Exhibit 1.1
DAL-TILE INTERNATIONAL INC.
Shares of Common Stock, Par Value $.01 per Share
of Dal-Tile International Inc.
INDEMNIFICATION AGREEMENT
June __, 1998
The Underwriters named on
Schedules I and II hereto
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
In order to induce the several Underwriters named on Schedule I hereto (the
"SECONDARY SHARES UNDERWRITERS") and the several Underwriters named on Schedule
II hereto (the "PEPS UNDERWRITERS," and together with the Secondary Shares
Underwriters, the "UNDERWRITERS") to enter into the Underwriting Agreement with
Xxxxxxxxx World Industries, Inc. ("AWI") dated May __, 1998 (the "UNDERWRITING
AGREEMENT"), and in consideration of good and valuable consideration, receipt of
which is hereby acknowledged, and pursuant to the Shareholders Agreement dated
December 29, 1995 (as amended July 15, 1996, the "SHAREHOLDERS AGREEMENT") by
and among Dal-Tile International Inc., a Delaware corporation ("DAL-TILE"), AEA
Investors Inc., DTI Investors LLC ("DTI Investors"), AWI, Xxxxxxxxx Enterprises,
Inc. and Xxxxxxxxx Cork Finance Corporation, Dal-Tile enters into this Agreement
with the Underwriters in connection with the filing for registration under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), of up to ___ shares
(which number includes up to ______ shares to cover over-allotments) of Common
Stock, par value $.01, of Dal-Tile ("COMMON STOCK"). Of these shares of Common
Stock, (i) up to ________ shares (which number includes up to ______ shares to
cover over-allotments) are being offered for sale by AWI as selling shareholder
in connection with the offer and sale of its ____________ __% Participating
Exchangeable Premium Securities due _______, 2001 (the "PEPS") (in exchange for
which PEPS, the holders of such PEPS at maturity thereof may receive Common
Stock pursuant to the terms of the PEPS) (such shares, the "PEPS SHARES"), and
(ii) ________ shares (which number includes up to ______ shares to cover
over-allotments) are being offered for sale by AWI as selling shareholder (such
shares the "SECONDARY SHARES," and together with the PEPS Shares, the "SHARES").
Pursuant to the Shareholders Agreement, Dal-Tile has filed with the
Securities and Exchange Commission (the "COMMISSION") a registration statement,
including a prospectus, relating to the Shares. The registration statement as
amended at the time it becomes effective, including the information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Securities Act, is hereinafter referred to as
the "DAL-TILE REGISTRATION STATEMENT" and the prospectus in the form first used
to confirm sales of Secondary Shares (the "SECONDARY SHARES PROSPECTUS") and the
prospectus (the "PEPS SHARES PROSPECTUS") in the form included as an exhibit in
the AWI Prospectus first used to confirm sales of PEPS is hereinafter referred
to as a "DAL-TILE PROSPECTUS." The term "Dal-Tile preliminary prospectus" means
a preliminary prospectus relating to either the Secondary Shares or the PEPS
Shares. As used herein, the terms "Dal-Tile Prospectus" and "Dal-Tile
preliminary prospectus" shall include in each case the documents, if any,
incorporated by reference therein. If Dal-Tile has filed an abbreviated
registration statement to register additional shares of Common Stock pursuant to
Rule 462(b) under the Securities Act (the "RULE 462 DAL-TILE REGISTRATION
STATEMENT"), then any reference herein to the term "DAL-TILE REGISTRATION
STATEMENT" shall be deemed to include such Rule 462 Dal-Tile Registration
Statement.
AWI has filed with the Commission, and the Commission has declared
effective, a registration statement, including a prospectus, relating to, among
other securities, certain debt securities of AWI and has filed with, or
transmitted for filing to, or shall promptly hereafter file with or transmit for
filing to, the Commission a prospectus supplement (the "AWI PROSPECTUS
SUPPLEMENT") specifically relating to the PEPS pursuant to Rule 424 under the
Securities Act. The term "AWI REGISTRATION STATEMENT" means the registration
statement, including the exhibits thereto, as amended to the date of this
Agreement. The term "BASIC AWI PROSPECTUS" means the prospectus included in the
AWI Registration Statement. The term "AWI PROSPECTUS" means the Basic AWI
Prospectus together with the AWI Prospectus Supplement. The term "preliminary
prospectus" means a preliminary prospectus supplement specifically relating to
the PEPS, together with the Basic AWI Prospectus. As used herein, the terms
"Basic AWI Prospectus," "AWI Prospectus" and "the AWI preliminary prospectus"
shall include in each case the documents, if any, incorporated by reference
therein.
The terms "supplement," "amendment" and "amend" as used herein shall
include all documents subsequently filed by AWI or Dal-Tile with the Commission
pursuant to the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")
that are deemed to be incorporated by reference in the AWI Prospectus or either
Dal-Tile Prospectus, respectively.
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1. REPRESENTATIONS AND WARRANTIES OF DAL-TILE. Dal-Tile represents and
warrants to and agrees with each of the Underwriters that:
(a) The Dal-Tile Registration Statement has become effective; no stop
order suspending the effectiveness of the Dal-Tile Registration Statement
is in effect, and no proceedings for such purpose are pending before or, to
the knowledge of Dal-Tile, threatened by the Commission.
