1
SALOMON INC
3,000,000 DECS(SM) (Debt Exchangeable for Common Stock(SM))*
____ % Exchangeable Notes Due February 1, 2001
(Subject to Exchange into Common Shares, par value $1.00
per share, of Cincinnati ▇▇▇▇ Inc.)
UNDERWRITING AGREEMENT
New York, New York
November __, 1996
SALOMON BROTHERS INC
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
As Representatives of the several Underwriters
Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Salomon Inc, a Delaware corporation (the "Company"), proposes
to sell to the underwriters named in Schedule I hereto (the "Underwriters"), for
whom you (the "Representatives") are acting as representatives, an aggregate of
3,000,000 DECS(SM) (Debt Exchangeable for Common Stock(SM)) consisting of its
_____% Exchangeable Notes Due February 1, 2001 (the "Firm DECS"), to be issued
under an indenture dated as of December 1, 1988, as supplemented from time to
time, and as supplemented by the Ninth Indenture dated as of November __, 1996
(the indenture, dated as of December 1, 1988, as supplemented from time to time,
the "Indenture"), between the Company and Citibank, N.A., as trustee (the
"Trustee"). The Company also proposes to grant to the Underwriters an option to
purchase up to an additional 450,000 DECS (the "Option DECS;" the Option DECS,
together with the Firm DECS, being hereinafter called the "DECS") to cover
over-allotments. At maturity (including as a result of acceleration or
otherwise), the DECS may be mandatorily exchanged by the Company into Common
Shares, par value $1.00 per share (the "CBI Common Stock"), of Cincinnati ▇▇▇▇
Inc., an Ohio corporation ("CBI"), (or, at the Company's option as provided in
the Indenture, cash with an equal value) at the rate specified in the Final
Prospectus.
----------
* Plus an option to purchase from ▇▇▇▇▇▇▇ Inc up to 450,000 additional DECS
to cover over-allotments. "DECS" and "Debt Exchangeable for Common Stock"
are service marks of Salomon Brothers Inc.
2
It is further understood by the parties hereto that the Cincinnati ▇▇▇▇
Pension Plans Trust and CBI are concurrently entering into a separate
underwriting agreement dated the date hereof (the "Pension Trust Underwriting
Agreement") with the group of underwriters named therein, which provides for the
sale by the Cincinnati ▇▇▇▇ Pension Plans Trust to such underwriters of
2,000,000 shares of CBI Common Stock, plus up to an additional 300,000 shares of
CBI Common Stock solely to cover over-allotments (the "Pension Trust Shares").
In connection with the foregoing and pursuant to the Registration
Rights Agreement dated as of July 22, 1988 between CBI and the parties named
therein and the letter agreements dated January 30, 1984 and January 29, 1988,
respectively, between CBI and Bankers Trust Company (collectively, the
"Registration Rights Agreements"), CBI has filed with the Commission a
registration statement with respect to (i) 3,000,000 shares (the "Firm Shares")
of CBI Common Stock, in respect of the Firm DECS, plus an additional 450,000
shares (the "Option Shares;" the Option Shares, together with the Firm Shares,
being hereinafter called the "Shares") of CBI Common Stock, in respect of the
Option DECS, for delivery by the Company pursuant to the DECS and (ii) the
Pension Trust Shares, which registration statement is referred to in Section
1(b)(i) of this Agreement.
Certain terms used in this Agreement are defined in paragraphs (a)(iii)
and (b)(iv) of Section 1.
1. Representations and Warranties.
(a) Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each Underwriter
as set forth below in this Section 1(a).
(i) The Company meets the requirements for use of Form S-3
under the Securities Act of 1933 (the "Act") and has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement (file number 333-01807) on such Form, including a basic
prospectus, for the registration under the Act of the offering and sale
of the DECS. The Company may have filed one or more amendments thereto,
and may have used a Preliminary Final Prospectus, each of which has
previously been furnished to you. Such registration statement, as so
amended, has become effective. The offering of the Securities is a
delayed offering and, although the Basic Prospectus may not include all
the information with respect to the DECS and the offering thereof
required by the Act and the rules thereunder to be included in the
Final Prospectus, the Basic Prospectus includes all such information
required by the Act and the rules thereunder to be included therein as
of the Effective Date. The Company will next file with the Commission
pursuant to Rules 415 and 424(b)(2) or (5) a final supplement to the
form of prospectus included in such registration statement relating to
the DECS and the offering thereof. As filed, such final prospectus
supplement shall include all required information with respect to the
DECS and the offering thereof and, except to the extent the
Representatives shall agree in writing to a modification,
2
3
shall be in all substantive respects in the form furnished to the
Representatives prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
Basic Prospectus and any Preliminary Final Prospectus) as the Company
has advised the Representatives, prior to the Execution Time, will be
included or made therein.
(ii) On the Effective Date, the Registration Statement did or
will, and when the Final Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date (as hereinafter
defined), the Final Prospectus (and any supplement thereto) will,
comply in all material respects with the applicable requirements of the
Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the respective rules thereunder; on the Effective
Date, the Registration Statement did not or will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; on the Effective Date and on the
Closing Date, the Indenture did or will comply in all material respects
with the requirements of the Trust Indenture Act and the rules
thereunder; and, on the Effective Date, the Final Prospectus, if not
filed pursuant to Rule 424(b), did not or will not, and on the date of
any filing pursuant to Rule 424(b) and on the Closing Date, the Final
Prospectus (together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to
(A) that part of the Registration Statement which shall constitute the
Statement of Eligibility and Qualification (Form T-1) under the Trust
Indenture Act of the Trustee or (B) the information contained in or
omitted from the Registration Statement or the Final Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Company (i) by or on behalf of any
Underwriter through the Representatives or (ii) by or on behalf of CBI,
in each case, specifically for inclusion in the Registration Statement
or the Final Prospectus (or any supplement thereto).
(iii) The terms which follow, when used in this Agreement,
shall have the meanings indicated. The term "Effective Date" shall mean
each date that the Registration Statement and any post-effective
amendment or amendments thereto became or become effective. "Execution
Time" shall mean the date and time that this Agreement is executed and
delivered by the parties hereto. "Basic Prospectus" shall mean the
prospectus referred to in paragraph (a)(i) of this Section 1 contained
in the Registration Statement at the Effective Date. "Preliminary Final
Prospectus" shall mean any preliminary prospectus
3
4
supplement to the Basic Prospectus which describes the DECS and the
offering thereof and is used prior to filing of the Final Prospectus.
"Final Prospectus" shall mean the prospectus supplement relating to the
DECS that is first filed pursuant to Rule 424(b) after the Execution
Time, together with the Basic Prospectus. "Registration Statement"
shall mean the registration statement referred to in paragraph (a)(i)
of this Section 1, including incorporated documents, exhibits and
financial statements, as amended at the Execution Time and, in the
event any post-effective amendment thereto or a registration statement
filed with respect to the DECS pursuant to Rule 462(b) (or
post-effective amendment thereto) becomes effective prior to the
Closing Date, shall also mean such registration statement as so amended
or such registration statement (or amendment thereto) filed pursuant to
Rule 462(b), respectively. The term "Registration Statement" shall
include any Rule 430A Information deemed to be included therein at the
Effective Date as provided by Rule 430A. "Rule 415," "Rule 424," "Rule
430A," "Rule 462" and "Regulation S-K" refer to such rules or
regulation under the Act. "Rule 430A Information" means information
with respect to the DECS and the offering thereof permitted to be
omitted from the Registration Statement when it becomes effective
pursuant to Rule 430A. Any reference herein to the Registration
Statement, the Basic Prospectus, any Preliminary Final Prospectus or
the Final Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form
S-3 which were filed under the Exchange Act on or before the Effective
Date of the Registration Statement or the issue date of the Basic
Prospectus, such Preliminary Final Prospectus or the Final Prospectus,
as the case may be; and any reference herein to the terms "amend,"
"amendment" or "supplement" with respect to the Registration Statement,
the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the Effective Date of the
Registration Statement or the issue date of the Basic Prospectus, such
Preliminary Final Prospectus or the Final Prospectus, as the case may
be, deemed to be incorporated therein by reference.
(b) Representations and Warranties of CBI. CBI represents and
warrants to, and agrees with, the Company and each Underwriter as set forth
below in this Section 1(b).
