EXHIBIT 1.1
DRAFT: January 23, 1996
MERCURY AIR GROUP, INC.
$25,000,000*
___% Convertible Subordinated Debentures due February __, 2006
UNDERWRITING AGREEMENT
January __, 1996
EVEREN Securities, Inc.
Xxxxxxx, Xxxxxx & Co.
c/o EVEREN Securities, Inc.
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Pursuant to the terms of this Underwriting Agreement (this
"Agreement"), Mercury Air Group, Inc., a New York corporation (the
"Company"), proposes to sell to the underwriters named in Schedule I hereto
(the "Underwriters") an aggregate of $25,000,000 principal amount of its
____% Convertible Subordinated Debentures due February __, 2006 (the "Firm
Debentures"). The Firm Debentures are to be sold to the Underwriters, acting
severally and not jointly, in such amounts as are set forth in Schedule I
hereto opposite the name of such Underwriter. The Company also proposes to
grant to the Underwriters a one-time option to purchase up to an additional
$3,750,000 in principal amount of the Company's ___% Convertible Subordinated
Debentures due February __, 2006 as provided for in Section 2 of this
Agreement (the "Option Debentures"). The Firm Debentures and the Option
Debentures purchased pursuant to this Agreement are herein collectively
referred to as the "Debentures." The Debentures are to be issued pursuant to
an Indenture (the "Indenture"), to be dated as of January ___, 1996, between
the Company and IBJ Xxxxxxxx Bank & Trust Company, as trustee (the
"Trustee").
The Company and the Underwriters hereby agree to the following matters
with respect to the purchase and sale of the Debentures:
______________________
*/ Plus an option to purchase up to an additional $3,750,000 aggregate
principal amount of the Debentures to cover over-allotments, if any.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared
and filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-1 (File No. 33-65085), including a
preliminary prospectus and a Statement of Eligibility on Form T-1 with
respect to the Trustee pursuant to the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), relating to the Debentures and certain
amendments thereto. The Company expects to file the prospectus containing
the information required by Commission Rule 430A pursuant to Commission Rule
424(b) under the Act. The registration statement as amended at the time it
becomes effective, including all exhibits thereto (except the Statement of
Eligibility on Form T-1 with respect to the Trustee), is referred to in this
Agreement as the "Registration Statement" and the prospectus in the form
filed with the Commission as part of the Registration Statement or, if
applicable, in the form first filed pursuant to Commission Rule 424(b) after
the Registration Statement becomes effective is referred to in this Agreement
as the "Prospectus."
2. AGREEMENT TO SELL AND PURCHASE.
(a) On the basis of the representations, warranties and agreements
of the Company herein contained and subject to the terms and conditions set
forth herein, the Company hereby agrees to issue and sell to the
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company, at the purchase price of $_______ per $1,000
principal amount, the number of Firm Debentures set forth opposite the name
of such Underwriter in Schedule I hereto (or such number of Firm Debentures
as such Underwriter shall be obligated to purchase pursuant to the provisions
of Section 9 hereof).
(b) The Company agrees to sell to the Underwriters and, on the basis
of the representations, warranties and agreements of the Company set forth
herein and subject to the terms and conditions set forth herein, the
Underwriters shall have the right to purchase, severally and not jointly, from
the Company all or any portion of the Option Debentures at the purchase price
set forth above plus accrued interest upon delivery to the Company of the notice
hereinafter referred to. Option Debentures may be purchased solely for the
purpose of covering over-allotments made in connection with the offering of the
Firm Debentures. If any Option Debentures are to be purchased, each
Underwriter, severally and not jointly, agrees to purchase from the Company the
number of Option Debentures which bears the same proportion to the total number
of Option Debentures to be purchased from the Company as the number of Firm
Debentures set forth opposite such Underwriter's name in Schedule I (or such
number of Firm Debentures increased pursuant to the terms set forth in Section 9
hereof) bears to the total number of Firm Debentures.
3. TERMS OF PUBLIC OFFERING. The Company is advised by the Underwriters
that the Underwriters have agreed to make a public offering of their respective
portions of the Debentures as soon after the Registration Statement has become
effective and this Agreement has been executed as in the judgment of the
Underwriters is advisable and to first offer the Debentures upon the terms set
forth in the Prospectus.
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4. DELIVERY OF THE DEBENTURES AND PAYMENT THEREFOR.
(a) Delivery to the Underwriters of the Firm Debentures shall be
made against payment therefor at 7:00 a.m., California time, on February __,
1996 (the "Closing Date") at the offices of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx,
000 Xxxxx Xxxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000. The place of the
closing and the Closing Date may be varied by agreement among the
Underwriters and the Company.
(b) Delivery to the Underwriters of any Option Debentures to be
purchased by the several Underwriters shall be made in Los Angeles,
California against payment therefor at the offices of Xxxxxx, Xxxxxxxxxx &
Xxxxxxxxx at such time and on such date (the "Option Closing Date"), which
may be the same as the Closing Date but shall in no event be earlier than the
Closing Date nor earlier than two nor later than three business days after
the giving of the notice hereinafter referred to, as shall be specified in a
written notice from the Underwriters to the Company of the determination to
purchase Option Debentures in such principal amount as specified in said
notice. Said notice may be given at any time within 30 days after the date
of the execution of this Agreement. The place of the closing and the Option
Closing Date may be varied by agreement between the Underwriters and the
Company.