(b) (i)Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in each Dal-Tile Prospectus
complied or will comply when so filed in all material respects with the
Exchange Act and the applicable rules and regulations of the Commission
thereunder,(ii) the Dal-Tile Registration Statement, when it became
effective, did not contain and, as amended or supplemented, if applicable,
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading,(iii) the Dal-Tile Registration Statement
and each Dal-Tile Prospectus comply and, as amended or supplemented, if
applicable, will comply in all material respects with the Securities Act
and the applicable rules and regulations of the Commission thereunder and
(iv) each Dal-Tile Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set
forth in this paragraph do not apply to statements or omissions in the
Dal-Tile Registration Statement or either Dal-Tile Prospectus based upon
information relating to any Underwriter furnished to Dal-Tile in writing by
such Underwriter through you expressly for use therein.
(c) Dal-Tile has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in each Dal-Tile Prospectus and is
duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on Dal-Tile and its subsidiaries, taken as a whole.
(d) (i) Each "significant subsidiary" (as that term is used in Rule
1.02(w) of Regulation S-X under the Securities Act) of Dal-Tile, which for
purposes of this Agreement shall be deemed to include, without limitation,
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Dal-Tile Group Inc., Dal-Tile Corporation, Inc. and Dal-Tile Mexico S.A. de
C.V., (each a "MATERIAL SUBSIDIARY") has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in each Dal-Tile
Prospectus and, to the extent applicable under foreign law, is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on Dal-Tile and its subsidiaries, taken as a whole;(ii) all of the
issued shares of capital stock of each Material Subsidiary of Dal-Tile (x)
have been duly and validly authorized and issued, are fully paid and
non-assessable and (y) except as provided by the Bank Credit Agreement
dated August 14, 1996 and as amended June 19, 1997 and September 30, 1997,
among Dal-Tile and the banks signatory thereto (the "Credit Agreement"),
are owned directly or indirectly by Dal-Tile, free and clear of all liens,
encumbrances, equities or claims.
(e) This Agreement has been duly authorized, executed and delivered
by Dal-Tile.
(f) The authorized capital stock of Dal-Tile conforms as to legal
matters to the description thereof contained in each Dal-Tile Prospectus.
(g) The outstanding shares of Common Stock (including the Shares)
have been duly authorized and are validly issued, fully paid and
non-assessable and are not subject to any preemptive or similar rights.
(h) The execution and delivery by Dal-Tile of, and the performance by
Dal-Tile of its obligations under, this Agreement will not contravene any
provision of (i) applicable law or (ii) the certificate of incorporation or
by-laws of Dal-Tile or (iii) any agreement or other instrument binding upon
Dal-Tile or any of its subsidiaries, or (iv) any judgment, order or decree
of any governmental body, agency or court having jurisdiction over Dal-Tile
or any subsidiary, except where, in the case of clauses (i), (iii) and
(iv), such contravention would not, individually or in the aggregate, have
a material adverse effect on Dal-Tile and its subsidiaries, taken as a
whole, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by Dal-Tile of its obligations under this Agreement, except
such as have been obtained under the Securities
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Act and as may be required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the Shares.
(i) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of Dal-Tile and its subsidiaries, taken as a whole, from that
set forth in each Dal-Tile Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(j) Other than as set forth in each of the Dal-Tile Prospectuses,
there are no legal or governmental proceedings pending or, to the knowledge
of Dal-Tile, threatened to which Dal-Tile or any of its subsidiaries is a
party or to which any of the properties of Dal-Tile or any of its
subsidiaries is subject that are required to be described in the Dal-Tile
Registration Statement or either Dal-Tile Prospectus and are not so
described or any contracts or other documents that are required to be
described in the Dal-Tile Registration Statement or either Dal-Tile
Prospectus or to be filed as exhibits to the Dal-Tile Registration
Statement that are not described or filed as required.
(k) Each preliminary prospectus filed as part of the Dal-Tile
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act, complied
when so filed in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder.
(l) Dal-Tile is not an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended.
(m) Dal-Tile and its subsidiaries are in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
LAWS"), have received all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses and are in compliance with all terms and conditions of any such
permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals would not, singly or in the aggregate, have
a material adverse effect on Dal-Tile and its subsidiaries, taken as a
whole.
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To the best of Dal-Tile's knowledge, there are no costs or liabilities
associated with Environmental Laws (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate, have
a material adverse effect on Dal-Tile and its subsidiaries, taken as a
whole.
(n) Except as described in the Dal-Tile Registration Statement and
each Dal-Tile Prospectus (including the description of the Shareholders
Agreement), there are no contracts, agreements or understandings between
Dal-Tile and any person granting such person the right to require Dal-Tile
to file a registration statement under the Securities Act with respect to
any securities of Dal-Tile or to require Dal-Tile to include such
securities with the Shares registered pursuant to the Dal-Tile Registration
Statement. No such rights, if any, were exercised in connection with the
sale of the Shares except by AWI.
