than the
Subsidiaries;
(g) There are no legal or governmental proceedings pending
or, to the knowledge of the Company or FCI, threatened, against the
Company or any of the Subsidiaries, or to which the Company or any of
the Subsidiaries or any of their respective properties is subject,
required to be described in the Registration Statement or the
Prospectus that are not described as required, nor any agreements,
contracts, indentures, leases or other documents required to be
described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement by the Act that have
not been described or filed as required.
(h) Neither FCI, the Company nor any of the Subsidiaries is
in violation of its certificate or articles of incorporation or
by-laws, or other organizational documents, or of any law, ordinance,
administrative or governmental rule or regulation applicable to FCI,
the Company or any of the Subsidiaries or of any decree of any court
or governmental agency or body having jurisdiction over FCI, the Company
or any of the Subsidiaries. None of the Company or any Subsidiary is in
default in any material respect in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any material agreement,
indenture, lease or other instrument (collectively, "Contracts") to
which the Company or any of the Subsidiaries is a party or by which
any of them or any of their respective properties may be bound, has
received notice or claim of any such default or has knowledge of any
breach of any Contract.
(i) Each of FCI and its subsidiaries has, to the extent each
is or will be a party hereto or thereto, the corporate power and
authority to execute, deliver and perform its obligations under the
Transaction Documents and this Agreement. The execution and delivery
of, and the performance by each of FCI and its subsidiaries, to the
extent a party hereto or thereto, of its obligations under this
Agreement and the Transaction Documents has been duly and validly
authorized, and this Agreement has been duly executed and delivered
by FCI and each of this Agreement and the Transaction Documents
constitutes or will constitute when duly executed and delivered by
each of FCI and its subsidiaries, to the extent a party hereto or
thereto, the valid and legally binding agreement of FCI and its
subsidiaries, to the extent a party hereto or thereto, enforceable in
accordance with its terms (assuming, in the case of this Agreement,
the due authorization, execution and delivery by the
Representatives), except (A) the enforcement hereof and thereof may
be subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in
effect relating to creditor's rights generally, and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought (regardless of whether such
enforcement is considered in a proceeding at law or in equity and (B)
rights to indemnity or contribution under this Agreement may be
limited by federal or state securities laws or public policy relating
thereto.
(j) Each of the Company and the Subsidiaries has, to the
extent each is or will be a party hereto or thereto, the corporate
power and authority to execute, deliver and perform its obligations
under each of this Agreement and the Transaction Documents. The
execution and delivery of, and the performance by each of the Company
and the Subsidiaries, to the extent a party hereto or thereto, of its
obligations under this Agreement and the Transaction Documents has been
duly and validly authorized, and this Agreement
has been duly executed and delivered by the Company and each of this
Agreement and the Transaction Documents constitutes or will
constitute when duly executed and delivered by each of the Company
and the Subsidiaries, to the extent a party hereto or thereto, the
valid and legally binding agreement of the Company and the
Subsidiaries, to the extent a party hereto or thereto, enforceable in
accordance with its terms (assuming, in the case of this Agreement,
the due authorization, execution and delivery by the
Representatives), except (A) the enforcement hereof and thereof may
be subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in
effect relating to creditor's rights generally, and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought (regardless of whether such
enforcement is considered in a proceeding at law or in equity and (B)
rights to indemnity or contribution under this Agreement may be
limited by federal or state securities laws or public policy relating
thereto.
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(k) No consent, approval, authorization or order of any court
or governmental agency or body is required for the performance of
this Agreement or any of the Transaction Documents by each of FCI and
its subsidiaries, the Company and the Subsidiaries, to the extent a
party hereto or thereto, or the consummation by each of FCI and its
Subsidiaries, the Company and the Subsidiaries, to the extent a party
hereto or thereto, of the transactions contemplated hereby and
thereby, except such as have been obtained and such as may be
required under state securities or "Blue Sky" laws in connection with
the purchase and distribution of the Shares by the Underwriters.
(l) Neither the issuance and sale of the Shares, nor the
execution, delivery and performance by FCI or its subsidiaries, the
Company or the Subsidiaries, to the extent a party hereto or thereto,
of each of this Agreement and the Transaction Documents and the
consummation by FCI and its subsidiaries, the Company and the
Subsidiaries, to the extent a party hereto or thereto, of the
transactions contemplated hereby and thereby will conflict with or
constitute or result in a breach or violation of any of (i) the terms
or provisions of, or constitute a default under, any Contract to
which FCI, any of the subsidiaries of FCI, the Company or any of the
Subsidiaries is a party or to which any of them or their respective
properties is subject, which conflict, breach, violation or default
would have a Material Adverse Effect, (ii) the certificate or
articles of incorporation or by-laws, or other organizational
documents, of FCI, any of the subsidiaries of FCI, the Company
or any of the Subsidiaries or (iii) (assuming compliance with all
applicable state securities and "Blue Sky" laws) any statute, judgment,
decree, order, rule or regulation of any court or governmental agency
or other body applicable to FCI, any of the subsidiaries of FCI, the
Company or any of Subsidiaries, or any of their respective properties,
which conflict, breach, violation or default would have a Material
Adverse Effect.