(c) Certificates for the Firm Debentures and for the Option
Debentures shall be registered in such names and in such denominations as the
Underwriters shall request prior to 9:00 a.m., California time, on the second
full business day preceding the Closing Date or the Option Closing Date, as
the case may be. Such certificates shall be made available to the
Underwriters at the office of The Depository Trust Company, New York, New
York, for inspection and packaging not later than 9:00 a.m., California time,
on the business day next preceding the Closing Date or the Option Closing
Date, as the case may be. The certificates evidencing the Firm Debentures and
the Option Debentures shall be delivered to the Underwriters on the Closing
Date or the Option Closing Date, as the case may be, for the respective
accounts of the several Underwriters, against payment of the purchase price
therefor by certified or official bank checks payable in Los Angeles Clearing
House or other next day funds to the order of the Company, subject to change
by written agreement of the Company and the Underwriters.
5. AGREEMENTS OF THE COMPANY. The Company agrees with the several
Underwriters as follows:
(a) The Company will endeavor to cause the Registration Statement
to become effective and will advise the Underwriters promptly and, if
requested by the Underwriters, will confirm such advice in writing, (A) when
the Registration Statement has become effective and when any post effective
amendment to it becomes effective, and of the filing of any final prospectus
or supplement or amendment to the Prospectus, (B) of any request by the
Commission for amendments or supplements to the Registration Statement or
Prospectus or for additional information, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Debentures for
offering or sale in any jurisdiction, or the initiation or contemplation
known to the Company of any proceeding for such purposes, and (D) within
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the period of time referred to in paragraph (f) below, of the happening
of any event which makes any statement made in the Registration Statement or
Prospectus (as then amended or supplemented) untrue in any material respect
or which requires the making of any additions to or changes in the
Registration Statement or Prospectus (as then amended or supplemented) in
order to make the statements therein not misleading or the necessity to amend
or supplement the Prospectus to comply with the Act, the Trust Indenture Act
or any other law. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Company will
make every reasonable effort to obtain the withdrawal of such order at the
earliest possible moment.
(b) If, at the time that the Registration Statement becomes
effective, any information shall have been omitted therefrom in reliance upon
Rule 430A under the Act, then promptly following the execution of this
Agreement, the Company will prepare and file with the Commission, in accordance
with Rule 430A and Rule 424(b) under the Act, copies of an amended Prospectus
or, if required by Rule 430A, a post-effective amendment to the Registration
Statement (including an amended Prospectus) containing all information so
omitted.
(c) The Company will furnish to the Underwriters, without charge,
three signed copies of the Registration Statement and of each amendment thereto,
including all exhibits thereto, and will also furnish to the Underwriters,
without charge, for transmittal to each of the other Underwriters such number of
conformed copies of the Registration Statement and of each amendment thereto as
the Underwriters may reasonably request.
(d) The Company will not file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus of which the
Underwriters shall not previously have been advised or to which the Underwriters
shall promptly after being so advised reasonably object in writing.
(e) Prior to the effective date of the Registration Statement, the
Company has delivered or will deliver to each of the Underwriters, without
charge, copies of each form of preliminary prospectus in such quantities as they
have reasonably requested or may hereafter reasonably request. The Company
consents to the use, in accordance with the provisions of the Act and with the
securities or Blue Sky laws of the jurisdictions in which the Debentures are
offered by the several Underwriters and by dealers, prior to the effective date
of the Registration Statement, of each preliminary prospectus so furnished by
the Company.
(f) On the effective date of the Registration Statement and
thereafter from time to time during such period as in the opinion of counsel for
the Underwriters a prospectus is required by law to be delivered in connection
with offers or sales of the Debentures by an Underwriter or a dealer, the
Company will deliver to each Underwriter and dealer, without charge, as many
copies of the Prospectus (and of any amendment or supplement thereto) as they
may reasonably request. During such period, if any event occurs which in the
judgment of the Company, or in the opinion of counsel for the Underwriters,
should be set forth in the Prospectus in order to ensure that no part of the
Prospectus includes an untrue statement of a material fact or omits to state a
material fact necessary in
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order to make the statements therein, in the light of the circumstances at
the time the Prospectus is delivered to a purchaser, not misleading, the
Company will forthwith prepare, submit to the Underwriters, file with the
Commission and deliver, without charge to the several Underwriters and
dealers (whose names and addresses will be furnished by the Underwriters to
the Company) to whom Debentures have been sold by the Underwriters or to
other dealers any amendments or supplements to the Prospectus so that the
statements in the Prospectus, as so amended or supplemented, will comply with
the standards set forth in this sentence. The Company consents to the use of
such Prospectus (and of any amendments or supplements thereto) in accordance
with the provisions of the Act and with the securities or Blue Sky laws of
the jurisdictions described in the preliminary Blue Sky memorandum in which
the Debentures are lawfully offered by the several Underwriters and by all
dealers to whom Debentures may be sold, both in connection with the offering
or sale of the Debentures and for such period of time thereafter as the
Prospectus is required by law to be delivered in connection therewith. In
case any Underwriter is required to deliver a Prospectus (and any amendment
or supplement thereto) more than nine months after the first date upon which
the Debentures are offered to the public, the Company will, upon the request
of the Underwriters and at the expense of the Company, furnish such
Underwriter with reasonable quantities of a Prospectus complying with Section
10(a)(3) of the Act.