(o) Except as disclosed in the Dal-Tile Registration Statement and
each Dal-Tile Prospectus, subsequent to the respective dates as of which
information is given in the Dal-Tile Registration Statement and each
Dal-Tile Prospectus,(i) Dal-Tile and its subsidiaries have not incurred any
liability or obligation, direct or contingent that is material to Dal-Tile
and its subsidiaries, taken as a whole, nor entered into any material
transaction not in the ordinary course of business that is material to
Dal-Tile and its subsidiaries, taken as a whole;(ii) Dal-Tile has not
purchased any of its outstanding capital stock, nor declared, paid or
otherwise made any dividend or distribution of any kind on its capital
stock other than ordinary and customary dividends;(iii) there has not been
any material change in the capital stock, short-term debt or long-term debt
of Dal-Tile and its consolidated subsidiaries; and (iv) there has not been
any development having or which could reasonably be expected to have a
material adverse effect on Dal-Tile and its subsidiaries, taken as a whole.
(p) Dal-Tile and its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects except such as do not materially adversely affect
Dal-Tile and its subsidiaries, taken as a whole, and do not interfere with
the use made and proposed to be made of such property by Dal-Tile and its
subsidiaries taken as a whole; and any real property and buildings
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held under lease by Dal-Tile and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of
such property and buildings by Dal-Tile and its subsidiaries.
(q) No material labor dispute with the employees of Dal-Tile or any
of its subsidiaries exists, or, to the knowledge of Dal-Tile, is imminent;
and Dal-Tile is not aware of any existing, threatened or imminent labor
disturbance by the employees of any of its principal suppliers,
manufacturers or contractors that could result in any material adverse
effect on Dal-Tile and its subsidiaries, taken as a whole.
(r) Dal-Tile and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities ("PERMITS") necessary to conduct their
respective businesses, and neither Dal-Tile nor any such subsidiary has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which,
individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on
Dal-Tile and its subsidiaries, taken as a whole.
(s) Dal-Tile maintains with respect to itself and each of its
subsidiaries a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations;(ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability;(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 the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(t) All of the outstanding shares of capital stock of Dal-Tile Group
have been duly authorized and validly issued, are fully paid and
non-assessable and are owned directly or indirectly by Dal-Tile, free and
clear of all liens, encumbrances, equities or claims;
2. AGREEMENTS OF DAL-TILE (CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS
UNDER THE UNDERWRITING AGREEMENT).
(a) Dal-Tile agrees that it will not, for a period of 90 days
following the date of this Agreement, without the prior written consent of
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Xxxxxx Xxxxxxx & Co. Incorporated,(i) offer, pledge, loan, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or
exchangeable for shares of Common Stock (except through gifts to persons
who agree in writing to be bound by the restrictions of this paragraph), or
(ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of the ownership of
shares of Common Stock, whether any such transaction described in clause
(i) or (ii) above is to be settled by delivery of shares of Common Stock or
such other securities, in cash or otherwise. The foregoing sentence shall
not apply to the issuance by Dal-Tile of shares of Common Stock or options
to purchase Common Stock under existing stock option and stock purchase
plans. Dal-Tile agrees that, without the prior written consent of Xxxxxx
Xxxxxxx & Co. Incorporated (which consent shall not be unreasonably
withheld), during the period ended 90 days after the date following this
Agreement it will not file a registration statement with the Commission for
an offering of Common Stock or any securities convertible into, or
exercisable or exchangeable for Common Stock other than the filing of a
registration statement on Form S-8 or an equivalent form.
(b) Dal-Tile shall deliver to the Underwriters on the Closing Date
(as defined in the Underwriting Agreement) a certificate, dated the Closing
Date and signed by an executive officer of Dal-Tile, to the effect that the
representations and warranties of Dal-Tile contained in this Agreement are
true and correct as of the Closing Date and that Dal-Tile has complied with
all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date (with such
exceptions and modifications as such officer may deem appropriate).
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) Dal-Tile shall use reasonable efforts to ensure that the
Underwriters shall have received on the Closing Date an opinion of Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx, counsel for Dal-Tile, dated the Closing
Date, to the effect that:
(i) Dal-Tile is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
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the corporate power and authority to own its property and to conduct
its business as described in each Dal-Tile Prospectus;
(ii) Dal-Tile Group Inc., a Delaware corporation ("Dal-Tile
Group"), is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the corporate
power and authority to own its property and to conduct its business as
described in each Dal-Tile Prospectus;
(iii) the authorized capital stock of Dal-Tile is as set forth
in each Dal-Tile Prospectus under the caption, "Capitalization";
(iv) the Shares have been duly authorized and are validly
issued, fully paid and non-assessable;
(v) all of the outstanding shares of capital stock of
Dal-Tile Group have been duly authorized and validly issued, are fully
paid and non-assessable and are owned directly or indirectly by
Dal-Tile;
(vi) this Agreement has been duly authorized, executed and
delivered by Dal-Tile;
(vii) the execution and delivery by Dal-Tile of, and the
performance by Dal-Tile of its obligations under, this Agreement do
not and will not (a) contravene any provision of the Restated
Certificate of Incorporation or Restated By-Laws of Dal-Tile or
Dal-Tile Group Inc., (b) contravene, result in a breach of or
constitute a default under the Credit Agreement or any other agreement
or instrument binding upon Dal-Tile (or any of its Subsidiaries) (1)
that is listed as an exhibit to the Dal-Tile Registration Statement or
Dal-Tile's Annual Report on Form 10-K for the fiscal year ended
January 3, 1998 or (2) that is listed as an exhibit to any document
filed with the Commission subsequent to January 3, 1998 and prior to
the date of this opinion that is incorporated or deemed to be
incorporated in the Registration Statement or (c) violate (1) any
present statute, rule or regulation of any governmental agency or
authority of the United States of America or the State of New York or
any present provision of the General Corporation Law of the State of
Delaware (the "DGCL") applicable to Dal-Tile, or (2) any judgment,
decree or order of any court or governmental agency or body of the
United States of America or the State of New York or of the State of
Delaware
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pursuant to the DGCL set forth in the Officers' Certificate to be
attached to such opinion; PROVIDED, HOWEVER, that such counsel need
express no opinion with respect to any violation, breach or default
not ascertainable from the face of any such agreement, instrument,
judgment, decree or order, or arising under or based upon any
cross-default provision insofar as such violation relates to a default
under an agreement that is not referred to in subclause (1) or (2) of
clause (b) above or arising under or based upon any covenant of a
financial or numerical nature or which requires arithmetic
computation.