(m) The audited consolidated financial statements and
schedules and related notes of the Company included in the
Registration Statement and the Prospectus present fairly, in all
material respects, the consolidated financial position, results of
operations and cash flows of the Company at the dates and for the
periods to which they relate and have been prepared in accordance
with generally accepted accounting principles applied on a consistent
basis, except as otherwise stated therein. The unaudited
consolidated financial statements and the related notes included in
the Registration Statement and the Prospectus present fairly, in all
material respects (on the basis stated therein), the consolidated
financial position, results of operations and cash flows of the
Company at the dates and for the periods to which they relate,
subject to year-end audit adjustments, and have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis, except as otherwise stated therein. The
assumptions used in the preparation of the consolidated financial
statements are reasonable and the allocations of assets, liabilities,
equity, revenues and expenses to the Company are appropriate. The
Company knows of no reason that future financial statements will not
be prepared on the same basis as the consolidated financial
statements included in the Registration Statement and Prospectus.
The other financial and statistical information and data included in
the Registration Statement and the Prospectus are accurately
presented and prepared on a basis consistent with the audited
consolidated financial statements and the books and records of the
Company and the Subsidiaries. KPMG Peat Marwick LLP, which has
examined certain of such consolidated financial statements and
schedules as set forth in its reports included in the Registration
Statement and the Prospectus, is an independent public accounting
firm as required by the Act and the Rules and Regulations.
(n) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus and
except as described therein or contemplated thereby, (i) none of the
Company or any of the Subsidiaries has incurred any material
liabilities or obligations, direct or contingent, or entered into any
material transactions, not in the ordinary course of business; and
(ii) none of the Company, or any of the Subsidiaries has purchased
any of its outstanding capital stock, or declared, paid or otherwise
made any dividend or distribution of any kind on its capital stock;
and (iii) there has not been any change in the capital stock, or
material increase in the short-term debt or long-term debt, of the
Company or any of the Subsidiaries, or any material adverse change,
or any development involving or which may reasonably be expected to
involve, a prospective material adverse change, in the condition
(financial or other), business, net worth or results of operations of
the Company and the Subsidiaries, taken as a whole.
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(o) Each of the Company and the Subsidiaries has good and
marketable title to all real property and personal property described
in the Prospectus as being owned by it and good and marketable title
to all leasehold estates in the real and personal property described
in the Prospectus as being leased by it (except for those leases of
real property in which the Company or such Subsidiary has good title
and that would be marketable but for the requirement that the
landlord consent to an assignment or sublease of the lease), free and
clear of all liens, charges, encumbrances or restrictions, except, in
each case, as described in the Prospectus or to the extent the
failure to have such title or the existence of such liens, charges,
encumbrances or restrictions would not, individually or in the
aggregate, have a Material Adverse Effect.
(p) The Company has not distributed and, prior to the later
to occur of (i) the Closing Date and (ii) completion of the
distribution of the Shares, will not distribute any offering material
in connection with the offering and sale of the Shares other than the
Registration Statement, the Prepricing Prospectus, the Prospectus or
other materials, if any, permitted by the Act.
(q) Each of the Company and the Subsidiaries possesses all
licenses, permits, franchises, certificates, consents, orders,
approvals and other authorizations from, and has made all
declarations and filings with, all federal, state, local and other
governmental authorities, all self-regulatory organizations and all
courts and other tribunals, presently required or necessary to own or
lease, as the case may be, and to operate its respective properties
and to carry on its respective businesses as now or proposed to be
conducted as set forth in the Prospectus ("Permits"), except where
the failure to obtain such Permits would not, individually or in the
aggregate, have a Material Adverse Effect; each of the Company and
the Subsidiaries has fulfilled and performed all of its obligations
with respect to such Permits and no event has occurred
which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such Permit; and none
of the Company or the Subsidiaries has received any notice of any
proceeding relating to revocation or modification of any such Permit,
except as described in the Prospectus and except where such
revocation or modification would not, individually or in the
aggregate, have a Material Adverse Effect.
(r) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only
in accordance with management's general or specific authorization;
and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(s) To the knowledge of the Company or FCI, none of the
Company, any of the Subsidiaries or any of their respective employees
or agents has made any payment of funds of the Company or any
Subsidiary, as the case may be, or received or retained any funds in
violation of any law, rule or regulation, which payment, receipt or
retention of funds is of a character required to be disclosed in the
Prospectus.
(t) Each of the Company and the Subsidiaries has filed all
necessary federal, state, local and foreign income and franchise tax
returns, except where the failure to so file such returns would not
have a Material Adverse Effect and each has paid all taxes shown as
due thereon; and other than tax deficiencies which the Company or any
of the Subsidiaries is contesting in good faith and for which
adequate reserves have been provided, there is no tax deficiency that
has been asserted against the Company or any of the Subsidiaries that
would, individually or in the aggregate, have a Material Adverse
Effect.