(i) CBI meets the requirements for use of Form S-3 under the
Act and has filed with the Commission a registration statement (file
number 333-13699) on such Form, including a related preliminary
prospectus, for the registration under the Act of the offering and sale
of the Shares in connection with the offering and sale of the DECS and
an alternate form of related preliminary prospectus, for registration
under the Act of the offering and sale of the Pension Trust Shares. CBI
may have filed one or more amendments thereto, including the related
preliminary prospectuses, each of which amendments has previously been
4
5
furnished to the Company and the Representatives. CBI will next file
with the Commission one of the following: (A) prior to effectiveness of
such registration statement, a further amendment to such registration
statement, including the final forms of such prospectuses, (B) such
final prospectuses in accordance with Rules 430A and 424(b)(1) or (4)
or (C) such final prospectuses in accordance with Rules 415 and
424(b)(2) or (5). In the case of clause (B), CBI has included in such
registration statement, as amended at the CBI Effective Date, all
information (other than CBI Rule 430A Information) required by the Act
and the rules thereunder to be included in such prospectuses with
respect to the Shares, the Pension Trust Shares and the offering
thereof. As filed, such amendment and final forms of prospectuses, or
such final prospectuses, shall contain all CBI Rule 430A Information,
together with all other such required information, with respect to the
Shares, the Pension Trust Shares and the offering thereof and, except
to the extent the Company and the Representatives shall agree in
writing to a modification, shall be in all substantive respects in the
form furnished to the Company and the Representatives prior to the
Execution Time or, to the extent not completed at the Execution Time,
shall contain only such specific additional information and other
changes (beyond that contained in the latest Preliminary CBI
Prospectus) as CBI has advised the Company and the Representatives,
prior to the Execution Time, will be included or made therein. If the
Registration Statement contains the undertaking specified by Regulation
S-K Item 512(a), the Registration Statement, at the Execution Time,
meets the requirements to Rule 415(a)(1)(x).
(ii) On the CBI Effective Date, the CBI Registration Statement
did or will, and when the CBI Prospectus is first filed (if required)
in accordance with Rule 424(b) and on the Closing Date, the CBI
Prospectus (and any supplement thereto) will, comply in all material
respects with the applicable requirements of the Act, the Exchange Act
and the respective rules thereunder; on the CBI Effective Date, the CBI
Registration Statement did not or will not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading; and, on the CBI Effective Date, the CBI Prospectus, if not
filed pursuant to Rule 424(b), did not or will not, and on the date of
any filing pursuant to Rule 424(b) and on the Closing Date, the CBI
Prospectus (together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that CBI makes no representations or warranties as to the
information contained in or omitted from the CBI Registration Statement
or the CBI Prospectus (or any supplement thereto) in reliance upon and
in conformity with information furnished in writing to CBI by or on
behalf of any Underwriter through the
5
6
Representatives specifically for inclusion in the CBI Registration
Statement or the CBI Prospectus (or any supplement thereto).
(iii) On the Effective Date, the Registration Statement did
not or will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading; and, on the
Effective Date, the Final Prospectus, if not filed pursuant to Rule
424(b), did not or will not, and on the date of any filing pursuant to
Rule 424(b) and on the Closing Date, the Final Prospectus (together
with any supplement thereto) will not, include any untrue statement of
a material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
foregoing representations shall apply only to the extent that the
untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Company by CBI specifically for inclusion
therein.
(iv) The terms which follow, when used in this Agreement,
shall have the meanings indicated. The term "CBI Effective Date" shall
mean each date that the CBI Registration Statement and any
post-effective amendment or amendments thereto became or become
effective. "Preliminary CBI Prospectus" shall mean any preliminary
prospectus referred to in paragraph (b)(i) of this Section 1 and any
preliminary prospectus included in the CBI Registration Statement at
the CBI Effective Date that omits CBI Rule 430A Information. "CBI DECS
Prospectus" shall mean the prospectus relating to the Shares that is
used in connection with the offering and sale of the DECS, that is
delivered with the Final Prospectus and that is first filed pursuant to
Rule 424(b) after the Execution Time or, if no filing pursuant to Rule
424(b) is required, shall mean the form of such final prospectus
relating to the Shares included in the CBI Registration Statement at
the CBI Effective Date. "CBI Pension Trust Prospectus" shall mean the
prospectus relating to the Pension Trust Shares that is used in
connection with the offering and sale of the Pension Trust Shares and
that is first filed pursuant to Rule 424(b) after the Execution Time
or, if no filing pursuant to Rule 424(b) is required, shall mean the
form of such final prospectus included in the CBI Registration
Statement at the CBI Effective Date. "CBI Prospectus" shall mean the
CBI DECS Prospectus and the CBI Pension Trust Prospectus. "CBI
Registration Statement" shall mean the registration statement referred
to in paragraph (b)(i) of this Section 1, including incorporated
documents, exhibits and financial statements, as amended at the
Execution Time (or, if not effective at the Execution Time, in the form
in which it shall become effective) and, in the event any
post-effective amendment thereto or a registration statement filed with
respect to the Shares pursuant to Rule 462(b) (or post-effective
amendment thereto) becomes effective prior to the Closing Date, shall
also mean such registration
6
7
statement as so amended or such registration (or amendment thereto)
filed pursuant to Rule 462(b), respectively. The term "CBI Registration
Statement" shall include any CBI Rule 430A Information deemed to be
included therein at the CBI Effective Date as provided by Rule 430A.
"CBI Rule 430A Information" means information with respect to the
Shares and the Pension Trust Shares permitted to be omitted from the
CBI Registration Statement when it becomes effective pursuant to Rule
430A. Any reference herein to the CBI Registration Statement, any
Preliminary CBI Prospectus or the CBI Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Exchange Act
on or before the CBI Effective Date or the issue date of such
Preliminary CBI Prospectus or the CBI Prospectus, as the case may be;
and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the CBI Registration Statement, any
Preliminary CBI Prospectus or the CBI Prospectus shall be deemed to
refer to and include the filing of any document under the Exchange Act
after the CBI Effective Date or the issue date of any Preliminary CBI
Prospectus or the CBI Prospectus, as the case may be, deemed to be
incorporated therein by reference.
(v) CBI 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 the CBI 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 CBI and its subsidiaries, taken
as a whole.
(vi) Each subsidiary of CBI 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 the CBI 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 CBI
and its subsidiaries, taken as a whole.
(vii) All of the outstanding shares of capital stock of each
subsidiary of CBI have been duly and validly authorized and issued, are
fully paid and nonassessable and are owned beneficially by CBI free and
clear of any security interests, liens, encumbrances, equities or
claims.
7
8
(viii) This Agreement has been duly authorized, executed and
delivered by CBI.
(ix) CBI's authorized equity capitalization consists of
240,000,000 shares of CBI Common Stock and 5,000,000 preferred shares;
and the authorized capital stock of CBI conforms as to legal matters to
the description thereof contained or incorporated by reference in the
CBI Prospectus.
(x) The shares of CBI Common Stock (including the Shares)
outstanding have been duly authorized and are validly issued, fully
paid and non-assessable.
(xi) The shares of CBI Common Stock (including the Shares)
have been duly authorized for listing on the New York Stock Exchange
(the "NYSE") and the Cincinnati Stock Exchange (the "CSE").
(xii) Coopers & ▇▇▇▇▇▇▇ L.L.P, whose reports appear in the
documents incorporated by reference in the CBI Registration Statement,
are independent public accountants with respect to CBI and its
subsidiaries as required by the Act and the rules and regulations
thereunder.
(xiii) The historical consolidated financial statements
(including the related notes) included or incorporated by reference in
the CBI Registration Statement present fairly the consolidated
financial position of CBI and its consolidated subsidiaries as of the
dates indicated and the results of operations and changes in financial
condition for the periods specified; such financial statements have
been prepared in conformity with generally accepted accounting
principles applied on a consistent basis through the periods involved;
and the supporting schedules included or incorporated by reference in
the CBI Registration Statement present fairly the information required
to be stated therein. The selected historical consolidated financial
data included in the CBI Prospectus present fairly the information
shown therein and have been compiled on a basis consistent with that of
the related historical consolidated financial statements included or
incorporated by reference in the CBI Registration Statement.
(xiv) The execution and delivery by CBI of, and the
performance by CBI of its obligations under, this Agreement will not
contravene any provision of applicable law or the certificate of
incorporation or by-laws of CBI or any agreement or other instrument
binding upon CBI or any of its subsidiaries that is material to CBI and
its subsidiaries, taken as a whole, or any judgment, order or decree of
any governmental body, agency or court having jurisdiction over CBI or
any subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by CBI of its obligations under this Agreement, except such
as may
8
9
be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the DECS and the distribution of
the Shares pursuant to the DECS.