(viii) No consent, approval, authorization, order, qualification
of or registration with any court or government agency of the United
States of America or the States of New York or Delaware (as it relates
to the General Corporation Law of the State of Delaware) is required
for the performance by Dal-Tile of its obligations hereunder (except
such as have been obtained under the Securities Act and such as may be
required under state securities or Blue Sky laws) in connection with
the sale of the Shares;
(ix) the statements (A) in each Dal-Tile Prospectus under the
captions ["Principal and Selling Shareholders--Shareholders
Agreement,"] "Description of Capital Stock," "Description of Second
Amended Credit Agreement,"and (B) [in the Dal-Tile Registration
Statement in Item 15] in each case insofar as such statements
constitute summaries of the legal matters and documents referred to
therein, fairly present the information disclosed therein in all
material respects;
(x) Dal-Tile is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended and;
(xi) (a) The Dal-Tile Registration Statement and each of the
Dal-Tile Prospectuses (in each case excluding the documents
incorporated or deemed to be incorporated by reference therein), as of
their respective effective or issue dates (other than the financial
statements, the notes and schedules thereto and the other financial
information included therein or omitted therefrom, as to which we
express no opinion), each appeared on its face to be responsive as to
form in all material respects to the requirements of the Securities
Act and the rules and regulations of the Commission thereunder
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and (b) the documents incorporated or deemed to be incorporated by
reference in the Dal-Tile Prospectus (other than the financial
statements, the notes and schedules thereto and the other financial
information included therein or omitted therefrom, as to which we
express no opinion), when they were filed with the Commission, each
appeared on its face to be responsive as to form in all material
respects to the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder.
In addition, such counsel shall state that in the course of the
preparation by Dal-Tile of the Dal-Tile Registration Statement and each
Dal-Tile Prospectus, such counsel participated in conferences with certain
of the officers and representatives of, and the independent public
accountants for, Dal-Tile, at which the contents of the Dal-Tile
Registration Statement and each Dal-Tile Prospectus were discussed.
Between the date of the effectiveness of the Dal-Tile registration
Statement and the time of delivery of such opinion, such counsel attended
additional conferences with certain of the officers and representatives of
Dal-Tile, at which the contents of each Dal-Tile Prospectus were discussed
to a limited extent. Such counsel shall state that, given the limitations
inherent in the independent verification of factual matters and the
character of determinations involved in the registration process, such
counsel shall not pass upon or assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Dal-Tile
Registration Statement or the Dal-Tile Prospectuses, except as set for the
in paragraph (ix) above. Subject to the foregoing and on the basis of the
information gained in the performance of the services referred to above,
including information obtained from officers and other representatives of,
and the independent public accountants for, Dal-Tile, such counsel shall
state that no facts have come to their attention that have caused them to
believe that the Dal-Tile Registration Statement, as of its effective date,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein not misleading, or that either Dal-Tile Prospectus,
as of [insert pricing date], 1998, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. Also,
subject to the foregoing, such counsel shall state that no facts have come
to their attention in the course of the procedures described in the second
sentence of this paragraph that cause them to believe that each Dal-Tile
Prospectus, as of the date and time of delivery of this letter, contains an
untrue statement of a material fact or omits to state a material fact
required to be
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stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
Such counsel shall state that they express no view or belief, however, with
respect to financial statements, the notes or schedules thereto or other
financial information included in or incorporated by reference into or
omitted from the Dal-Tile Registration Statement or each Dal-Tile
Prospectus.
(d) Dal-Tile shall use reasonable efforts to ensure that the
Underwriters shall have received on the Closing Date an opinion of Xxxx X.
Xxxxx, Esq.,Vice-President, Secretary and General Counsel of Dal-Tile,
dated the Closing Date, to the effect that:
(i) Dal-Tile is duly qualified to transact business and is in
good standing in each jurisdiction listed on the attached Schedule
III;
(ii) Dal-Tile Group is duly qualified to transact business and
is in good standing in each jurisdiction listed on the attached
Schedule IV; and
(iii) after due inquiry, such counsel does not know of any
legal or governmental proceedings pending or threatened to which
Dal-Tile or any of its subsidiaries is a party or to which any of the
properties of Dal-Tile or any of its subsidiaries is subject that are
required to be described in the Dal-Tile Registration Statement or
either the Dal-Tile Prospectus and are not so described or of any
contracts or other documents that are required to be described in the
Dal-Tile Registration Statement or either Dal-Tile Prospectus or to be
filed as exhibits to the Dal-Tile Registration Statement that are not
described or filed as required.