(g) The Company will cooperate with the Underwriters and counsel for
the Underwriters in connection with the registration or qualification of the
Debentures for offer and sale by the several Underwriters and by dealers under
the securities or Blue Sky laws of such jurisdictions as the Underwriters may
designate and will file such consents to service of process or other documents
as may be necessary in order to effect such registration or qualification;
provided that in no event shall the Company be obligated (i) to qualify to do
business in any jurisdiction where it is not now so qualified or (ii) to file
any general consent to service of process.
(h) The Company will make generally available to its security
holders an earnings statement of the Company, which need not be audited,
covering a twelve-month period commencing after the effective date of the
Registration Statement and ending not later than 15 months thereafter, as
soon as practicable after the end of such period, which earnings statement
shall satisfy the provisions of Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including Rule 158).
(i) For a period of five years after the date of this Agreement:
(1) the Company will furnish to the Underwriters (1) as
soon as available, a copy of each report of the Company of general
interest mailed to any class of its security holders, (2) copies of
all annual reports and current reports filed with the Commission on
Forms 10-K, 10-Q and 8-K and any amendment thereto or such other
similar forms as may be designated by the Commission and (3) from
time to time, such other information concerning the Company as the
Underwriters may reasonably request;
(2) if, at any time during such five year period, the
Company shall cease filing with the Commission the annual reports and
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current reports on Forms 10-K, 10-Q and 8-K or other similar forms
referred to in clause (1) above, the Company will forward to its
stockholders generally and the Underwriters and upon request to each
of the other Underwriters (i) as soon as practicable after the end of
each fiscal year, copies of a balance sheet and statements of income
and retained earnings of the Company as of the end of and for such
fiscal year, certified by independent public accountants, and (ii) as
soon as practicable after the end of each quarterly fiscal period,
except for the last quarterly fiscal period in each fiscal year, a
summary statement (which need not be certified) of income and
retained earnings of the Company for such period, which shall also be
made publicly available.
(j) The Company will pay, or reimburse if paid by the
Underwriters, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses incident
to the performance by it of its obligations under this Agreement including,
without limiting the generality of the foregoing, (i) preparation, printing,
filing and distribution (including postage, air freight charges and charges
for counting and packaging) of the original registration statement, the
Registration Statement, each preliminary prospectus, the Prospectus, each
amendment and/or supplement to any of the foregoing, and this Agreement and
other underwriting agreements and the Indenture, (ii) furnishing to the
several Underwriters and dealers copies of the foregoing materials as
reasonably requested by the Underwriters, (iii) the registrations or
qualifications referred to in paragraph (g) above (including reasonable fees
and disbursements of counsel in connection therewith) and expenses of
printing and delivering to the several Underwriters copies of the preliminary
and final Blue Sky Memoranda, (iv) the review of the terms of the public
offering of the Debentures by the NASD (including the filing fees paid to the
NASD in connection therewith) and the reasonable fees and disbursements of
counsel for the Underwriters in connection therewith, (v) the performance by
the Company of its other obligations under this Agreement, including the fees
of the Company's counsel and accountants, (vi) the issuance of the Debentures
and the preparation and printing of the certificates representing the
Debentures, (vii) the fees and expenses of the Trustee and any agent of the
Trustee and the fees and disbursements of counsel for the Trustee in
connection with the Indenture and the Debentures, (viii) all fees and
expenses associated with obtaining credit ratings on the Debentures, (ix) all
travel, lodging and reasonable living expenses incurred by the Company in
connection with marketing, dealer and other meetings attended by the Company
and the Underwriters in marketing the Debentures, (x) furnishing to the
several Underwriters copies of all reports and information required by
paragraph (i) above, including reasonable costs of shipping and mailing and
(xi) the fees payable to The American Stock Exchange (the "AMEX") in
connection with the listing of the Debentures on the AMEX.
(k) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than by notice given by the Underwriters to
terminate this Agreement pursuant to Section 9 hereof), the Company agrees to
reimburse the several Underwriters for all out-of-pocket expenses (including
reasonable fees and expenses of counsel for the Underwriters) reasonably
incurred by them in connection herewith but without any further obligation of
the Company for lost profits or otherwise; provided, however, that the
Company's reimbursement obligation pursuant to this Section 5(k) shall not
exceed $100,000. If this Agreement is terminated
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pursuant to Section 9 hereof, the several Underwriters shall themselves bear
any such out-of-pocket expenses incurred by them.
(l) The Company will apply the net proceeds from the sale of the
Debentures to be sold by it under this Agreement for the purposes set forth
in the Prospectus under the caption "Use of Proceeds."
(m) If at any time during the 25-day period after the Registration
Statement becomes effective or the period prior to the Option Closing Date,
any rumor, publication or event relating to or affecting the Company shall
occur as a result of which in your opinion the market price of the Company's
Common Stock has been or is likely to be materially affected (regardless of
whether such rumor, publication or event necessitates a supplement to or
amendment of the Prospectus), the Company will, after written notice from you
advising the Company to the effect set forth above, forthwith prepare,
consult with you concerning the substance of, and disseminate a press release
or other public statement, reasonably satisfactory to you, responding to or
commenting on such rumor, publication or event.
(n) The Company will cause the Debentures to be listed on the AMEX
prior to the Firm Closing Date. The Company will ensure that the Debentures
remain listed on the AMEX following the Firm Closing Date.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter that:
(a) Each preliminary prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto or filed
pursuant to Rule 424(b) under the Act complied in all material respects when
so filed with the provisions of the Act and the Trust Indenture Act and the
rules and regulations thereunder; except that this representation and
warranty does not apply to statements in or omissions from the Registration
Statement or the Prospectus (or any supplement or amendment thereto) made in
reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by or on behalf of such Underwriter
specifically for use in the Registration Statement or to statements in or
omissions from the Registration Statement or the Prospectus (or any
supplement or amendment thereto) relating to that part of the Registration
Statement which shall constitute the Statement of Eligibility and
Qualification on Form T-1 under the Trust
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Indenture Act of the Trustee. The Commission has not issued any order
preventing or suspending the use of any preliminary prospectus.