(xv) 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 CBI and its subsidiaries, taken as a whole, from that set
forth in the CBI Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).
(xvi) There is no legal or governmental proceeding pending
or threatened to which CBI or any of its subsidiaries is a party or to
which any of the properties of CBI or any of its subsidiaries is
subject that (A) has adversely affected, or would reasonably be likely
to adversely affect, the execution by CBI of this Agreement, the
performance by CBI of any of its obligations hereunder or the
consummation of any of the transactions contemplated in this Agreement,
(B) except as disclosed in the CBI Prospectus, has had or is reasonably
likely to have, singularly or in the aggregate with all such actions,
suits, proceedings or investigations, a material adverse effect on CBI
and its subsidiaries, taken as a whole, or (C) is required to be
described in the CBI Registration Statement or the CBI Prospectus and
is not so described; and there are no statutes, regulations, contracts
or other documents that are required to be described in the CBI
Registration Statement or the CBI Prospectus or to be filed as exhibits
to the CBI Registration Statement that are not described or filed as
required.
(xvii) CBI is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(xviii) CBI and its subsidiaries (A) 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"), (B) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (C) 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 CBI and its subsidiaries, taken as a whole.
(xix) In the ordinary course of its business, CBI conducts a
periodic review of the effect of Environmental Laws on the business,
operations and
9
10
properties of CBI and its subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (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).
On the basis of such review, CBI has reasonably concluded that such
associated costs and liabilities would not, singly or in the aggregate,
have a material adverse effect on CBI and its subsidiaries, taken as a
whole.
(xx) There are no contracts, agreements or understandings
between CBI and any person granting such person the right to require
CBI to file a registration statement under the Act with respect to any
securities of CBI (other than the Registration Rights Agreement) or to
require CBI to include such securities with the Shares registered
pursuant to the CBI Registration Statement.
(xxi) CBI has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result, under the Exchange Act
or otherwise, in stabilization or manipulation of the price of any
security of CBI to facilitate the sale or resale of the DECS, the
Shares or the Pension Trust Shares.
(2) Purchase and Sale. (a) Subject to the terms and conditions
and in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, at a purchase price of
$_______ per DECS, plus accrued interest, if any, on the DECS from the issue
date of the DECS to the Closing Date, the number of DECS set forth opposite such
Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several Underwriters to purchase, severally and not jointly, up to
450,000 Option DECS at the same purchase price per DECS, plus accrued interest,
if any, from the issue date of the DECS to the date of the closing for the
purchase, as the Underwriters shall pay for the Firm DECS. Said option may be
exercised only to cover over-allotments in the sale of the Firm DECS by the
Underwriters. Said option may be exercised in whole or in part at any time (but
not more than once) on or before the 30th day after the date of the Final
Prospectus upon written or telegraphic notice by the Underwriters to the Company
setting forth the number of Option DECS as to which the Underwriters are
exercising the option and the settlement date. Delivery of certificates for the
Option DECS, and payment therefor, shall be made as provided in Section 3
hereof. The number of Option DECS to be purchased by each Underwriter shall be
the same percentage of the total number of Option DECS to be purchased by the
several Underwriters as such Underwriter is purchasing of the Firm DECS, subject
to such adjustments as the Representatives in their absolute discretion shall
make to eliminate any fractional shares.
10
11
(3) Delivery and Payment. Delivery of and payment for the Firm DECS
(and the Option DECS (if and to the extent the option provided for in Section
2(b) hereof shall have been exercised on or before the first business day prior
to the Closing Date)) shall be made at 10:00 AM, New York City time, on November
__, 1996, or such later date (not later than November __, 1996) as the
Representatives shall designate, which date and time may be postponed by
agreement between the Representatives and the Company or as provided in Section
9 hereof (such date and time of delivery and payment for the Firm DECS being
herein called the "Closing Date"). Delivery of the DECS shall be made on the
instructions of the Representatives for the respective accounts of the several
Underwriters against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the
Company in immediately available funds. Delivery of, and payment for, the DECS
shall be made through the facilities of The Depository Trust Company.
Certificates for the DECS shall be registered in such names and in such
denominations as the Representatives shall request not less than one full
business day in advance of the Closing.
The Company agrees to have the DECS available for inspection, checking
and packaging by the Representatives in New York, New York, not later than 1:00
PM on the business day prior to the Closing Date.
If the option provided for in Section 2(b) hereof is exercised after
the first full business day prior to the Closing Date, the Company will deliver
(at the expense of the Company) to the Representatives, at Seven World Trade
Center, New York, New York, on the date specified by the Representatives in the
notice described in Section 2(b), or such later date (not later than December
__, 1996) specified by the Representatives, certificates for the Option DECS in
such names and denominations as the Representatives shall have requested against
payment of the purchase price thereof to or upon the order of the Company in
immediately available funds. If settlement for the Option DECS occurs after the
Closing Date, the Company will deliver to the Representatives on the settlement
date for the Option DECS, and the obligation of the Underwriters to purchase the
Option DECS shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof.
(4) Offering by the Underwriters. It is understood that the several
Underwriters propose to offer the DECS for sale to the public as set forth in
the Final Prospectus.
(5) Agreements.
(a) Agreements of the Company. The Company agrees with the several
Underwriters that:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the DECS, the Company will not file any amendment of the
Registration Statement or
11
12
supplement (including the Final Prospectus or any Preliminary Final
Prospectus) to the Basic Prospectus unless the Company has furnished
the Representatives a copy for their review prior to filing and will
not file any such proposed amendment or supplement to which the
Representatives reasonably object. Subject to the foregoing sentence,
the Company will cause the Final Prospectus, properly completed, and
any supplement thereto to be filed with the Commission pursuant to the
applicable paragraph of Rule 424(b) within the time period prescribed
and will provide evidence satisfactory to the Representatives of such
timely filing. The Company will promptly advise the Representatives (A)
when the Registration Statement, if not effective at the Execution
Time, and any amendment thereof, shall have become effective, (B) when
the Final Prospectus, and any supplement thereto, shall have been filed
with the Commission pursuant to Rule 424(b), (C) when, prior to
termination of the offering of the DECS, any amendment to the
Registration Statement shall have been filed or become effective, (D)
of any request by the Commission for any amendment of the Registration
Statement or supplement to the Final Prospectus or for any additional
information, (E) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (F)
of the receipt by the Company of any notification with respect to the
suspension of the qualification of the DECS or the Shares for sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose. The Company will use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the DECS
is required to be delivered under the Act in the opinion of counsel for
the Underwriters, any event occurs or condition exists as a result of
which the Final Prospectus as then supplemented would include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if, in the
opinion of counsel to the Underwriters, it shall be necessary to amend
the Registration Statement or supplement the Final Prospectus to comply
with the Act or the Exchange Act or the respective rules thereunder,
the Company promptly will notify the Representatives and prepare and
file with the Commission, subject to the second sentence of paragraph
(a)(i) of this Section 5, an amendment or supplement which will correct
such statement or omission or effect such compliance.
(iii) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an
earnings statement or statements of the Company and its subsidiaries
which will satisfy the provisions of Section 11(a) of the Act and Rule
158 under the Act.
12
13
(iv) The Company will furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including exhibits thereto) and to each other
Underwriter a copy of the Registration Statement (without exhibits
thereto) and, so long as delivery of a prospectus by an Underwriter or
dealer may be required by the Act, as many copies of any Preliminary
Final Prospectus and the Final Prospectus and any supplement thereto as
the Representatives may reasonably request. The Company will pay the
expenses of printing or other production of all documents relating to
the offering, other than the CBI Registration Statement, each CBI
Preliminary Prospectus and the CBI Prospectus.
(v) The Company will arrange for the qualification of the
DECS and, with the cooperation of CBI, of the Shares for sale under the
laws of such jurisdictions as the Representatives may designate, will
maintain such qualifications in effect so long as required for the
distribution of the DECS, will arrange for the determination of the
legality of the DECS and of the Shares for purchase by institutional
investors and will pay the fee of the National Association of
Securities Dealers, Inc., in connection with its review, if any, of the
offering.