(e) Dal-Tile shall use reasonable efforts to ensure that the
Underwriters shall have received on the Closing Date an opinion of
Consultoria Juridicia Mercantil, S.A. de C.V., counsel for Materiales
Ceramicos, S.A. de C.V. and Dal-Tile Mexico, S.A. de C.V., dated the
Closing Date, to the effect that:
(i) each of Dal-Tile Mexico, S.A. de C.V. and Materiales
Ceramicos, S.A. de C.V. (the "MEXICAN SUBSIDIARIES") is a corporation
duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, with full corporate power
and authority to own, lease, and operate its
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properties and to conduct its business as described in the Dal-Tile
Registration Statement and each Dal-Tile Prospectus; and (x) all the
outstanding shares of capital stock of each of the Mexican
Subsidiaries have been duly authorized and validly issued, are fully
paid and non-assessable, and (y) all the outstanding shares of capital
stock of each of the Mexican Subsidiaries are owned by Dal-Tile
directly or indirectly (except for directors' qualifying shares in the
case of the Mexican Subsidiaries), free and clear of any lien,
encumbrances, claim or equity;
(ii) none of the Mexican Subsidiaries is (A) in violation of
its respective certificate of incorporation or bylaws or other
organizational documents, or (B) to the best knowledge of such counsel
after reasonable inquiry, is in default in the performance of any
material obligation, agreement or condition contained in any bond,
debenture, note or other evidence of indebtedness, except as may be
disclosed in the Dal-Tile Prospectuses;
(iii) neither the execution, delivery or performance by
Dal-Tile of this Agreement conflicts or will conflict with or
constitutes or will constitute a breach of, or default under, the
certificate of incorporation or bylaws or other organizational
documents of any of the Mexican Subsidiaries or any agreement,
indenture, lease or other instrument to which any of the Mexican
Subsidiaries is a party or by which any of them or any of their
respective properties is bound that is an exhibit to the Dal-Tile
Registration Statement, or is known to such counsel after reasonable
inquiry, or will result in the creation or imposition of any lien,
encumbrance, equity or claim upon any property or assets of any of the
Mexican Subsidiaries, nor will any such action result in any violation
of any existing Mexican rule, law, regulation, ruling, judgment,
injunction, order or decree known to such counsel after reasonable
inquiry, and applicable to any of the Mexican Subsidiaries, or any of
their respective properties;
(iv) to the best knowledge of such counsel after reasonable
inquiry, other than as described or contemplated in the Dal-Tile
Prospectuses, there are no legal or governmental proceedings pending
or threatened against any of the Mexican Subsidiaries, or to which any
of the Mexican Subsidiaries, or any of their respective property, is
subject;
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(v) to the best knowledge of such counsel after reasonable
inquiry, (A) none of the Mexican Subsidiaries is in violation of any
law, ordinance, administrative or governmental rule or regulation
applicable to any of the Mexican Subsidiaries or of any decree of any
Mexican court or governmental agency or body having jurisdiction over
any of the Mexican Subsidiaries and (B) each of the Mexican
Subsidiaries has such Permits as are necessary to own their respective
properties and to conduct their respective business in the manner
described in the Dal-Tile Prospectuses; and each of the Mexican
Subsidiaries has fulfilled and performed all its material obligations
with respect to such Permits and no event has occurred that 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;
(vi) each of the Mexican Subsidiaries has good and marketable
title to all property (real and personal) described in the Dal-Tile
Prospectuses as being owned by it, free and clear of all liens,
claims, security interests or other encumbrances, except such as are
described in the Dal-Tile Registration Statement and the Dal-Tile
Prospectuses or in a document filed as an exhibit to the Dal-Tile
Registration Statement and all the property described in the Dal-Tile
Prospectuses as being held under lease by each of the Mexican
Subsidiaries is held by it under valid, subsisting and enforceable
leases;
(vii) each of the Mexican Subsidiaries has filed all material
tax returns required by Mexican law to be filed, which returns are
true, complete and correct, and no such Mexican Subsidiary is in
default in the payment of any taxes which were payable pursuant to
said returns or any assessments with respect thereto; and
(viii) except as described in the Dal-Tile Registration
Statement and Dal-Tile Prospectuses, the Mexican Subsidiaries (i) are
in compliance in all material respects with Mexican Environmental Laws
(as hereinafter defined) and (ii) have received, and are in compliance
in all material respects with all terms and conditions of, all
material permits, licenses, authorizations or other approvals required
of them under Mexican Environmental Laws to conduct their respective
businesses; and
14
(ix) except as described in the Dal-Tile Registration
Statement and Dal-Tile Prospectuses, there are no past or present
actions (including on-site and off-site disposal of Mexican Hazardous
Substances (as hereinafter defined)), omissions or conditions
regarding the Mexican Subsidiaries or any real property upon which any
of them conduct their respective business operations that have formed,
or are reasonably likely to form, the basis of any material claim or
violation against any of the Mexican Subsidiaries (including releases
or discharges of Mexican Hazardous Substances) under Mexican
Environmental Laws.
As used herein, "Mexican Environmental Laws" means any and all
applicable Mexican laws, regulations, rules, ordinances, judgments or
decrees relating to the protection of human health, safety or the
environment, the preservation of natural resources, or to Hazardous
Substances. As used herein, "Mexican Hazardous Substances" means any
and all explosive, radioactive, hazardous, toxic or otherwise
dangerous materials, pollutants, contaminants or wastes regulated
pursuant to Mexican Environmental Laws.