(b) The Registration Statement in the form in which it becomes
effective and also in such form as it may be when this Agreement is executed
or any post-effective amendment to the Registration Statement shall become
effective, and the Prospectus when and in the form last filed with the
Commission as part of the Registration Statement prior to effectiveness or,
if applicable, first filed pursuant to Rule 424(b) under the Act, and when
any supplement or amendment thereto is filed with the Commission, each will
comply in all material respects with the provisions of the Act and the Trust
Indenture Act and the rules and regulations thereunder, will not at any such
time contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; except that this representation and warranty does not apply to
statements in or omissions from the Registration Statement or the Prospectus
(or any supplement or amendment thereto) made in reliance upon and in
conformity with information relating to any Underwriter furnished to the
Company in writing by or on behalf of such Underwriter specifically for use
in the Registration Statement or to statements in or omissions from the
Registration Statement or the Prospectus (or any supplement or amendment
thereto) relating to that part of the Registration Statement which shall
constitute the Statement of Eligibility and Qualification on Form T-1 under
the Trust Indenture Act of the Trustee.
(c) There is no contract or other document of a character required
to be described in the Registration Statement or Prospectus or to be filed as
an exhibit to the Registration Statement by the Act or the Trust Indenture
Act or the rules and regulations thereunder which is not described or filed
as required.
(d) Deloitte & Touche LLP, who are certifying certain of the
consolidated financial statements of the Company included in the Registration
Statement and the Prospectus, are independent public accountants as required
by the Act.
(e) The consolidated financial statements, together with the notes
thereto, of the Company included in the Registration Statement and the
Prospectus comply in all material respects with the Act and present fairly
the consolidated financial position of the Company as of the dates indicated,
and the results of operations, cash flows and changes in financial position
of the Company for the periods specified. Such consolidated financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the entire
period involved except to the extent disclosed therein.
(f) The Company and each of its subsidiaries have been duly
organized and are validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation and are duly
qualified to transact business, as such business is currently being
conducted, as foreign corporations and are in good standing under the laws of
all other jurisdictions where the ownership or leasing of their respective
properties or the conduct of their respective businesses requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the condition (financial or otherwise) of the
Company.
(g) The Company has an authorized and outstanding capitalization
as set forth in the Prospectus and the Debentures conform in all material
respects to the description thereof contained in the Prospectus. All of the
issued and outstanding shares of capital stock of the Company and each of its
subsidiaries have been duly authorized, validly issued and are fully paid and
non-assessable and free of preemptive or other similar rights. There are no
8
options, agreements, contracts or other rights in existence to acquire from
the Company any shares of capital stock except as set forth in the
Prospectus.
(h) The Indenture, which will be substantially in the form filed
as an exhibit to the Registration Statement, has been duly authorized and
duly qualified under the Trust Indenture Act and when executed and delivered
by the Company and the Trustee, the Indenture will have been duly authorized,
executed and delivered by the Company and will constitute a valid and legally
binding agreement of the Company, enforceable against the Company in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws affecting creditors' rights
generally and to general principles of equity; and the Indenture conforms in
all material respects to the description thereof in the Prospectus.
(i) The Debentures have been duly authorized and, when executed
and authenticated in accordance with the terms of the Indenture and issued
and delivered in accordance with the terms of this Agreement against payment
therefor, will have been duly executed, authenticated and delivered by the
Company and will constitute valid and binding obligations of the Company
entitled to the benefits of the Indenture, enforceable against the Company in
accordance with their terms, subject, as to such benefit and enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws affecting
creditors' rights generally and to general principles of equity; the
Debentures conform in all material respects to the description thereof
contained in the Prospectus; and the Debentures will be substantially in the
form filed as an exhibit to the Registration Statement.
(j) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated or
contemplated therein, there has not been (A) any material adverse change in
the condition (financial or otherwise), earnings, affairs, business or
prospects of the Company or any of its subsidiaries, whether or not arising
in the ordinary course of business, (B) any material transaction entered
into, or any material liability or obligation incurred, by the Company or any
of its subsidiaries other than in the ordinary course of business, (C) any
change in the capital stock, or material increase in the short-term debt or
long-term debt of the Company or any of its subsidiaries, or (D) any dividend
or distribution of any kind declared, paid or made by the Company on its
capital stock.
(k) The Company and each of its subsidiaries have good and
marketable title to all properties and assets described in the Prospectus as
owned by them, free and clear of all liens, charges, encumbrances or
restrictions, except such as are referred to in the Prospectus or are not
materially significant in relation to the businesses of the Company and its
subsidiaries; all of the leases and subleases material to the business of the
Company and each of its subsidiaries or under which the Company or a
subsidiary holds properties described in the Prospectus are in full force and
effect; and neither the Company nor any subsidiary has received any notice of
any material claim of any sort which has been asserted by anyone adverse to
the rights of the Company or any subsidiary as owner or as lessee or
sublessee under any of the leases or subleases mentioned above, or affecting
or questioning the rights of the Company or any subsidiary to the continued
possession of the leased or subleased premises under any such lease or
sublease.