(u) No holder of any security of the Company or any
Subsidiary has any right to require registration of shares of Common
Stock or any other security of the Company because of the filing of
the Registration Statement or consummation of the transactions
contemplated by this Agreement, or otherwise. Except as described in
or contemplated by the Prospectus, there are no outstanding options,
warrants or other rights calling for the issuance
of, and there are no commitments, plans or arrangements to issue, any
shares of Common Stock or any security convertible into or
exchangeable or exercisable for Common Stock.
(v) Each of the Company and the Subsidiaries owns or
possesses adequate licenses or other rights to use all patents,
trademarks, service marks, trade names, copyrights and know-how
necessary to conduct the businesses now operated by it or proposed to
be operated by it, as described in the Prospectus, and none of the
Company or any of the Subsidiaries has received any notice of
infringement of, or conflict with (or knows of any such infringement
of or conflict with), asserted rights of others with respect to any
patents, trademarks, service marks, trade names, copyrights or know-
how which, if such assertion of infringement or conflict were
sustained, would have a Material Adverse Effect.
(w) The Company is not now and after sale of the Shares to be
sold by it hereunder and application of the net proceeds from such
sale as described in the Prospectus under the caption "Use of
Proceeds" will not be, an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act").
9
(x) The Company has complied with all provisions of Florida
Statutes, Section 517.075, relating to issuers doing business with Cuba,
to the extent applicable.
7. Indemnification and Contribution. (a) Each of the
Company and FCI agrees, jointly and severally, to indemnify and hold
harmless each of you and each other Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prepricing Prospectus
or in the Registration Statement or the Prospectus or in any amendment or
supplement thereto, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prepricing
Prospectus or the Prospectus, in light of the circumstances under which
such statements were made) not misleading, except insofar as such losses,
claims, damages, liabilities or expenses arise out of or are based upon any
untrue statement or omission or alleged untrue statement or omission which
has been made therein or omitted therefrom in reliance upon and in
conformity with information relating to such Underwriter furnished in
writing to the Company by or on behalf of any Underwriter through you
expressly for use in connection therewith; provided, however, that the
indemnification contained in this paragraph (a) with respect to any
Prepricing Prospectus shall not inure to the benefit of any Underwriter (or
to the benefit of any person controlling such Underwriter) on account of
any such loss, claim, damage, liability or expense arising from the sale of
the Shares by such Underwriter to any person if a copy of the Prospectus
shall not have been delivered or sent to such person within the time
required by the Act, and the untrue statement or alleged untrue statement
or omission or alleged omission of a material fact contained in such
Prospectus was corrected in the Prospectus, provided that the Company has
delivered the Prospectus to the several Underwriters in requisite quantity
on a timely basis to permit such delivery or sending. The foregoing
indemnity agreement shall be in addition to any liability which the Company
or FCI may otherwise have.
(b) If any action, suit or proceeding shall be brought
against any Underwriter or any person controlling any Underwriter in
respect of which indemnity may be sought against the Company, such
Underwriter or such controlling person shall promptly notify the Company
and FCI, and the Company or FCI shall assume the defense thereof, including
the employment of counsel and payment of all fees and expenses. Such
Underwriter or any such controlling person shall have the right to employ
separate counsel in any such action, suit or proceeding and to participate
in the defense thereof, but the fees and expenses of such counsel shall be
at the expense of such Underwriter or such controlling person unless
(i) the Company has agreed in writing to pay such fees and expenses,
(ii) the Company has failed to assume the defense and employ counsel, or
(iii) the named parties to any such action, suit or proceeding (including
any impleaded parties) include both such Underwriter or such controlling
person and either the Company or FCI and such Underwriter or such
controlling person shall have been advised by its counsel that
representation of such indemnified party and the Company or FCI by the same
counsel would be inappropriate under applicable standards of professional
conduct due to actual or potential differing interests between them (in
which case the Company and FCI shall not have the right to assume the
defense of such action, suit or proceeding on behalf of such Underwriter or
such controlling person). It is understood, however, that the Company and
FCI shall, in connection with any one such action, suit or proceeding or
separate but substantially similar or related actions, suits or proceedings
in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time
for all such Underwriters and controlling persons not having actual or
potential differing interests with you or among themselves, which firm
shall be designated in writing by Xxxxx Xxxxxx Inc., and that all such fees
and expenses shall be reimbursed as they are incurred. Neither the Company
nor FCI shall not be liable for any settlement of any such action, suit or
proceeding effected without its written consent, but if settled with such
written consent, or if there be a final judgment for the plaintiff in any such
action, suit or proceeding, the Company and FCI agree to indemnify and hold
harmless any Underwriter, to the extent provided in the preceding
paragraph, and any such controlling person from and against any loss,
claim, damage, liability or expense by reason of such settlement or
judgment.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who
sign the Registration Statement, and any person who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act, to the same extent as the foregoing indemnity from the Company to each
Underwriter, but only with respect to information relating to such
Underwriter furnished in writing by or on behalf of such Underwriter
through you expressly for use in the Registration Statement, the Prospectus
or any Prepricing Prospectus, or any amendment or supplement thereto. If
any action, suit or proceeding shall be brought against the Company, any of
its directors, any such officer, or any such controlling person based on
the Registration Statement, the Prospectus or any Prepricing Prospectus, or
any amendment or supplement thereto, and in respect of which indemnity may
be sought against any Underwriter pursuant to this paragraph (c), such
Underwriter shall have the rights and duties given to the Company by
paragraph (b) above (except that if the Company shall have assumed the
defense thereof such Underwriter shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof, but
the fees and expenses of such counsel shall be at such Underwriter's
expense), and the Company, its directors, any such officer, and any such
controlling person shall have the rights and duties given to the
Underwriters by paragraph (b) above. The foregoing indemnity agreement
shall be in addition to any liability which the Underwriters may otherwise
have.