(x) to the best knowledge of such counsel, no labor problem
exists with employees of any Mexican Subsidiary or is imminent that
could adversely affect the Mexican Subsidiaries.
The opinions of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, Xxxx X.
Solls and Consultoria Juridicia Mercantil, S.A. de C.V. described in
Sections 2(c) and 2(e) above shall be rendered to the Underwriters at the
request of Dal-Tile (and of Materiales Ceramicos, S.A. de C.V. and Dal-Tile
Mexico, S.A. de C.V., in the case of the opinion of Consultoria Juridicia
Mercantil, S.A. de C.V.), and shall so state therein.
(f) Dal-Tile shall use reasonable efforts to ensure that the
Underwriters shall have received, on each of the date hereof and the
Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from
Ernst & Young LLP, independent public accountants, containing statements
and information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in each Dal-Tile Registration
Statement and the Dal-Tile Prospectus; PROVIDED that the letter delivered
on the Closing Date shall use a "cut-off date" not earlier than the date
hereof.
15
(g) Dal-Tile shall use reasonable efforts to ensure that the
"lock-up" agreements, each substantially in the form of Exhibit A hereto,
between you and certain stockholders, officers and directors of Dal-Tile
relating to sales and certain other dispositions of shares of Common Stock
or certain other securities, be delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date.
(h) Dal-Tile shall use reasonable efforts to ensure that the
Underwriters shall have received on each Option Closing Date (as defined in
the Underwriting Agreement) such documents as you may reasonably request
with respect to the good standing of Dal-Tile, the due authorization and
issuance of the Additional Secondary Shares (as defined in the Underwriting
Agreement) and the Shares underlying the Additional PEPS (as defined in the
Underwriting Agreement), as the case may be, and other matters related to
the offering of the Additional Secondary Shares and the Additional PEPS, as
the case may be.
3. ADDITIONAL COVENANTS OF DAL-TILE. In further consideration of the
agreements of the Underwriters herein contained, Dal-Tile further covenants with
each Underwriter as follows:
(a) To furnish to you, without charge, 4 signed copies of the
Dal-Tile Registration Statement (including exhibits thereto) and for
delivery to each other Underwriter a conformed copy of the Dal-Tile
Registration Statement (without exhibits thereto) and to furnish to you in
New York City, without charge, prior to 5:00 p.m., New York City time, on
the business day next succeeding the date of this Agreement and during the
period mentioned in Section 3(c) below, as many copies of each Dal-Tile
Prospectus and any supplements and amendments thereto or to the Dal-Tile
Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Dal-Tile Registration
Statement or either Dal-Tile Prospectus, to furnish to you a copy of each
such proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object, and to file with
the Commission within the applicable period specified in Rule 424(b) under
the Securities Act any prospectus required to be filed pursuant to such
Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
either Dal-Tile Prospectus is required by law to be delivered in connection
with sales by an Underwriter or dealer, any event shall occur or condition
exist as a
16
result of which it is necessary to amend or supplement such Dal-Tile
Prospectus in order to make the statements therein, in the light of the
circumstances when such Dal-Tile Prospectus is delivered to a purchaser,
not misleading, or if, in the reasonable judgment of the Company or in the
opinion of counsel for the Underwriters, it is necessary to amend or
supplement such Dal-Tile Prospectus to comply with applicable law,
forthwith to prepare, file with the Commission and furnish, at its own
expense, to the Underwriters and to the dealers (whose names and addresses
you will furnish to Dal-Tile) to which Secondary Shares or PEPS may have
been sold by you on behalf of the Underwriters and to any other dealers
upon request, either amendments or supplements to such Dal-Tile Prospectus
so that the statements in such Dal-Tile Prospectus as so amended or
supplemented will not, in the light of the circumstances when such Dal-Tile
Prospectus is delivered to a purchaser, be misleading or so that such
Dal-Tile Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) To make generally available to Dal-Tile's security holders and to
you as soon as practicable an earning statement covering the twelve-month
period beginning on the first day of the first full fiscal quarter after
the Closing Date that satisfies the provisions of Section 11(a) of the
Securities Act and the rules and regulations of the Commission thereunder.
4. EXPENSES. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, Dal-Tile agrees
to pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees, disbursements
and expenses of accountants and counsel for Dal-Tile and counsel for AWI in
connection with the registration and delivery of the Secondary Shares under
the Securities Act and all other fees or expenses in connection with the
preparation and filing of the Dal-Tile Registration Statement, any Dal-Tile
preliminary prospectus, each Dal-Tile Prospectus and amendments and
supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof to
the Underwriters and dealers, in the quantities hereinabove specified, (ii)
the cost of printing or producing any Blue Sky or Legal Investment
memorandum in connection with the offer and sale of the Shares under state
securities laws and all expenses in
17
connection with the qualification of the Shares for offer and sale under
state securities laws as provided in Section 3(d) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with
the Blue Sky or Legal Investment memorandum, (iii) all filing fees and the
reasonable fees and disbursements of counsel to the Underwriters incurred
in connection with the review and qualification of the offering of the
Shares by the National Association of Securities Dealers, Inc., (iv) all
costs and expenses incident to listing the Shares on the NYSE, (v) the
costs and charges of any transfer agent, registrar or depositary for the
Shares, (vi) the costs and expenses of Dal-Tile relating to investor
presentations on any "road show" undertaken in connection with the
marketing of the offering of the Shares, including, without limitation,
expenses associated with the production of road show slides and graphics,
fees and expenses of any consultants engaged in connection with the road
show presentations with the prior approval of Dal-Tile, travel and lodging
expenses of the representatives and officers of Dal-Tile and any such
consultants, and the cost of any aircraft chartered in connection with the
road show, and (vii) all other costs and expenses incident to the
performance of the obligations of Dal-Tile hereunder for which provision is
not otherwise made in this Section. It is understood, however, that except
as provided in this Section, Section 5 and the last paragraph of Section 7
below, the Underwriters will pay all of their costs and expenses, including
fees and disbursements of their counsel, stock transfer taxes payable on
resale of any of the Shares by them and any advertising expenses connected
with any offers they may make.