(vi) The Company will not, until the first business day
following the Closing Date, without prior written consent of the
Representatives, offer, sell or contract to sell, or otherwise dispose
of, directly or indirectly, or announce the offering of, any debt
securities issued or guaranteed by the Company other than the DECS.
(b)Agreements of CBI. CBI agrees with the Company and the several
Underwriters that:
(i) CBI will use its best efforts to cause the CBI
Registration Statement, if not effective at the Execution Time, and any
amendment thereof to become effective. Prior to the termination of the
offering of the DECS, CBI will not file any amendment of the CBI
Registration Statement or supplement to the CBI Prospectus unless CBI
has furnished the Representatives a copy for their review prior to
filing and will not file any such proposed amendment or supplement to
which the Company or the Representatives reasonably object. Subject to
the foregoing sentence, if the CBI Registration Statement has become or
becomes effective pursuant to Rule 430A, or filing of the CBI
Prospectus is otherwise required under Rule 424(b), CBI will cause the
CBI Prospectus, properly completed, and any supplement thereof to be
filed with the Commission pursuant to the applicable paragraph of Rule
424(b) within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. CBI will
promptly advise the Representatives (A) when the CBI Registration
Statement, if not effective at the Execution Time, and any
13
14
amendment thereof, shall have become effective, (B) when the CBI
Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b), (C) when, prior
to termination of the offering of the DECS, any amendment to the CBI
Registration Statement shall have been filed or become effective, (D)
of any request by the Commission for any amendment of the CBI
Registration Statement or supplement to the CBI Prospectus or for any
additional information, (E) of the issuance by the Commission of any
stop order suspending the effectiveness of the CBI Registration
Statement or the institution or threatening of any proceeding for that
purpose and (F) of the receipt by CBI of any notification with respect
to the suspension of the qualification of the DECS or the Shares for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. CBI will use its best efforts to prevent
the issuance of any such stop order and, if issued, to obtain as soon
as possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the CBI
Common Stock is required to be delivered under the Act (including in
respect of the offering and sale of the DECS) in the opinion of counsel
for the Company or the Underwriters, any event occurs or condition
exists as a result of which the CBI Prospectus as then supplemented
would include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein in the light
of the circumstances under which they were made not misleading, or if,
in the opinion of counsel for the Company or the Underwriters, it shall
be necessary to amend the CBI Registration Statement or supplement the
CBI Prospectus to comply with the Act or the Exchange Act or the
respective rules thereunder, CBI (A) immediately will notify the
Company and the Representatives of such event or necessity and (B)
promptly will prepare and file with the Commission, subject to the
second sentence of paragraph (b)(i) of this Section 5, an amendment or
supplement which will correct such statement or omission or effect such
compliance.
(iii) As soon as practicable, CBI will make generally
available to its security holders, to the Company and to the
Representatives an earnings statement or statements of CBI and its
subsidiaries which will satisfy the provisions of Section 11(a) of the
Act and Rule 158 under the Act.
(iv) CBI will furnish to the Company, the Representatives and
counsel for the Company and the Underwriters, without charge, signed
copies of the CBI Registration Statement (including exhibits thereto)
and to each other Underwriter a copy of the CBI Registration Statement
(without exhibits thereto) and, so long as delivery of a prospectus by
an Underwriter or dealer may be required by the Act (including in
respect of the offering and sale of the DECS), as many copies of each
Preliminary CBI Prospectus, the CBI Prospectus and any supplement
thereto as the Company or the Representatives may reasonably request.
CBI will pay the
14
15
expenses of printing or other production of the CBI Registration
Statement, each Preliminary CBI Prospectus and the CBI Prospectus.
(v) CBI will cooperate with the Company for purposes of
arranging the qualification of the DECS and the Shares for sale under
the laws of such jurisdictions as the Representatives may designate and
will maintain such qualifications in effect so long as required for the
distribution of the DECS and the Shares.
(vi) Without the prior written consent of the Representatives
on behalf of the Underwriters, CBI will not, during the period ending
90 days after the date of the CBI Prospectus, (A) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of, directly or indirectly,
or announce the offering of, any shares of CBI Common Stock or any
securities convertible into or exercisable or exchangeable for CBI
Common Stock (whether such shares or any such securities are now owned
by CBI or are hereafter acquired) or (B) 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 CBI Common Stock, whether any
such transaction described in clause (A) or (B) above is to be settled
by delivery of CBI Common Stock or such other securities, in cash or
otherwise; provided, however, that CBI may issue, or grant options for,
shares of CBI Common Stock pursuant to any stock plan for employees or
directors or any qualified employee benefit plan in effect on the date
of the CBI Prospectus, or pursuant to any stock options outstanding on
the date of the CBI Prospectus, and any defined contribution qualified
employee benefit plan in effect on the date of the CBI Prospectus may
sell shares of CBI Common Stock to satisfy plan liquidity needs. In
addition, CBI agrees that, without the prior written consent of the
Representatives on behalf of the Underwriters, it will not, during the
period ending 90 days after the date of the CBI Prospectus, make any
demand for, or exercise any right with respect to, the registration of
any shares of CBI Common Stock or any security convertible into or
exercisable or exchangeable for CBI Common Stock. CBI further agrees to
establish an internal mechanism for monitoring and ensuring compliance
by each executive officer and director with the aggregate limit on
sales of CBI Common Stock by such persons set forth in the proviso to
the second paragraph of the form of letter agreement to be executed by
such persons attached hereto as Exhibit A.
(vii) CBI will furnish to the Trustee copies of CBI's annual
report to shareholders and reports on Forms 10-K and 10-Q as soon as
practicable after such reports are required to be filed with the
Commission and in sufficient quantities for transmission to holders of
the DECS.
15
16
(viii) CBI will take such actions as may be reasonably
necessary to comply with the rules and regulations of the NYSE and the
CSE in respect of the offering of the Shares in connection with the
DECS.
(6) Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters to purchase the Firm DECS and the Option DECS, as the case
may be, shall be subject to the accuracy of the representations and warranties
on the part of each of the Company and CBI contained herein as of the Execution
Time and the Closing Date and any settlement date pursuant to Section 3 hereof,
to the accuracy of the statements of the Company and CBI made in any
certificates pursuant to the provisions hereof, to the performance by each of
the Company and CBI of its obligations hereunder and to the following additional
conditions:
(a) If the Registration Statement or the CBI Registration Statement has
not become effective prior to the Execution Time, unless the Representatives
agree in writing to a later time, each such registration statement will
become effective not later than (i) 6:00 PM New York City time, on the date
of determination of the public offering price of the DECS, if such
determination occurred at or prior to 3:00 PM New York City time on such
date or (ii) 12:00 Noon New York City time on the business day following the
date of determination of the public offering price of the DECS, if such
determination occurred after 3:00 PM New York City time on such date; if
filing of the Final Prospectus or the CBI Prospectus, or any supplement
thereto, is required pursuant to Rule 424(b), such Final Prospectus or CBI
Prospectus, and any such supplement, shall have been filed in the manner and
within the time period required by Rule 424(b); and no stop order suspending
the effectiveness of either the Registration Statement or the CBI
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.