10
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities
or expenses (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 Shares, or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand and the Underwriters on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, 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 hand shall be deemed to be in
the same proportion as the total net proceeds from the offering of the Shares
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus.
The relative fault of the Company on the one hand and the Underwriters on
the other hand 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 on the one hand or by the Underwriters
on the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
(e) The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 7 were
determined by a 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
paragraph (d) above. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, liabilities and expenses referred
to in paragraph (d) above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating any
claim or defending any such action, suit or proceeding. Notwithstanding
the provisions of this Section 7, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price of
the Shares underwritten by it and distributed to the public exceeds the
amount of any damages which 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 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 number of Firm Shares set forth
opposite their names in Schedule 1 hereto (or such numbers of Firm Shares
increased as set forth in Section 10 hereof) and not joint.
(f) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding.
11
(g) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution
under this Section 7 shall be paid by the indemnifying party to the
indemnified party as such losses, claims, damages, liabilities or expenses
are incurred. The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company and FCI set
forth in this Agreement shall remain operative and in full force and
effect, regardless of (i) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter, FCI, the Company its
directors or officers or any person controlling the Company,
(ii) acceptance of any Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to any Underwriter or any
person controlling any Underwriter, or to the Company, its directors or
officers, or any person controlling the Company, shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 7.
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares hereunder
are subject to the following conditions:
(a) If, at the time this Agreement is executed and delivered,
it is necessary for the registration statement or a post-effective
amendment thereto to be declared effective before the offering of the
Shares by the Underwriters may commence, the registration statement
or such post-effective amendment shall have become effective not
later than 5:30 P.M. (or, in the case of a registration statement
filed pursuant to Rule 462(b) under the Act, not later than 10:00
P.M.), New York City time, on the date hereof, or at such later date
and time as shall be consented to in writing by you, and all filings,
if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for
that purpose shall have been instituted or, to the knowledge of the
Company or any Underwriter, threatened by the Commission, and any
request of the Commission for additional information (to be included
in the Registration Statement or the Prospectus or otherwise) shall
have been complied with to your reasonable satisfaction.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving
a prospective change, in or affecting the condition (financial or
other), business, properties, net worth or results of operations of
the Company or the Subsidiaries not contemplated by the Prospectus,
which in your opinion, as Representatives of the several Underwriters,
would materially, adversely affect the market for the Shares, or (ii)
any event or development relating to or involving the Company or FCI
or any officer or director of the Company or FCI or any Subsidiary
which makes any statement made in the Prospectus untrue or which, in
the opinion of the Company and its counsel or the Underwriters and
their counsel, requires the making of any addition to or change in
the Prospectus in order to state a material fact required by the Act
or any other law to be stated therein or necessary in order to make
the statements therein not misleading, if amending or supplementing
the Prospectus to reflect such event or development would, in your
opinion, as Representatives of the several Underwriters, materially
adversely affect the market for the Shares.