The provisions of this Section shall not supersede or otherwise affect
any agreement that Dal-Tile and AWI may otherwise have for the allocation
of such expenses among themselves.
5. INDEMNITY AND CONTRIBUTION.(a) Dal-Tile agrees to indemnify and
hold harmless each Underwriter 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 (including, without limitation, any legal
or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Dal-Tile
Registration Statement or any amendment thereof, any Dal-Tile preliminary
prospectus or any Dal-Tile Prospectus (as amended or supplemented if
Dal-Tile shall have furnished any amendments or supplements thereto) 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
18
misleading, except insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to any Underwriter
furnished to Dal-Tile in writing by such Underwriter through you expressly
for use therein; PROVIDED, HOWEVER, that the foregoing indemnity agreement
with respect to any preliminary prospectus shall not inure to the benefit
of any Underwriter from whom the person asserting any such losses, claims,
damages or liabilities purchased Shares, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented
if Dal-Tile shall have furnished any amendments or supplements thereto) was
not sent or given by or on behalf of such Underwriter to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities, unless such
failure is the result of noncompliance by Dal-Tile's [failure to promptly
deliver any supplement or amendment to either Dal-Tile Prospectus or the
Dal-Tile Registration Statement].[DISCUSS].
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless Dal-Tile, the directors of Dal-Tile, the officers of
Dal-Tile who sign the Dal-Tile Registration Statement and each person, if
any, who controls Dal-Tile 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 (including, without limitation,
any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Dal-Tile Registration Statement or any amendment thereof, any Dal-Tile
preliminary prospectus or any Dal-Tile Prospectus (as amended or
supplemented if Dal-Tile shall have furnished any amendments or supplements
thereto), 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, but only with reference to information
relating to such Underwriter furnished to Dal-Tile in writing by such
Underwriter through you expressly for use therein.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to Section 5(a) or 5(b), such person (the "INDEMNIFIED
PARTY") shall promptly notify the person against whom such indemnity may be
sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party,
upon request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified
19
party 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 party
unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named parties
to any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party 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 party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for (i) the fees and expenses of more
than one separate firm (in addition to any local counsel) for all
Underwriters and all persons, if any, who control any Underwriter within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act and (ii) the fees and expenses of more than one separate firm
(in addition to any local counsel) for Dal-Tile, its directors, its
officers who sign the Dal-Tile Registration Statement and each person, if
any, who controls Dal-Tile within the meaning of either such Section, and
that all such fees and expenses shall be reimbursed as they are incurred.
In the case of any such separate firm for the Underwriters and such control
persons of any Underwriters, such firm shall be designated in writing by
Xxxxxx Xxxxxxx & Co. Incorporated. In the case of any such separate firm
for Dal-Tile, and such directors, officers and control persons of Dal-Tile,
such firm shall be designated in writing by Dal-Tile. The indemnifying
party 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 party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second and third sentences of this
paragraph, the indemnifying party 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 90 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with
such request prior to the date of such settlement (other than with respect
to requests for reimbursement of an indemnified party contested in good
faith). No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
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 proceeding.
20
(d) To the extent the indemnification provided for in Section 5(a) or
5(b) is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party 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 indemnifying party or parties on the
one hand and the indemnified party or parties on the other hand from the
offering of the Secondary Shares or PEPS, as the case may be, or (ii) if
the allocation provided by clause 5(d)(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 5(d)(i) above but also the
relative fault of the indemnifying party or parties on the one hand and of
the indemnified party or parties on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by Dal-Tile on the one hand and the Underwriters
on the other hand in connection with the offering of the Secondary Shares
or PEPS, as the case may be, shall be deemed to be in the same respective
proportions as the net proceeds from the offering (before deducting
expenses) of the Secondary Shares or the PEPS, as the case may be, received
by AWI and the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover of the
Secondary Shares Prospectus or the AWI Prospectus, bear to the aggregate
public offering price of the Dal-Tile Shares or the PEPS, as the case may
be. The relative fault of Dal-Tile 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 Dal-Tile or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Underwriters'
respective obligations to contribute pursuant to this Section 5 are several
in proportion to the respective number of Secondary Shares or PEPS, as the
case may be, they have agreed to purchase under the Underwriting Agreement,
and not joint.