(b) The Company shall have furnished to the Representatives the opinion
of Cravath, Swaine & ▇▇▇▇▇, counsel for the Company, or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
counsel for the Company, dated the Closing Date, to the effect, in
aggregate, that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full corporate
power and authority to own its properties and conduct its business as
described in the Final Prospectus;
(ii) the Company's authorized equity capitalization is as
set forth in the Final Prospectus; the DECS conform in all material
respects to the description thereof contained in the Final Prospectus;
(iii) the Indenture has been duly authorized, executed and
delivered, has been duly qualified under the Trust Indenture Act and
constitutes a legal, valid and binding instrument enforceable against
the Company in accordance with its terms (subject to applicable
bankruptcy, reorganization, insolvency, moratorium
16
17
or similar laws affecting creditors' rights generally from time to time
in effect); and the DECS have been duly authorized and, when executed
and authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Underwriters pursuant to this
Agreement, will constitute legal, valid and binding obligations of the
Company entitled to the benefits of the Indenture;
(iv) to the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator against or
involving the Company or any of its subsidiaries, of a character
required to be disclosed in the Registration Statement which is not
adequately disclosed in the Final Prospectus; and the statements
included or incorporated by reference in the Final Prospectus
describing any legal proceedings relating to the Company fairly
summarize such matters;
(v) the Registration Statement has become effective under
the Act; any required filing of the Basic Prospectus, any Preliminary
Final Prospectus and the Final Prospectus, and any supplements thereto,
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); to the best knowledge of such counsel,
no stop order suspending the effectiveness of the Registration
Statement has been issued, no proceedings for that purpose have been
instituted or threatened, and the Registration Statement and the Final
Prospectus (except for the financial statements and other information
of an accounting or financial nature contained therein as to which such
counsel need express no opinion) comply as to form in all material
respects with the applicable requirements of the Act, the Exchange Act
and the Trust Indenture Act and the respective rules thereunder; and
such counsel has no reason to believe that at the Effective Date, the
Execution Date or the Closing Date the Registration Statement contained
any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Final Prospectus includes
any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the opinions and beliefs expressed pursuant to this
paragraph (v) shall not relate to the CBI Registration Statement, the
CBI Prospectus (together with any supplement thereto) or that part of
the Registration Statement constituting the Statement of Eligibility
and Qualification (Form T-1) and certain other information with respect
to CBI, Western & Southern and Waslic included in the Registration
Statement or Prospectus, as to which such counsel need express no
opinion or belief;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) no consent, approval, authorization or order of any
court or governmental agency or body is required for the consummation
of the transactions contemplated herein, except such as have been
obtained under the Act and such as
17
18
may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the DECS and the
Shares by the Underwriters as contemplated by this Agreement and such
other approvals (specified in such opinion) as have been obtained;
(viii) none of the issue and sale of the DECS, the
consummation of any other of the transactions herein contemplated or
the fulfillment of the terms hereof will conflict with, result in a
breach of, or constitute a default under the charter or by-laws of the
Company or the terms of any indenture or other agreement or instrument
known to such counsel and to which the Company or any of its
subsidiaries is a party or bound, or any judgment, order or regulation
known to such counsel to be applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company or
any of its subsidiaries; and
(ix) no holders of securities of the Company have rights to
the registration of such securities under the Registration Statement.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
New York, the General Corporation Law of the State of Delaware or the Federal
laws of the United States, to the extent deemed proper and specified in such
opinion, upon the opinion of other counsel of good standing believed to be
reliable and who are satisfactory to counsel for the Underwriters and (B) as to
matters of fact, to the extent deemed proper, on certificates of responsible
officers of the Company and public officials. References to the Final Prospectus
in this paragraph (b) include any supplements thereto at the Closing Date.
(c) The Representatives shall have received from Cleary, Gottlieb,
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date, with respect to the issuance and sale of the DECS, the
Indenture, the Registration Statement, the Final Prospectus (together with any
supplement thereto), the Shares, the CBI Registration Statement, the CBI
Prospectus (together with any supplement thereto) and other related matters as
the Representatives may reasonably require, and the Company and CBI shall have
furnished to such counsel such documents as such counsel requests for the
purpose of enabling such counsel to pass upon such matters.
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Senior Vice President and by the
principal financial or accounting officer of the Company, dated the Closing
Date, to the effect that the signers of such certificate have carefully examined
the Registration Statement, the Final Prospectus, any supplement to the Final
Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing
18
19
Date with the same effect as if made on the Closing Date and the
Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the
Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Final Prospectus (exclusive of any supplement thereto),
there has been no material adverse change in the condition (financial
or other), earnings, business, operations or properties of the Company
and its subsidiaries, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated in
the Final Prospectus (exclusive of any supplement thereto).
(e) At the Execution Time, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP shall have furnished to
the Representatives a letter or letters (which may refer to letters previously
delivered to the Representatives), dated as of the Execution Time, in form and
substance satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Act and the Exchange Act and
the respective applicable published rules and regulations thereunder and stating
in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules and pro forma financial statements, if
any, included or incorporated in the Registration Statement and the
Final Prospectus and reported on by them comply in form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its
subsidiaries; their limited review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited interim financial information as indicated in their
reports incorporated in the Registration Statement and the Final
Prospectus; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing standards)
which would not necessarily reveal matters of significance with respect
to the comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors and executive and audit
committees of the Company and SBI; and inquiries of certain officials
of the Company who have responsibility for financial and accounting
matters of the Company and its subsidiaries as to transactions and
events subsequent to the date of the most recent audited financial
statements
19
20
included or incorporated in the Final Prospectus, nothing came to their
attention which caused them to believe that:
(1) any unaudited financial statements included or
incorporated in the Registration Statement and the Final
Prospectus do not comply in form in all material respects with
applicable accounting requirements and with the published
rules and regulations of the Commission with respect to
financial statements included or incorporated in quarterly
reports on Form 10-Q under the Exchange Act; or said unaudited
financial statements are not in conformity with generally
accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included or incorporated in the Registration
Statement and the Final Prospectus;
(2) with respect to the period subsequent to the date of
the most recent financial statements (other than any capsule
information), audited or unaudited, included or incorporated
in the Registration Statement and the Final Prospectus, there
were any material changes, at a specified date not more than
three business days prior to the date of the letter, in the
consolidated long-term debt or capital stock of the Company
and its subsidiaries or decreases in the stockholders' equity
of the Company and its subsidiaries as compared with the
amounts shown on the most recent consolidated balance sheet
included or incorporated in the Registration Statement and the
Final Prospectus, except in all instances for changes or
decreases set forth in such letter, in which case the letter
shall be accompanied by an explanation by the Company as to
the significance thereof unless said explanation is not deemed
necessary by the Representatives;
(3) the amounts included in any unaudited "capsule"
information included or incorporated in the Registration
Statement and the Final Prospectus do not agree with the
amounts set forth in the unaudited financial statements for
the same periods or were not determined on a basis
substantially consistent with that of the corresponding
amounts in the audited financial statements included or
incorporated in the Registration Statement and the Final
Prospectus.
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Registration Statement and the Final Prospectus and in
Exhibit 12 to the Registration Statement, including the information
included or incorporated in Items 1, 2, 6, 7 and 11 of the Company's
Annual Report on
20
21
Form 10-K, incorporated in the Registration Statement and the Final
Prospectus, and the information included in the "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" included or incorporated in the Company's Quarterly Reports
on Form 10-Q, incorporated in the Registration Statement and the Final
Prospectus, agrees with the accounting records of the Company and its
subsidiaries, excluding any questions of legal interpretation; and
(iv) if unaudited pro forma financial statements are included
or incorporated in the Registration Statement and the Final Prospectus,
on the basis of a reading of the unaudited pro forma financial
statements included or incorporated in the Registration Statement and
the Final Prospectus (the "pro forma financial statements"), carrying
out certain specified procedures, inquiries of certain officials of the
Company who have responsibility for financial and accounting matters,
and proving the arithmetic accuracy of the application of the pro forma
adjustments to the historical amounts in the pro forma financial
statements, nothing came to their attention which caused them to
believe that the pro forma financial statements do not comply in form
in all material respects with the applicable accounting requirements of
Rule 11-02 of Regulation S-X or that the pro forma adjustments have not
been properly applied to the historical amounts in the compilation of
such statements.
References to the Final Prospectus in this paragraph (e) include any
supplement thereto to the date of the letter.
In addition, at the Closing Date, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP shall have
furnished to the Representatives a letter or letters, dated as of the Closing
Date, in form and substance satisfactory to the Representatives, to the effect
set forth above.
(f) Subsequent to the Execution Time or, if earlier, the dates as
of which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Final Prospectus (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified in the
letter or letters referred to in paragraph (e) of this Section 6 or (ii) any
change, or any development involving a prospective change, in or affecting the
condition (financial or other), earnings, business, operations or properties of
the Company and its subsidiaries the effect of which, in any case referred to in
clause (i) or (ii) above, is, in the judgment of the Representatives, so
material and adverse as to make it impractical or inadvisable to proceed with
the offering or delivery of the DECS as contemplated by the Registration
Statement (exclusive of any amendment thereof) and the Final Prospectus
(exclusive of any supplement thereto).
(g) Subsequent to the Execution Time, there shall not have been
any decrease in the ratings of any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Act) or
21
22
any notice given of any intended or potential decrease in any such rating or of
a possible change in any such rating that does not indicate the direction of the
possible change.