(c) You shall have received on the Closing Date, an opinion
of Cravath, Swaine & Xxxxx, counsel for the Company and FCI, dated
the Closing Date and addressed to you, as Representatives of the
several Underwriters to the effect that:
(i) The Company's authorized, issued and outstanding
capitalization is as set forth under the caption "Capitalization" in
the Registration Statement and the Prospectus; all of the shares of
capital stock of the Company outstanding prior to the issuance of the
Shares have been duly authorized and validly issued, are fully paid
and nonassessable and are free of any preemptive or similar rights;
the Shares have been duly authorized and, when issued and delivered
to the Underwriters against payment therefor in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable
and free of any preemptive or similar rights; and the authorized
capital stock of the Company conforms as to legal matters, in all
material respects, to the description thereof in the Registration
Statement and the Prospectus under the caption "Description of
Capital Stock";
(ii) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, with full corporate power and authority to own, lease and
operate its properties and conduct its business, as described in the
Registration Statement and the Prospectus, and is duly registered and
qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the
conduct of such business requires such registration or qualification,
except where the failure so to register or qualify would not have a
Material Adverse Effect;
(iii) FCI is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Minnesota, with full corporate power and authority to own, lease and
operate its properties and conduct its business;
(iv) Each of the Subsidiaries is a corporation or other
legal entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of its organization, with full
power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement and
Prospectus, and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place where
the nature of its properties or the conduct of such business requires
such registration or qualification, except where the failure so to
register or qualify would not have a Material Adverse Effect; all of
the outstanding shares of capital stock of each Subsidiary have been
duly authorized and validly issued, are fully paid and nonassessable,
and are owned by the Company directly, free and clear of any lien,
adverse claim, security interest, equity or other encumbrance; the
Company does not own, directly or indirectly, shares of capital stock
of or other equity interest in any corporation or other entity other
than the Subsidiaries;
(v) To the best knowledge of such counsel after due
inquiry, (A) other than as described in the Prospectus, there are no
legal or governmental proceedings pending or threatened against the
Company or any of the Subsidiaries, or to which the Company or any of
the Subsidiaries or any of their respective properties is subject,
which are required to be described in the Registration Statement or
the Prospectus and (B), there are no Contracts that are required to
be described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement by the Act that have
not been described or filed as required;
12
(vi) Neither FCI, the Company nor any of the
Subsidiaries is in violation of its certificate or articles of
incorporation or by-laws, or other organizational documents, or of
any law, ordinance, administrative or governmental rule or regulation
applicable to FCI, the Company or any of the Subsidiaries or of any
decree of any court or governmental agency or body having
jurisdiction over FCI, the Company or any of the Subsidiaries. To
the best knowledge of such counsel, none of the Company or any
Subsidiary is in default in the performance of any Contracts to which
the Company or any of the Subsidiaries is a party or by which any of
them or any of their respective properties may be bound, except
where any such breach would not, individually or in the aggregate,
have a Material Adverse Effect;
(vii) Each of FCI and its subsidiaries has, to the
extent each is or will be a party hereto or thereto, the corporate
power and authority to execute, deliver and perform its obligations
under the Transaction Documents and this Agreement. The execution
and delivery of, and the performance by each of FCI and its
subsidiaries, to the extent a party hereto or thereto, of its
obligations under this Agreement and the Transaction Documents has
been duly and validly authorized, and this Agreement and the
Transaction Documents have been duly executed and delivered by FCI
and its subsidiaries, to the extent a party hereto or thereto, and
each of this Agreement and the Transaction Documents constitutes the
valid and legally binding agreement of FCI and its subsidiaries, to
the extent a party hereto or thereto, enforceable in accordance with
its terms (assuming, in the case of this Agreement, the due
authorization, execution and delivery by the Representatives), except
(A) the enforcement hereof and thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating
to creditor's rights generally, and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor
may be brought (regardless of whether such enforcement is considered
in a proceeding at law or in equity and (B) rights to indemnity or
contribution under this Agreement may be limited by federal or state
securities laws or public policy relating thereto;
(viii) Each of the Company and the Subsidiaries has,
to the extent each is or will be a party hereto or thereto, the
corporate power and authority to execute, deliver and perform its
obligations under each of this Agreement and the Transaction
Documents. The execution and delivery of, and the performance by
each of the Company and the Subsidiaries, to the extent a party
hereto or thereto, of its obligations under this Agreement and the
Transaction Documents has been duly and validly authorized, and this
Agreement and the Transaction Documents have been duly executed and
delivered by the Company and the Subsidiaries, to the extent a party
hereto or thereto, and each of this Agreement and the Transaction
Documents constitutes the valid and legally binding agreement of the
Company and the Subsidiaries, to the extent a party hereto or
thereto, enforceable in accordance with its terms (assuming, in the
case of this Agreement, the due authorization, execution and delivery
by the Representatives), except (A) the enforcement hereof and
thereof may be subject to (i) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating to creditor's rights
generally, and (ii) general principles of equity and the discretion
of the court before which any proceeding therefor may be brought
(regardless of whether such enforcement is considered in a proceeding