(e) Dal-Tile and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 5 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 Section 5(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph 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 or defending any such
21
action or claim. Notwithstanding the provisions of this Section 5, no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Secondary Shares or PEPS, as
the case may be, 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 remedies provided for
in this Section 5 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law
or in equity.
(f) The indemnity and contribution provisions contained in this
Section 5 and the representations, warranties and other statements of
Dal-Tile contained 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 Dal-Tile, its officers or directors or any
person controlling Dal-Tile and (iii) acceptance of and payment for any of
the Secondary Shares or PEPS.
6. TERMINATION. This Agreement shall be subject to termination by
notice given by you to Dal-Tile, if you elect to terminate the Underwriting
Agreement pursuant to Section 8 thereof.
7. EFFECTIVENESS. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
If the Underwriting Agreement shall be terminated by the Underwriters,
or any of them, because of any failure or refusal on the part of Dal-Tile
to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason Dal-Tile shall be unable to perform its
obligations under this Agreement, Dal-Tile will reimburse the Underwriters
or such Underwriters as have so terminated the Underwriting Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including
the fees and disbursements of their counsel) reasonably incurred by such
Underwriters in connection with this Agreement, the Underwriting Agreement
or the offerings contemplated hereunder or thereunder.
8. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument.
22
9. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
10. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
DAL-TILE INTERNATIONAL INC.
By:
-------------------------------
Name:
Title:
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
Acting on behalf of itself and the
several Underwriters named in
Schedule I and Schedule II hereto.
XXXXXX XXXXXXX & CO. INCORPORATED
By:
------------------------------
Name:
Title:
23
SCHEDULE I
UNDERWRITER
-------------------------------------------
Xxxxxx Xxxxxxx & Co. Incorporated . . . . .
Lazard Freres & Co. LLC . . . . . . . . . .
Xxxxx Xxxxxx Inc. . . . . . . . . . . . . .
[NAMES OF OTHER UNDERWRITERS] . . . . . . .
SCHEDULE II
UNDERWRITER
-------------------------------------------
Xxxxxx Xxxxxxx & Co. Incorporated . . . . .
Lazard Freres & Co. LLC . . . . . . . . . .
Xxxxx Xxxxxx Inc. . . . . . . . . . . . . .
[NAMES OF OTHER UNDERWRITERS] . . . . . . .
SCHEDULE III
SCHEDULE IV
2
EXHIBIT A
[FORM OF LOCK-UP LETTER]
____________, 1998
The Underwriters named in Schedules I
and II to the Indemnification Agreement
(as defined below)
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated ("XXXXXX
XXXXXXX") together with the several Underwriters (the "UNDERWRITERS") named in
the schedules to the Indemnification Agreement (as defined below) propose to
enter into an Indemnification Agreement (the "INDEMNIFICATION AGREEMENT") with
Dal-Tile International Inc., a Delaware corporation ("DAL-TILE"), relating to
the public offering by Xxxxxxxxx World Industries, Inc. ("AWI") of up to __
shares of the Common Stock, $.01 par value, of Dal-Tile ("COMMON STOCK")
deliverable upon maturity of AWI's __% Premium Exchangeable Participating
Securities due ____ 2001, and up to ______ shares of Common Stock (the
"SECONDARY SHARES") to be sold by AWI in a concurrent public offering
(collectively, the "PUBLIC OFFERINGS").
To induce the Underwriters that may participate in the Public Offerings to
continue their efforts in connection with the Public Offerings, the undersigned
hereby agrees that, without the prior written consent of Xxxxxx Xxxxxxx, [it]
[he] will not, during the period ending 90 days after the date of the final
prospectuses relating to the Public Offerings (the "DAL-TILE PROSPECTUSES"),
[for so long as he remains a director or executive officer of Dal-Tile,] (1)
offer, pledge, loan, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of (each, a "TRANSFER"),
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock (whether such shares or any
such securities all then owned by the undersigned or are thereafter acquired
directly from Dal-Tile), or (2) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any
3
such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. In
addition, the undersigned agrees that, without the prior written consent of
Xxxxxx Xxxxxxx, [it] [he] will not, during the period commencing on the date
hereof and ending 90 days after the date of the Dal-Tile Prospectuses, make any
demand for or exercise any right with respect to, the registration of any shares
of Common Stock or any security convertible into or exercisable or exchangeable
for Common Stock. Notwithstanding anything to the contrary in the foregoing,
the consent of Xxxxxx Xxxxxxx shall not be required for (i) any Transfer by the
undersigned to (A) any affiliate of the undersigned, or (B) any member of the
undersigned's immediate family, or to a trust for the benefit of the undersigned
or any member of the undersigned's immediate family, provided that any such
transferee shall agree in writing, prior to or contemporaneously with such
Transfer, to be bound by the provisions of this agreement to the same extent as
the undersigned, and (ii) any pledge by the undersigned of shares of Common
Stock, or any securities convertible into or exercisable or exchangeable for
Common Stock, to secure indebtedness, provided that the pledgee shall agree in
writing, prior to or contemporaneously with such pledge, to be bound by the
provisions of this agreement to the same extent as the undersigned. The
undersigned further agrees that Dal-Tile may note such restrictions on the books
and records of Dal-Tile.
Whether or not the Public Offerings actually occur depends on a number of
factors, including market conditions. Each Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between AWI and the Underwriters.
Very truly yours,
----------------------------------------
(Name)
----------------------------------------
(Address)
4