(h) CBI shall have furnished to the Company and the
Representatives the opinion of Frost & ▇▇▇▇▇▇, counsel for CBI, dated as of the
Closing Date, to the effect that:
(i) CBI 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 the CBI Prospectus
and is duly qualified to transact business and is in good standing in
each jurisdiction in which CBI has informed such counsel that 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 CBI and its subsidiaries, taken as a whole;
(ii) each subsidiary of CBI 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 the CBI Prospectus and is duly qualified to transact business and is
in good standing in each jurisdiction in which CBI has informed such
counsel that 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 CBI and its subsidiaries, taken as a whole;
(iii) all the outstanding shares of capital stock of each
subsidiary of CBI have been duly and validly authorized and issued and
are fully paid and nonassessable, and, except as otherwise set forth in
the CBI Prospectus, all outstanding shares of capital stock of each
such subsidiary are owned by CBI either directly or through wholly
owned subsidiaries free and clear of any perfected security interest
and, to the knowledge of such counsel, after due inquiry, any other
security interests, claims, liens or encumbrances;
(iv) this Agreement has been duly authorized, executed and
delivered by CBI;
(v) CBI's authorized equity capitalization consists of
240,000,000 shares of CBI Common Stock and 5,000,000 preferred shares;
and the authorized capital stock of CBI conforms as to legal matters to
the description thereof contained or incorporated by reference in the
CBI Prospectus;
22
23
(vi) the shares of CBI Common Stock (including the Shares)
outstanding have been duly authorized and are validly issued, fully
paid and non-assessable;
(vii) the shares of CBI Common Stock (including the Shares)
have been duly authorized for listing on the NYSE and the CSE;
(viii) the execution and delivery by CBI of, and the
performance by CBI of its obligations under, this Agreement will not
contravene any provision of applicable law or the certificate of
incorporation or by-laws of CBI or, to the best of such counsel's
knowledge, any agreement or other instrument binding upon CBI or any of
its subsidiaries that is material to CBI and its subsidiaries, taken as
a whole, or, to the best of such counsel's knowledge, any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over CBI or any subsidiary, and no consent, approval,
authorization or order of, or qualification with, any governmental body
or agency is required for the performance by CBI of its obligations
under this Agreement, except such as may be required by the securities
or Blue Sky laws of the various states in connection with the offer and
sale of the DECS and the distribution of the Shares pursuant to the
DECS;
(ix) the statements (A) in the CBI DECS Prospectus under
the captions "Business - Cincinnati ▇▇▇▇ Telephone Company -
Regulation," (third and fourth paragraphs), "Business - Other
Businesses" (fourth paragraph), "Certain Relationships" and
"Description of Capital Stock" and (B) in the CBI Registration
Statement in Item 15, in each case insofar as such statements
constitute summaries of the legal matters, documents or proceedings
referred to therein, fairly present the information called for with
respect to such legal matters, documents and proceedings and fairly
summarize the matters referred to therein;
(x) after due inquiry, such counsel does not know of any
legal or governmental proceedings pending or threatened to which CBI or
any of its subsidiaries is a party or to which any of the properties of
CBI or any of its subsidiaries is subject that are required to be
described in the CBI Registration Statement or the CBI Prospectus and
are not so described or of any statutes, regulations, contracts or
other documents that are required to be described in the CBI
Registration Statement or the CBI Prospectus or to be filed as exhibits
to the CBI Registration Statement that are not described or filed as
required;
(xi) CBI is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended;
(xii) the CBI Registration Statement has become effective
under the Act; any required filing of the CBI Prospectus, and any
supplements thereto,
23
24
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); and to the best knowledge of such
counsel, no stop order suspending the effectiveness of the CBI
Registration Statement has been issued, and no proceedings for that
purpose have been instituted or threatened;
(xiii) such counsel (A) is of the opinion that the CBI
Registration Statement and CBI Prospectus (except for financial
statements and schedules and other financial and statistical data
included therein as to which such counsel need not express any opinion)
comply as to form in all material respects with the Securities Act and
the applicable rules and regulations of the Commission thereunder, (B)
has no reason to believe that (except for financial statements and
schedules and other financial and statistical data as to which such
counsel need not express any belief) the CBI Registration Statement and
the prospectus included therein at the time the CBI Registration
Statement became effective contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading and (C) has
no reason to believe that (except for financial statements and
schedules and other financial and statistical data as to which such
counsel need not express any belief) the CBI Prospectus contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
(xiv) no holders of securities of CBI have rights to the
registration of such securities under the CBI Registration Statement.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
Ohio or the United States, to the extent they deem proper and specified in such
opinion, upon the opinion of other counsel of good standing whom they believe to
be reliable and who are satisfactory to counsel for the Underwriters and (B) as
to matters of fact, to the extent they deem proper, on certificates of
responsible officers of CBI and public officials. References to the CBI
Prospectus in this paragraph (b) include any supplements thereto at the Closing
Date.
(i) CBI shall have furnished to the Company and the Representatives a
certificate of CBI, signed by the Chairman of the Board or the President and the
principal financial or accounting officer of CBI, dated the Closing Date, to the
effect that the signers of such certificate have carefully examined the CBI
Registration Statement, the CBI Prospectus, any supplements to the CBI
Prospectus and this Agreement and that:
(i) the representations and warranties of CBI in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and CBI has complied with all the
24
25
agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the CBI
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to CBI's knowledge, threatened; and
(iii) since the date of the most recent financial statements
included in the CBI Prospectus (exclusive of any supplement thereto),
there has been no material adverse change in the condition (financial
or other), earnings, business, operations or properties of CBI and its
subsidiaries, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the CBI
Prospectus (exclusive of any supplement thereto).
(j) At the Execution Time and at the Closing Date, Coopers & ▇▇▇▇▇▇▇
L.L.P., accountants for CBI, shall have furnished to the Company and the
Representatives a letter or letters, dated respectively as of the Execution Time
and as of the Closing Date, in form and substance satisfactory to the Company
and the Representatives, confirming that they are independent accountants within
the meaning of the Act and the Exchange Act and the respective applicable
published rules and regulations thereunder and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included or incorporated in the CBI
Registration Statement and the CBI Prospectus and reported on by them
comply in form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related published
rules and regulations;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by CBI and its subsidiaries; their
limited review in accordance with standards established by the American
Institute of Certified Public Accountants of the unaudited interim
financial information as indicated in their reports incorporated in the
CBI Registration Statement and CBI Prospectus; carrying out certain
specified procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set forth
in such letter; a reading of the minutes of the meetings of the
stockholders, directors and Executive, Audit, Finance and Benefits and
Compensation committees of CBI and its subsidiaries; and inquiries of
certain officials of CBI who have responsibility for financial and
accounting matters of CBI and its subsidiaries as to transactions and
events subsequent to December 31, 1995, nothing came to their attention
which caused them to believe that:
(1) any unaudited financial statements included or
incorporated in the CBI Registration Statement and the CBI
Prospectus do not comply
25
26
in form in all material respects with applicable accounting
requirements and with the published rules and regulations of
the Commission with respect to financial statements included
or incorporated in quarterly reports on Form 10-Q under the
Exchange Act; or said unaudited financial statements are not
in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited financial statements included or incorporated in the
CBI Registration Statement and the CBI Prospectus; or
(2) with respect to the period subsequent to December
31, 1995, there were any changes, at a specified date not more
than three business days prior to the date of the letter, in
the long-term debt of CBI and its subsidiaries or capital
stock of CBI or any decreases in the shareowners' equity of
CBI as compared with the amounts shown on the December 31,
1995 consolidated balance sheet included or incorporated in
the CBI Registration Statement and the CBI Prospectus, or for
the period from January 1, 1996 to such specified date there
were any decreases, as compared with the corresponding period
in the preceding year in revenues, operating income or income
before income taxes, extraordinary charges and cumulative
effect of change in accounting principles or in the total or
per-share amounts of net income, except in all instances for
changes or decreases set forth in such letter, in which case
the letter shall be accompanied by an explanation by CBI as to
the significance thereof unless said explanation is not deemed
necessary by the Company and the Representatives; and
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of CBI and its subsidiaries) set forth or
incorporated in the CBI Registration Statement and the CBI Prospectus,
including the information set forth under the captions "Prospectus
Summary," "Risk Factors," "Selected Consolidated Financial
Information," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business Outlook," "Business"
and "Description of Capital Stock" in the CBI Prospectus, the
information included or incorporated in Items 1, 2, 6, 7, 8 and 11 of
CBI's Annual Report on Form 10-K, incorporated in the CBI Registration
Statement and the CBI Prospectus, the information included in the
portions of CBI's Proxy Statement dated March 14, 1996 incorporated in
the CBI Registration Statement and the CBI Prospectus and the
information included in the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included or incorporated
in CBI's Quarterly Reports on Form 10-Q, incorporated in the CBI
Registration Statement and the CBI
26
27
Prospectus, agrees with the accounting records of CBI and its
subsidiaries, excluding any questions of legal interpretation.