at law or in equity and (B) rights to indemnity or contribution under
this Agreement may be limited by federal or state securities laws or
public policy relating thereto;
(ix) No consent, approval, authorization or order of any
court or governmental agency or body is required for the performance
of this Agreement or any of the Transaction Documents by each of FCI
and its subsidiaries, the Company and the Subsidiaries, to the extent
a party hereto or thereto, or the consummation by each of FCI and its
Subsidiaries, the Company and the Subsidiaries, to the extent a party
hereto or thereto, of the transactions contemplated hereby and
thereby, except such as have been obtained and such as may be
required under state securities or "Blue Sky" laws in connection with
the purchase and distribution of the Shares by the Underwriters;
13
(x) Neither the issuance and sale of the Shares, nor
the execution, delivery and performance by FCI or its subsidiaries,
the Company or the Subsidiaries, to the extent a party hereto or
thereto, of each of this Agreement and the Transaction Documents and
the consummation by FCI and its subsidiaries, the Company and the
Subsidiaries, to the extent a party hereto or thereto, of the
transactions contemplated hereby and thereby will conflict with or
constitute or result in a breach or violation of any of (i) the terms
or provisions of, or constitute a default under, any Contract listed
as an exhibit to the Registration Statement or known to such counsel
to which FCI, any of the subsidiaries of FCI, the Company or any of
the Subsidiaries is a party or to which any of them or their
respective properties is subject, which conflict, breach, violation
or default would have a Material Adverse Effect, (ii) the certificate
or articles of incorporation or by-laws, or other organizational
documents, of FCI, any of the subsidiaries of FCI, the Company or any
of the Subsidiaries or (iii) (assuming compliance with all applicable
state securities and "Blue Sky" laws) any statute, judgment, decree,
order, rule or regulation of any court or governmental agency or
other body applicable to FCI, any of the subsidiaries of FCI, the
Company or any of Subsidiaries, or any of their respective
properties, which conflict, breach, violation or default would have a
Material Adverse Effect;
(xi) Each of the Company and the Subsidiaries has good
and marketable title to all real property and personal property
described in the Prospectus as being
owned by it and good and marketable title to all leasehold estates in
the real and personal property described in the Prospectus as being
leased by it (except for those leases of real property in which the
Company or such Subsidiary has good title and that would be
marketable but for the requirement that the landlord consent to an
assignment or sublease of the lease), free and clear of all liens,
charges, encumbrances or restrictions, except, in each case, as
described in the Prospectus or to the extent the failure to have such
title or the existence of such liens, charges, encumbrances or
restrictions would not, individually or in the aggregate, have a
Material Adverse Effect;
(xii) Each of the Company and the Subsidiaries
possesses all Permits presently required or necessary to own or
lease, as the case may be, and to operate its respective properties
and to carry on its respective businesses as now or proposed to be
conducted as set forth in the Prospectus, except where the failure to
obtain such Permits would not, individually or in the aggregate, have
a Material Adverse Effect; each of the Company and the Subsidiaries
has fulfilled and performed all of its obligations with respect to
such Permits and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the holder
of any such Permit;
(xiii) The form of certificates for the Shares
conforms to the requirements of the Delaware General Corporation Law;
(xiv) The Registration Statement and all
post-effective amendments, if any, have become effective and, to the
best knowledge of such counsel after due inquiry, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose are pending before or
contemplated by the Commission; and any required filing of the
Prospectus pursuant to Rule 424(b) has been made in accordance with
Act;
(xv) The Registration Statement and the Prospectus and
any supplements or amendments thereto (except for the financial
statements and the notes thereto and the schedules and other
financial and statistical data included therein, as to which such
counsel need not express any opinion) comply as to form in material
respects with the requirements of the Act;
(xvi) The statements in the Registration Statement
and Prospectus, insofar as they are descriptions of contracts,
agreements, or other legal documents, or
refer to statements of law or legal conclusions, are accurate and
present fairly the information required to be stated therein;
At the time the foregoing opinion is delivered, such
counsel shall additionally state that it has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the
Company, representatives of the Underwriters and counsel for the
Underwriters, at which conferences the contents of the Registration
Statement and the Prospectus and related matters were discussed, and,
although it has not independently verified and is not passing upon
and assumes no responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or
the Prospectus (except to the extent specified in subsection
8(c)(xvi)), no facts have come to its attention which lead it to
believe that the Registration Statement at the time it became
effective, or the Prospectus, as of its date and as of the Closing
Date or the Option Closing Date, as the case may be, 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 contained therein, in light of the circumstances under
which they were made, not misleading (it being understood that such
counsel need express no opinion with respect to the financial
statements and related notes thereto and the other financial,
statistical and accounting data included in the Registration
Statement or Prospectus).
14
(d) [Intentionally left blank.]
(e) You shall have received on the Closing Date the opinion,
in form and substance satisfactory to you, of Xxxxxx Xxxxxx &
Xxxxxxx, counsel for the Underwriters, with respect to certain legal
matters relating to this Agreement and such other related matters as
you may reasonably require. In rendering such opinion, Xxxxxx Xxxxxx
& Xxxxxxx shall have received and may rely upon such certificates and
other documents and information as it may reasonably request to pass
upon such matters.
(f) You shall have received letters addressed to you, as
Representatives of the several Underwriters, and dated the date
hereof and the Closing Date from KPMG Peat Marwick LLP, independent
certified public accountants, substantially in the forms heretofore
approved by you.