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(l) Neither the Company nor any subsidiary is in default in the
observance of any provision of its Certificate of Incorporation, by-laws or
other organizational documents, or in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
it is a party or by which it or any of its properties may be bound, the
effect of which could be materially adverse to the condition (financial or
otherwise), earnings, affairs, business or prospects of the Company or any
such subsidiary.
(m) The execution and delivery of this Agreement and the
Indenture, the issuance and delivery of the Debentures, the consummation of
the transactions contemplated herein and in the Registration Statement and
the compliance with the terms of this Agreement have been duly authorized by
all necessary corporate action and will not result in any violation of the
Certificate of Incorporation or by-laws of the Company, and will not conflict
with or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company under
any contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which the Company is a party or by which the
Company, or any of its properties, is bound, or any existing applicable law,
rule, regulation, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of its properties.
(n) No approval, authorization or consent of any court,
governmental authority or agency having jurisdiction over the Company is
required in connection with the issuance and delivery of the Debentures in
accordance with the terms of this Agreement and the Indenture, except such as
may be required under the Act, the Trust Indenture Act and state securities
or Blue Sky laws.
(o) Except as disclosed in the Registration Statement, there is no
action, suit or proceeding before or by any court or governmental agency or
body, domestic or foreign, or any arbitrator or arbitration panel, now
pending or, to the knowledge of the Company, threatened against or affecting
the Company or any of its subsidiaries which could result in any material
adverse change to the condition (financial or otherwise), earnings, affairs,
business or prospects of the Company or any such subsidiary; and there is no
decree, judgment or order of any kind in existence against or restraining the
Company or any of its subsidiaries, or any of their respective officers,
employees or directors, from taking any actions of any kind in connection
with the business of the Company or any such subsidiary.
(p) The Company and each of its subsidiaries own or possess or
have obtained all material governmental licenses, permits, consents, orders,
approvals and other authorizations necessary to lease or own, as the case may
be, and to operate their properties and to carry on their business as
presently conducted, and neither the Company nor any subsidiary has received
any notice of proceedings related to revocation or modification of any such
licenses, permits, consents, orders, approvals or authorizations which singly
or in the aggregate, if the subject of an unfavorable ruling or finding,
would be materially adverse to
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the condition (financial or otherwise), earnings, affairs, business or
prospects of the Company or any subsidiary.
(q) The Company and each of its subsidiaries are in compliance
with all applicable federal, state and local laws and regulations that
regulate or are concerned in any way with the business of the Company or any
of its subsidiaries, where the effect of the failure to comply would be
materially adverse to the condition (financial or otherwise), earnings,
affairs, business or prospects of the Company or any subsidiary.
(r) The Company and each of its subsidiaries own or possess, or
can acquire on reasonable terms, trademarks, service marks and trade names
necessary to conduct the business now operated by them, and neither the
Company nor any of its subsidiaries has received any notice of infringement
of or conflict with asserted rights of others with respect to any trademark,
service marks or trade names which, singly or in the aggregate, if the
subject of any unfavorable decision, ruling or finding, would be materially
adverse to the condition (financial or otherwise), earnings, affairs,
business or prospects of the Company or any subsidiary.
(s) The Company has filed all tax returns required to be filed and
is not in default in the payment of any taxes which were payable pursuant to
said returns or any assessments with respect thereto, other than any tax
returns which the Company is contesting in good faith or which are not
material to the Company.
(t) This Agreement has been duly executed and delivered by the
Company.
(u) The Company is not and does not intend to conduct
businesses in a manner in which it would become an "investment company" as
defined in Section 3(a) of the Investment Company Act of 1940, as amended
(the "Investment Company Act").
(v) The Company has timely filed all reports required to be filed
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since June 30, 1994.
(w) No labor dispute with the employees of the Company or any of
its subsidiaries exists or is threatened or imminent that could result in a
material adverse change in the condition (financial or otherwise), earnings,
affairs, business or prospects of the Company or any of its subsidiaries,
except as described in or contemplated by the Prospectus.
(x) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which
they are engaged; neither the Company nor any such subsidiary has been
refused any insurance coverage sought or applied for; and neither the Company
nor any such subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely affect the
condition (financial or otherwise),
11
earnings, affairs, business or prospects of the Company and its subsidiaries,
except as described in or contemplated by the Prospectus.
(y) No subsidiary of the Company is currently prohibited, directly
or indirectly, from paying any dividends to the Company, from making any
other distribution on such subsidiary's capital stock, from repaying to the
Company any loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary's property or assets to the Company or
any other subsidiary of the Company, except as described in or contemplated
by the Prospectus.
(z) Neither the Company nor any of its subsidiaries is in
violation of any federal or state law or regulation relating to occupational
safety and health or to the storage, handling or transportation of hazardous
or toxic materials and the Company and its subsidiaries have received all
permits, licenses or other approvals required of them under applicable
federal and state occupational safety and health and environmental laws and
regulations to conduct their respective businesses, and the Company and each
such subsidiary is in compliance with all terms and conditions of any such
permit, license or approval, except any such violation of law or regulation,
failure to receive required permits, licenses or other approvals or failure
to comply with the terms and conditions of such permits, licenses or
approvals which would not, singly or in the aggregate, result in a material
adverse change in the condition (financial or otherwise), earnings, affairs,
business or prospects of the Company and its subsidiaries, except in each
case as described in or contemplated by the Prospectus.