References to the CBI Prospectus in this paragraph (j) include any
supplement thereto at the date of the letter.
(k) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the CBI Registration Statements (exclusive of any
amendment thereof) and the CBI Prospectus (exclusive of any supplement thereto),
there shall not have been (i) any change or decrease specified in the letter or
letters referred to in paragraph (j) of this Section 6 or (ii) any change, or
any development involving a prospective change, in or affecting the condition
(financial or other), earnings, business, operations or properties of CBI and
their respective subsidiaries the effect of which, in any case referred to in
clause (i) or (ii) above, is, in the judgment of the Representatives, so
material and adverse as to make it impractical or inadvisable to proceed with
the offering or delivery of the DECS as contemplated by the Registration
Statement (exclusive of any amendment thereof) and the Final Prospectus
(exclusive of any supplement thereto).
(l) Subsequent to the Execution Time, there shall not have been any
decrease in the ratings of any of CBI's debt securities by any "nationally
recognized statistical rating organization" (as defined for purpose of Rule
436(g) under the Act) or any notice given of any intended or potential decrease
in any such rating or of a possible change in any such rating that does not
indicate the direction of the possible change.
(m) At the Execution Time, CBI shall have furnished to the
Representatives a letter substantially in the form of Exhibit A hereto from each
executive officer and director of CBI and from Waslic Company II and The Western
and Southern Life Insurance Company addressed to the Representatives, relating
to sales and certain other dispositions of shares of CBI Common Stock or certain
other securities, and such letter agreements shall be in full force and effect
on the Closing Date.
(n) On or prior to the Closing Date, the Company and Waslic Company II
shall have consummated the purchase and sale by the Company from Waslic Company
II of certain exchangeable notes of Waslic Company II pursuant to the purchase
agreement dated the date of this Agreement between the Company, Waslic Company
II and The Western and Southern Life Insurance Company.
(o) Prior to the Closing Date, each of the Company and CBI shall have
furnished to the Representatives such further information, certificates and
documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and
27
28
certificates mentioned above or elsewhere in this Agreement shall not be in all
material respects reasonably satisfactory in form and substance to the
Representatives and counsel for the Underwriters, this Agreement and all
obligations of the Underwriters hereunder may be canceled at, or at any time
prior to, the Closing Date by the Representatives. Notice of such cancellation
shall be given to the Company in writing or by telephone or telegraph confirmed
in writing.
7. Expenses. (a) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company 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 the Company's counsel and the Company's accountants in connection
with the registration and delivery of the DECS under the Act and all other fees
or expenses in connection with the preparation and filing of the Registration
Statement, each Preliminary Final Prospectus, the Final 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) all
costs and expenses related to the transfer and delivery of the DECS to the
Underwriters, including any transfer or other taxes payable thereon, (iii) the
cost of printing or producing any Blue Sky or Legal Investment memorandum in
connection with the offer and sale of the DECS under state securities laws and
all expenses in connection with the qualification of the DECS for offer and sale
under state securities laws as provided in Section 5(a)(vi) 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, (iv) all filing fees and disbursements
of counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the DECS by the National Association of
Securities Dealers, Inc., if any, (v) all costs and expenses incident to listing
the DECS on the NYSE, (vi) the cost of printing certificates representing the
DECS, (vii) the costs and charges of any transfer agent, registrar or
depositary, (viii) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the marketing of
the offering of the DECS, 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 the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the
cost of any aircraft chartered in connection with the road show, and (ix) all
other costs and expenses incident to the performance of the obligations of the
Company hereunder for which provision is not otherwise made in this Section.
(b) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, CBI 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 CBI's counsel
and CBI's accountants in connection with the registration and delivery of the
Shares under the Act and all other fees or expenses in connection with the
preparation and filing of the CBI Registration Statement, each Preliminary CBI
Prospectus, the CBI Prospectus and amendments and supplements to any of the
foregoing,
28
29
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) all costs and expenses incident to
listing the Shares on the NYSE and the CSE, (iii) the cost of printing
certificates representing the Shares, (iv) the costs and charges of any transfer
agent, registrar or depositary, (v) the costs and expenses of CBI 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 CBI, travel and lodging expenses of the
representatives and officers of CBI and any such consultants, and the cost of
any aircraft chartered in connection with the road show, and (vi) all other
costs and expenses incident to the performance of the obligations of CBI
hereunder for which provision is not otherwise made in this Section.
(c) If the sale of the DECS provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 6 hereof is not satisfied, because of any termination pursuant to
Section 10 hereof or because of any refusal, inability or failure on the part of
the Company or CBI to perform any agreement herein or comply with any provision
hereof other than by reason of a default by any of the Underwriters, the Company
will reimburse the Underwriters severally upon demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been incurred by them in connection with the proposed purchase and sale of
the DECS.
(d) The provisions of this Section 7 shall not supersede or otherwise
affect any agreement that the Company and CBI may otherwise have for the
allocation of such expenses among themselves.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement as originally filed or in
any amendment thereof, or in the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made (i) therein in reliance
upon and in conformity with written information furnished to the Company (A) by
or on
29
30
behalf of any Underwriter through the Representatives specifically for inclusion
therein or (B) by or on behalf of CBI specifically for inclusion therein or (ii)
in the CBI Prospectus. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) The Company agrees to indemnify and hold harmless CBI, each of its
directors, each of its officers who signs the CBI Registration Statement and
each person who controls CBI within the meaning of either the Act or the
Exchange Act against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the CBI Registration
Statement as originally filed or in any amendment thereof, or in the Preliminary
CBI Prospectus or the CBI Prospectus, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the 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 in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to CBI by or on behalf of the Company specifically for inclusion therein, and
agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action. The indemnity
agreement shall be in addition to any liability which the Company may otherwise
have.
(c) CBI agrees to indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each person
who controls any Underwriter within the meaning of either the Act or the
Exchange Act and to indemnify and hold harmless the Company, the directors,
officers, employees and agents of the Company and each person who controls the
Company within the meaning of either the Act or the Exchange Act, in either
case, against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in (i) the CBI
Registration Statement as originally filed or in any amendment thereof, or in
any Preliminary CBI Prospectus or the CBI Prospectus, or in any amendment
thereof or supplement thereto, or (ii) the Registration Statement as originally
filed or in any amendment thereof, or in any Preliminary Final Prospectus or the
Final Prospectus, or in any amendment thereto or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state in the
documents referred to in clause (i) or (ii) above a material fact required to be
stated in the documents referred to in clause (i) or (ii) above or necessary to
make the statements therein not misleading, but in the case of the documents
referred to in clause (ii) only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of CBI specifically for
30
31
inclusion therein, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that CBI shall not be liable under the
indemnity agreement in this paragraph (c) to the extent that any such loss,
claim, damage or liability arises out of or is based on any such untrue
statement or alleged untrue statement or omission or alleged omission made in
the documents referred to in clause (i) above in reliance upon and in conformity
with written information furnished to CBI by or on behalf of the Company
specifically for inclusion therein or by or on behalf of any Underwriter through
the Representatives specifically for inclusion therein. This indemnity agreement
will be in addition to any liability which CBI may otherwise have.
(d) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who signs the
Registration Statement and each person who controls the Company within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity in paragraph (a) from the Company to each Underwriter, but
only with reference to written information relating to such Underwriter
furnished to the Company by or on behalf of such Underwriter through the
Representatives specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which any Underwriter may otherwise have.
(e) Each Underwriter severally agrees to indemnify and hold harmless
CBI, each of its directors, each of its officers who signs the CBI Registration
Statement and each person who controls CBI within the meaning of either the Act
or the Exchange Act, to the same extent as the foregoing indemnity in paragraph
(c) from CBI to each Underwriter, but only with reference to written information
relating to such Underwriter furnished to CBI by or on behalf of such
Underwriter through the Representatives specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any Underwriter may otherwise have.