(g) (i) Each of the representations and warranties of the
Company and FCI contained in this Agreement shall be true and
correct, in all material respects, on and as of the date hereof and
on and as of the Closing Date as if made on and as of the Closing
Date; and (ii) you shall have received certificates, dated the
Closing Date and signed by the chief executive officer and the chief
financial officer of the Company and FCI (or such other officers as
are acceptable to you), to the effect set forth in this Section 8(g)
and in Section 8(h) hereof.
(h) Neither FCI, the Company nor any of the Subsidiaries
shall have failed at or prior to the Closing Date to have performed
or complied, in all material respects, with any of its agreements or
covenants or satisfied, in all material respects, any condition, in
each case, contained in this Agreement and required to be performed,
complied with or satisfied by it hereunder at or prior to the Closing
Date.
(i) The Transaction Documents shall have been executed and
delivered and be in full force and effect.
(j) The Shares shall have been listed or approved for listing
upon notice of issuance on the Nasdaq National Market.
(k) Neither the sale of the shares hereunder nor any of the
transactions contemplated hereby or by the Transfer Agreement shall
be enjoined (temporarily or permanently) on the Closing Date.
(l) [The Working Capital Facility will be in full force and
effect].
(m) The Reorganization shall have been consummated on the
terms and conditions set forth in the Transfer Agreement.
(n) On the Closing Date, the Underwriters shall have received
copies of all certificates, documents and opinions, reasonably
requested by the Underwriters or counsel to the Underwriters,
delivered by the Company or FCI, or any of their counsels.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only
if they are satisfactory in form and substance to you and your counsel.
Any certificate or document signed by any officer of the
Company or FCI and delivered to you, as Representatives of the
Underwriters, or to counsel for the Underwriters, shall be deemed a
representation and warranty by the Company or FCI, as the case may be, to
such Underwriter as to the statements made therein.
The several obligations of the Underwriters to purchase
Additional Shares hereunder are subject to the satisfaction on and as of
any Option Closing Date of the conditions set forth in this Section 8,
except that, if any Option Closing Date is other than the Closing Date, the
certificates, opinions and letters referred to in paragraphs (c)
through (h) shall be dated the Option Closing Date in question and the
Opinions called for by paragraphs (c), (d) and (e) shall be revised to
reflect the sale of Additional Shares.
15
9. Expenses. The Company agrees to pay the following costs
and expenses and all other costs and expenses incident to the performance
by it of its obligations hereunder: (i) the preparation, printing or
reproduction, and filing with the Commission of the registration statement
(including financial statements and exhibits thereto), each Prepricing
Prospectus, the Prospectus, and each amendment or supplement to any of
them; (ii) the printing (or reproduction) and delivery (including postage,
air freight charges and charges for counting and packaging) of such copies
of the registration statement, each Prepricing Prospectus, the Prospectus,
and all amendments or supplements to any of them as may be reasonably
requested for use in connection with the offering and sale of the Shares;
(iii) the preparation, printing, authentication, issuance and delivery of
certificates for the Shares, including any stamp taxes in connection with
the original issuance and sale of the Shares; (iv) the printing (or
reproduction) and delivery of this Agreement, the preliminary and
supplemental Blue Sky Memoranda and all other agreements or documents
printed (or reproduced) and delivered in connection with the offering of
the Shares; (v) the registration of the Common Stock under the Exchange Act
and the listing of the Shares on the Nasdaq National Market; (vi) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the several states as provided in
Section 5(g) hereof (including the reasonable fees, expenses and
disbursements of counsel for the Underwriters relating to the preparation,
printing or reproduction, and delivery of the preliminary and supplemental
Blue Sky Memoranda and such registration and qualification); (vii) the
filing fees in connection with any filings required to be made with the
National Association of Securities Dealers, Inc.; (viii) the transportation
and other expenses incurred by or on behalf of
representatives of the Company or FCI in connection with presentations to
prospective purchasers of the Shares; and (ix) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local
and special counsel) for the Company.
10. Effective Date of Agreement. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties
hereto; or (ii) if, at the time this Agreement is executed and delivered,
it is necessary for the registration statement or a post-effective
amendment thereto to be declared effective before the offering of the
Shares may commence, when notification of the effectiveness of the
Registration Statement or such post-effective amendment has been released
by the Commission. Until such time as this Agreement shall have become
effective, it may be terminated by the Company, by notifying you, or by
you, as Representatives of the several Underwriters, by notifying the
Company.