(aa) Except for the shares of capital stock of each of the
subsidiaries owned by the Company and except for shares of Western Pacific
Airlines, Inc. and LAXCA owned by the Company, neither the Company nor any
subsidiary owns any shares of stock or any other equity securities of any
corporation or has any equity interest in any firm, partnership, association
or other entity, except as described in or contemplated by the Prospectus.
(bb) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that
(1) transactions are executed in accordance with management's general or
specific authorizations; (2) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (3) access to
assets is permitted only in accordance with management's general or specific
authorization; and (4) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages, liabilities and expenses
whatsoever (including any investigation, legal or other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted) to which they, or any of them, may become
subject, arising out of or based upon any untrue statement or alleged untrue
statement of a material
12
fact contained in any preliminary prospectus or the Registration Statement or
the Prospectus or in any amendment or supplement thereto or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
insofar as such losses, claims, damages, liabilities or expenses arise out of
or are based upon any such untrue statement or omission or allegation thereof
which has been made therein or omitted therefrom in reliance upon and in
conformity with information relating to such Underwriter furnished in writing
to the Company by or on behalf of any Underwriter expressly for use therein;
PROVIDED however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages or liabilities
purchased Debentures, or any person controlling such Underwriter, if a copy of
the Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or
on behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
Debentures to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage or liability.
(b) If any action or claim shall be brought against any
Underwriter or any person controlling such Underwriter, in respect of which
indemnity may be sought against the Company, such Underwriter shall promptly
notify the Company in writing, and the Company shall assume the defense
thereof, including the employment of counsel and payment of all fees and
expenses. Any Underwriter or any such person controlling such Underwriter
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Underwriter or such controlling person unless
(i) the Company has agreed in writing to pay such fees and expenses, (ii) the
Company has failed to assume the defense and employ counsel, or (iii) the
named parties to any such action (including any impleaded party) included
such Underwriter or controlling person and the Company and such Underwriter
or controlling person shall have been advised by such counsel that there may
be one or more legal defenses available to it which are different from or
additional to those available to the Company and which may also result in a
conflict of interest (in which case if such Underwriter or controlling person
notifies the Company, the Company shall not have the right to assume the
defense of such action on behalf of such Underwriter or controlling person,
it being understood, however, that the Company shall not, in connection with
any one such action or separate but substantially similar or related actions
in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys for all such Underwriters and controlling
persons, which firm shall be designated in writing by the Underwriters). The
Company shall not be liable for any settlement or any such action effected
without the written consent of the Company, but if settled with the written
consent of the Company, or if there shall be a final judgment for the
plaintiff in any such action and the time for filing all appeals has expired,
the Company agrees to indemnify and hold harmless any Underwriter and any
such controlling person from and against any loss or liability by reason of
such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and any person controlling the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act to the
same extent as the foregoing indemnity from the Company to each Underwriter,
but only with respect to information relating to such Underwriter furnished
in writing to the Company by or on behalf of such Underwriter expressly for
use in the Registration Statement, the Prospectus or any preliminary
prospectus. If any action or claim shall be brought or asserted against the
Company, any of its directors, any such officer, or any such controlling
person based on the Registration Statement, the
13
Prospectus or any preliminary prospectus and in respect of which indemnity
may be sought against any Underwriter, such Underwriter shall have the rights
and duties given to the Company pursuant to Section 7(b) hereof (except that
if the Company shall have assumed the defense thereof, such Underwriter shall
not be required to do so, but may employ separate counsel therein and
participate in the defense thereof but the fees and expenses of such counsel
shall be at the expense of such Underwriter), and the Company, its directors,
any such officers, and any such controlling person shall have the rights and
duties given to the Underwriters by Section 7(b) hereof.
(d) (i) If the indemnification of the Underwriters, the Company,
its directors, its officers who sign the Registration Statement or their
respective controlling persons provided for in this Section 7 is unavailable
as a matter of law to the Underwriters, the Company or such directors,
officers or controlling persons, as the case may be, in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then
the Underwriters, or the Company, as the case may be, in lieu of indemnifying
such indemnified party thereunder, shall contribute to the amount paid or
payable by damages, liabilities or expenses (A) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Underwriters from the offering of the Debentures or (B) if the allocation
provided by clause (A) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (A) above but also the relative fault of the Company
and the Underwriters in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The respective relative
benefits received by the Company and the Underwriters shall be deemed to be
in the same proportion in the case of the Company, as the total price paid to
the Company for the Debentures by the Underwriters (net of underwriting
discount but before deducting expenses), and in the case of the Underwriters
as the underwriting discount received by them bears to the total of such
amounts paid to the Company and received by the Underwriters as underwriting
discount, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company and the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or by
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(ii) The Company and the Underwriters agree that the
determination of contribution pursuant to Section 7(d)(i) based on pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph would not be just and equitable (even if the several Underwriters
were treated as one entity for such purpose). The amount paid or payable by
an indemnified party as a result of the losses, claims, damages, liabilities
and expenses referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth in this Section 7,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the
14
Debentures underwritten by it and distributed to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11 (f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 7 are
several in proportion to the number of Firm Debentures set forth opposite
their respective names in Schedule I to this Agreement and not joint.
(e) The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company set forth in
this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter
or any person controlling any Underwriter, the Company or its directors or
officers (or any person controlling the Company), (ii) acceptance of any
Debentures and payment therefor hereunder and (iii) any termination of this
Agreement. A successor or assign of an Underwriter, the Company or its
directors or officers, and their legal and personal representatives (or of
any person controlling an Underwriter or the Company) shall be entitled to
the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 7.
8. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase the Firm Debentures hereunder are
subject to the following conditions:
(a) That the Registration Statement shall have become effective
not later than 4:00 p.m., Chicago time, on the date hereof, or at such later
date and time as shall be consented to in writing by the Underwriters, and,
if the Underwriters and the Company have elected to rely upon Rule 430A, the
price of the Debentures and any price-related or other information previously
omitted from the effective Registration Statement pursuant to such Rule 430A
shall have been transmitted to the Commission for filing pursuant to Rule
424(b) within the prescribed time period, and on or prior to the Closing
Date, the Company shall have provided evidence satisfactory to the
Underwriters of such timely filing, or a post-effective amendment providing
such information shall have been promptly filed and declared effective in
accordance with the requirements of Rule 430A.
(b) That subsequent to the effective date of the Registration
Statement, (i) there shall not have occurred any change, or any development
involving a prospective change, in or affecting particularly the business or
properties of the Company not contemplated by the Prospectus, which, in the
Representatives' opinion, would materially adversely affect the market for
the Debentures or make it impracticable or inadvisable to proceed with the
offering or the delivery of the Debentures, as contemplated herein and in the
Prospectus, or to attempt to enforce contracts for the purchase of
Debentures, and (ii) the business and operations of the Company shall not
have been adversely affected by strike, fire, flood, accident or other
calamity (whether or not insured).
15
(c) The Underwriters shall have received from XxXxxxx, XxXxxxx &
Xxxxx, counsel for the Company, a favorable opinion dated the Closing Date
and satisfactory to the Underwriters and the Underwriters' counsel to the
effect that:
(i) the Company and each of its subsidiaries listed in Exhibit
21 to the Registration Statement (the "Subsidiaries") have been duly
organized and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation and
are duly qualified to transact business as foreign corporations and
are in good standing under the laws of all other jurisdictions where
the ownership or leasing of their respective properties or the
conduct of their respective businesses requires such qualification,
except where the failure to be so qualified would not have a material
adverse effect on the condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole;
(ii) the Company and each of the Subsidiaries have the corporate
power to own or lease their respective properties and conduct their
respective businesses as described in the Registration Statement and
the Prospectus, and the Company has the corporate power to enter into
this Agreement and to carry out all of the terms and provisions
hereof to be carried out by it;
(iii) the issued shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and are owned beneficially by the Company free
and clear of any perfected security interests or, to the best
knowledge of such counsel, any other security interests, liens,
encumbrances, equities or claims;
(iv) the Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus; all of the issued
shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable, have been issued
in compliance with all applicable federal and state securities laws
or any liability of the Company resulting from noncompliance with any
such laws has been terminated and were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or
purchase securities; the Firm Debentures have been duly authorized by
all necessary corporate action of the Company and, when issued and
delivered to and paid for by the Underwriters pursuant to this
Agreement, will be validly issued, fully paid and nonassessable; the
Debentures have been duly listed on the AMEX; no holders of
outstanding shares of capital stock of the Company are entitled as
such to any preemptive or other rights to subscribe for any of the
Debentures; and no holders of securities of the Company are entitled
to have such securities registered under the Registration Statement;
(v) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and legally
binding obligation of the Company enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally,
16
and by general principles of equity, except that such counsel need
express no opinion as to the enforceability of the indemnity and
contribution provisions of Section 7 of this Agreement.
(vi) The Debentures have been duly and validly authorized,
executed and delivered by the Company and when delivered and paid for
pursuant hereto will constitute valid and binding obligations of the
Company entitled to the benefits of the Indenture, enforceable
against the Company in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally
and by general principles of equity, and conform in all material
respects to the description thereof in the Prospectus.
(vii) The Indenture has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally and by general principles of equity;
conforms in all material respects to the description thereof
in the Prospectus; and has been duly qualified under the Trust
Indenture Act.
(viii) No authorization, approval, order or consent of any
governmental authority or agency is required for the valid sale of
the Debentures, except such as may be required under the Act, the
Trust Indenture Act or the rules and regulations of the Commission
thereunder or state securities laws as to which such counsel need
express no opinion.
(ix) The issuance and sale of the Debentures, the execution,
delivery and performance of this Agreement and the Indenture by the
Company and the consummation of the transactions contemplated hereby
and thereby will not conflict with or result in a breach of any of
the provisions of, or constitute a default under (A) the Company's
Certificate of Incorporation or by-laws or any indenture, mortgage,
deed of trust or other instrument or agreement known to such counsel
to which the Company is a party or by which the Company is bound or
to which any of its properties is subject or (B) any order known to
such counsel, rule or regulation applicable to the Company of any
court or other governmental authority or body having jurisdiction
over the Company or any of its properties.
(x) The Registration Statement has become effective under the
Act, and, to the knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are pending
or contemplated under the Act.
17
(xi) The Registration Statement and the Prospectus and any
supplements or amendments thereto (other than the financial
statements and related schedules therein, as to which such counsel
need express no opinion) comply in all material respects as to form
with the requirements of the Act, the Trust Indenture Act and the
rules and regulations of the Commission thereunder and nothing has
come to the attention of such counsel that would cause such counsel
to believe that the Registration Statement, at the time it became
effective, at the time this Agreement was executed and at the Closing
Date, included or includes any untrue statement of a material fact or
omitted or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(xii) The statements in the Prospectus in the
sections captioned "Management -- Employment Agreements," "Certain
Transactions," "Description of Debentures," "Certain Federal Income
Tax Consequences" and "Description of Capital Stock" in each case
insofar as such statements reflect a summary of the material legal
matters or the documents referred to therein, fairly and accurately
present the information called for by the Act and the applicable
rules and regulations promulgated thereunder.