(f) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a), (b), (c), (d) or (e) above unless and to the
extent it did not otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses and (ii)
will not, in any event, relieve the indemnifying party from any obligations to
any indemnified party other than the indemnification obligation provided in
paragraph (a), (b), (c), (d) or (e) above. The indemnifying party shall be
entitled to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party
31
32
or parties except as set forth below); provided, however, that such counsel
shall be satisfactory to the indemnified party. Notwithstanding the indemnifying
party's election to appoint counsel to represent the indemnified party in an
action, the indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the reasonable
fees, costs and expenses of such separate counsel if (A) the use of counsel
chosen by the indemnifying party to represent the indemnified party would
present such counsel with a conflict of interest, (B) the actual or potential
defendants in, or targets of, any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, (C) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action or (D)
the indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(g) In the event that the indemnity provided in paragraph (a), (b),
(c), (d) or (e) of this Section 8 is unavailable to or insufficient to hold
harmless any indemnified party for any reason, the Company, CBI and the
Underwriters agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which the
Company, CBI and one or more of the Underwriters may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Company, CBI and the Underwriters from the offering of the DECS; provided,
however, that in no case shall any Underwriter (except as may be provided in any
agreement among underwriters relating to the offering of the DECS) be
responsible for any amount in excess of the underwriting discount or commission
applicable to the DECS purchased by such Underwriter hereunder. If the
allocation provided by the immediately preceding sentence is unavailable for any
reason, the Company, CBI and the Underwriters shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company, CBI and of the Underwriters in connection
with the statements or omissions which resulted in such Losses as well as any
other relevant equitable considerations. Benefits received by the Company and
CBI shall be deemed to be equal to the total net proceeds from the offering
(before deducting expenses) received by the Company, and benefits received by
the Underwriters shall be deemed to be equal to the total underwriting discounts
and commissions, in each case as set forth on the cover page of the Final
Prospectus. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
Company, CBI or the Underwriters. The Company, CBI and the Underwriters agree
that it would not be just and equitable if
32
33
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (g), 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. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of an Underwriter shall have the
same rights to contribution as such Underwriter; each person who controls the
Company within the meaning of either the Act or the Exchange Act, each officer
of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company; and each person who controls CBI within the meaning of either the Act
or the Exchange Act, each officer of CBI who shall have signed the CBI
Registration Statement and each director of CBI shall have the same rights to
contribution as CBI, subject in each case to applicable terms and conditions of
this paragraph (g).
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the DECS agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of DECS set forth
opposite their names in Schedule I hereto bears to the aggregate principal
amount of DECS set forth opposite the names of all the remaining Underwriters)
the DECS which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of DECS
which the defaulting Underwriter or Underwriters agreed but failed to purchase
shall exceed 10% of the aggregate principal amount of DECS set forth in Schedule
I hereto, the remaining Underwriters shall have the right to purchase all, but
shall not be under any obligation to purchase any, of the DECS, and if such
nondefaulting Underwriters do not purchase all the DECS, this Agreement will
terminate without liability to any nondefaulting Underwriter, the Company or
CBI; provided, further, that in no event shall the number of Shares that any
Underwriter has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 9 by an amount in excess of one-ninth of such Shares
without the written consent of such Underwriter. In the event of a default by
any Underwriter as set forth in this Section 9, the Closing Date shall be
postponed for such period, not exceeding seven days, as the Representatives
shall determine in order that the required changes in the Registration
Statement, the Final Prospectus, the CBI Registration Statement and the CBI
Prospectus or in any other documents or arrangements may be effected. Nothing
contained in this Agreement shall relieve any defaulting Underwriter of its
liability, if any, to the Company, CBI and any nondefaulting Underwriter for
damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company and
CBI prior to delivery of and payment for the DECS, if prior to such time (i)
trading in any securities of the Company or CBI shall have been suspended by the
Commission or on any exchange or over-the-
33
34
counter market or trading in securities generally on the NYSE, the American
Stock Exchange, the NASDAQ National Market System or the CSE shall have been
suspended or limited or minimum prices shall have been established on such
Exchange or System, (ii) a banking moratorium shall have been declared either by
Federal or New York State authorities or (iii) there shall have occurred any
outbreak or escalation of hostilities, declaration by the United States of a
national emergency or war or other calamity or crisis the effect of which on
financial markets is such as to make it, in the judgment of the Representatives,
impracticable or inadvisable to proceed with the offering or delivery of the
DECS as contemplated by the Final Prospectus (exclusive of any supplement
thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company, CBI or their officers and of the Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter, the Company or CBI or
any of the officers, directors or controlling persons referred to in Section 8
hereof, and will survive delivery of and payment for the DECS. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telegraphed and confirmed to them, care of Salomon Brothers Inc, at
Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention of the Legal
Department; if sent to the Company, will be mailed, delivered or telegraphed and
confirmed to it at Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention
of the Secretary (except that communications required by paragraph (ii) of
Section 5(b) will be sent by telecopy to Salomon Brothers Inc, Attn: ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, Esq., telecopy: ▇▇▇-▇▇▇-▇▇▇▇, telephone: ▇▇▇-▇▇▇-▇▇▇▇ and confirmed by
overnight courier); or if sent to CBI, will be mailed, delivered, telegraphed
and confirmed to it at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, attention
of ________.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
34
35
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company, CBI and the several Underwriters.
Very truly yours,
Salomon Inc
By:________________________________
Name:
Title:
Cincinnati ▇▇▇▇ Inc.
By:________________________________
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
By: Salomon Brothers Inc
By:_________________________________
Name:
Title:
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
35
36
SCHEDULE I
Number of DECS
Underwriters to be Purchased
------------ ---------------
Salomon Brothers Inc.................................... 1,500,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated....................... 1,500,000
---------
Total ......................................... 3,000,000
=========
36
37
EXHIBIT A
Salomon Inc
Public Offering of DECS
November __, 1996
Salomon Brothers Inc
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
c/o Salomon Brothers Inc
Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed Underwriting Agreement (the "Underwriting Agreement"), between Salomon
Inc, a Delaware corporation (the "Company"), Cincinnati ▇▇▇▇ Inc., an Ohio
corporation ("CBI"), and each of you as representatives (the "Representatives")
of a group of Underwriters named therein, relating to an underwritten public
offering (the "Public Offering") of ___ % Exchangeable Notes Due February 1,
2001 of the Company (the "DECS"). The DECS are subject to exchange into common
shares, par value $1.00 per share (the "CBI Common Stock"), of CBI.
In order to induce you and the other Underwriters to enter
into the Underwriting Agreement and to continue your and their efforts in
connection with the Public Offering, the undersigned hereby agrees that, without
the prior written consent of the Representatives on behalf of the Underwriters,
the undersigned will not, during the period commencing on the date hereof and
ending 90 days after the date of the final prospectus relating to the Public
Offering (the "Final Prospectus"), (1) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any shares of CBI Common Stock or any
securities convertible into or exercisable or exchangeable for CBI Common Stock
(whether such shares or any such securities are now owned by the undersigned or
are hereafter acquired), 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 CBI Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of CBI Common Stock or such
other securities, in cash or otherwise; provided, however, that the undersigned
may sell up to (x) 5,000 shares of CBI Common Stock or (y) 15% of the sum of the
number of shares of CBI Common Stock that are owned by the undersigned on the
date of this letter and the number of shares of CBI Common Stock that may be
purchased by the undersigned pursuant to currently exercisable options owned by
the undersigned on the date of this letter (whichever of (x) and (y) is greater)
so long as the aggregate amount of shares of CBI Common Stock sold during such
90-day period by all executive officers or directors of CBI who have entered
into an
37
38
agreement with the Underwriters in connection with the Public Offering similar
to this letter agreement does not exceed 200,000 shares of CBI Common Stock.* In
addition, the undersigned agrees that, without the prior written consent of the
Representatives on behalf of the Underwriters, the undersigned will not, during
the period commencing on the date hereof and ending 90 days after the date of
the Final Prospectus, make any demand for or exercise any right with respect to,
the registration of any shares of CBI Common Stock or any security convertible
into or exercisable or exchangeable for CBI Common Stock.
Whether or not the Public Offering actually occurs depends on
a number of factors, including market conditions. Any Public Offering will only
be made pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company, CBI and the Underwriters.
If for any reason the Underwriting Agreement shall be
terminated prior to the Closing Date (as defined in the Underwriting Agreement),
the agreement set forth above shall likewise be terminated.
Yours very truly,
-------------------------------
[Name]
----------------
* Proviso applies only to letters from executive officers and directors
of CBI.
38