If any one or more of the Underwriters shall fail or refuse to
purchase Shares that it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares that such defaulting
Underwriter or Underwriters are obligated but fail or refuse to purchase is
not more than one-tenth of the aggregate number of Shares which the
Underwriters are obligated to purchase on the Closing Date, each non-
defaulting Underwriter shall be obligated, severally, in the proportion
which the number of Firm Shares set forth opposite its name in Schedule I
hereto bears to the aggregate number of Firm Shares set forth opposite the
names of all non-defaulting Underwriters or in such other proportion as you
may specify in accordance with Section 20 of the Master Agreement Among
Underwriters of Xxxxx Xxxxxx Inc., to purchase the Shares which such
defaulting Underwriter or Underwriters are obligated, but fail or refuse,
to purchase. If any one or more of the Underwriters shall fail or refuse
to purchase Shares that it or they are obligated to purchase on the Closing
Date and the aggregate number of Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares which the
Underwriters are obligated to purchase on the Closing Date and arrangements
satisfactory to you and the Company for the purchase of such Shares by one
or more non-defaulting Underwriters or other party or parties approved by
you are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter
or the Company. In any such case which does not result in termination of
this Agreement, 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 the
Prospectus or 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 such default of
any such Underwriter under this Agreement. The term "Underwriter" as used
in this Agreement includes, for all purposes of this Agreement, any party
not listed in Schedule I hereto who, with your approval and the approval of
the Company, purchases Shares which a defaulting Underwriter is obligated,
but fails or refuses, to purchase.
Any notice under this Section 10 may be given by telegram,
telecopy or telephone but shall be subsequently confirmed by letter.
11. Termination of Agreement. This Agreement shall be
subject to termination in your absolute discretion, without liability on
the part of any Underwriter to the Company, by notice to the Company, if
prior to the Closing Date or any Option Closing Date (if different from the
Closing Date and then only as to the Additional Shares), as the case may
be, (i) trading in securities generally on the New York Stock Exchange,
American Stock Exchange or the Nasdaq National Market shall have been
suspended or materially limited, (ii) a general moratorium on commercial
banking activities in New York shall have been declared by either federal,
state or other governmental authorities, (iii) any securities of the
Company (including, without limitation, any securities issued by an entity
utilized by the Company for the securitization of its receivables) shall
have been downgraded or placed on any "watch list" for possible downgrading
by any nationally recognized statistical rating organization, or (iv) there
shall have occurred any outbreak or escalation of hostilities or other
international or domestic calamity, crisis or change in political,
financial or economic conditions, the effect of which on the financial
markets of the United States is such as to make it, in your judgment,
impracticable or inadvisable to commence or continue the offering of the
Shares at the offering price to the public set forth on the cover page of
the Prospectus or to enforce contracts for the resale of the Shares by the
Underwriters. Notice of such termination may be given to the Company by
telegram, telecopy or telephone and shall be subsequently confirmed by
letter.
16
12. Information Furnished by the Underwriters. The
statements set forth in the last paragraph on the cover page, the
stabilization legend on the inside cover page, and the first and third
paragraphs under the caption "Underwriting" in any Prepricing Prospectus
and in the Prospectus, constitute the only information relating to any
Underwriter furnished to the Company in writing by or on behalf of the
Underwriters through you as such information to the Company in writing is
referred to in Sections 6(a), 6(b) and 7 hereof.
13. Miscellaneous. Except as otherwise provided in
Sections 5, 10 and 11 hereof, notice given pursuant to any provision of
this Agreement shall be in writing and shall be delivered (i) if to the
Company, at the office of the Company at [ ]; (ii) if to FCI,
at the office of FCI at [ ]; or (iii) if to you, as
Representatives of the several Underwriters, care of Xxxxx Xxxxxx Inc.,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Manager,
Investment Banking Division.
This Agreement has been and is made solely for the benefit of
the several Underwriters, FCI, the Company, its directors and officers, and
the other controlling persons referred to in Section 7 hereof and their
respective successors and assigns, to the extent provided herein, and no
other person shall acquire or have any right under or by virtue of this
Agreement. Neither the term "successor" nor the term "successors and
assigns" as used in this Agreement shall include a purchaser from any
Underwriter of any of the Shares in his status as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be
governed by and construed in accordance with the laws of the State of New
York applicable to contracts made and to be performed within the State of
New York.
This Agreement may be signed in various counterparts which
together constitute one and the same instrument. If signed in
counterparts, this Agreement shall not become effective unless at least one
counterpart hereof shall have been executed and delivered on behalf of each
party hereto.
Please confirm that the foregoing correctly sets forth the
agreement among the Company, FCI and the several Underwriters.
Very truly yours,
METRIS COMPANIES INC.
By: ___________________________
Name:
Title:
FINGERHUT COMPANIES, INC.
By: ___________________________
Name:
Title:
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Underwriters named in
Schedule I hereto.
XXXXX XXXXXX INC.
BEAR, XXXXXXX & CO. INC.
XXXXXXX XXXXX & COMPANY L.L.C.
As Representatives of the
Several Underwriters
By XXXXX XXXXXX INC.
By:
Name:
Title:
17
SCHEDULE I
METRIS COMPANIES INC.
Number of
Underwriter Firm Shares
Xxxxx Xxxxxx Inc. ..................................
Bear, Xxxxxxx & Co. Inc. ...........................
Xxxxxxx Xxxxx & Company L.L.C. .....................
Total .........................................