(xiii) To the knowledge of such counsel there are no statutes
or regulations, provisions of the New York Corporation Law or any
pending or threatened litigation or governmental proceedings against
the Company required to be described in the Prospectus which are not
so described, nor, to the knowledge of such counsel, are there any
contracts or documents required to be described in or filed as a part
of the Registration Statement which are not described or filed as
required.
In expressing such opinions, such counsel may, as to matters of
fact, rely on certificates of officers of the Company and of public
officials. With respect to subparagraph (xii) above and the opinion
regarding the statements in the Prospectus in the section captioned
"Certain Federal Income Tax Consequences," such counsel may rely on an
opinion of counsel satisfactory in form and scope to counsel for the
Underwriters provided that a copy of any such opinion is delivered to
the Representatives and to counsel for the Underwriters and the
foregoing opinion states that counsel knows of no reason the
Underwriters are not entitled to rely upon the opinion of such other
counsel.
(d) That the Underwriters shall have received on the Closing Date a
favorable opinion dated the Closing Date from Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx,
counsel for the Underwriters, as to such matters as the Underwriters may
reasonably require.
18
(e) That the Underwriters shall have received letters addressed to
the Underwriters and dated the date hereof and the Closing Date from Deloitte
& Touche, LLP independent public accountants for the Company, substantially
in the forms heretofore approved by the Underwriters and counsel for the
Underwriters.
(f) That (i) no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there
shall not have been any change in the capital stock of the Company nor any
material increase in the short or long-term debt of the Company from that set
forth or contemplated in the Registration Statement; (iii) there shall not
have been, since the respective dates as to which information is given in the
Registration Statement and the Prospectus, except as may otherwise be set
forth or contemplated in the Registration Statement and the Prospectus, any
material adverse change in the financial condition or results of operations
of the Company; (iv) the Company shall not have incurred any material
liabilities or obligations, direct or contingent (whether or not in the
ordinary course of business), other than those reflected in the Registration
Statement, and (v) all of the representations and warranties of the Company
contained in this Agreement shall be true and correct on and as of the date
hereof and the Closing Date as if made on and as of each such date, and the
Underwriters shall have received a certificate, dated the Closing Date and
signed by the Chairman of the Board and Chief Executive Officer and the
President and Chief Operating Officer (or such other officers as are
acceptable to the Underwriters) to the effect set forth in this Section 8(f)
and in Section 8(h) hereof.
(g) Within 24 hours after the Registration Statement becomes
effective, or within such longer period as to which the Underwriters shall
have consented, the Debentures shall have been qualified for sale or exempted
from such qualification under the securities laws of such jurisdictions
(subject to Section 5(vii) hereof) as the Underwriters shall have designated
prior to the time of execution of this Agreement and such qualification or
exemption shall continue in effect to and including the Closing Date.
(h) That the Company shall not have failed at or prior to the
Closing Date to have performed or complied in all material respects with any
of the agreements herein contained and required to be performed or complied
with by it at or prior to the Closing Date.
The several obligations of the Underwriters to purchase Option
Debentures hereunder are subject to the satisfaction on and as of the Option
Closing Date of the conditions set forth in paragraphs (a) through (h);
except that the opinions called for in paragraphs (c) and (d) shall be
revised to reflect the sale of Option Debentures and shall be dated the
Option Closing Date, if different from the Closing Date.
9. EFFECTIVE DATE OF AGREEMENT.
(a) This Agreement shall become effective when notice of the
effectiveness of the Registration Statement has been released by the
Commission. Until such time as this
19
Agreement shall have become effective, it may be terminated by the Company by
notifying the Underwriters, or by the Underwriters by notifying the Company.
(b) If any one or more of the Underwriters shall fail or refuse to
purchase Firm Debentures which it or they have agreed to purchase under this
Agreement and the aggregate principal amount of Firm Debentures which such
defaulting Underwriter or Underwriters agreed but failed or refused to
purchase is not more than one-tenth of the aggregate principal amount of Firm
Debentures, each non-defaulting Underwriter shall be obligated, severally, in
the proportion which the principal amount of Firm Debentures set forth
opposite its name in Schedule I bears to the aggregate principal amount of
Firm Debentures set forth opposite the names of all non-defaulting
Underwriters, to purchase the Firm Debentures which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase. If any
Underwriter or Underwriters shall fail or refuse to purchase Firm Debentures
and the aggregate principal amount of Firm Debentures with respect to which
such default occurs is more than one-tenth of the aggregate principal amount
of Firm Debentures and arrangements satisfactory to the Underwriters and the
Company for the purchase of such Firm Debentures are not made within 36 hours
after such default, this Agreement will terminate without liability on the
part of any non-defaulting Underwriter or the Company. In any such case which
does not result in termination of this Agreement, either the Underwriters or
the Company shall have the right to postpone the Closing Date, but in no
event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and the Prospectus or any other documents or
arrangements may be effected. Any action taken under this paragraph shall
not relieve any defaulting Underwriter from liability in respect of any such
default of any such Underwriter under this Agreement.
(c) Any notice under this Section 9 may be made by telecopy or
telephone but shall be subsequently confirmed by letter.
10. TERMINATION OF AGREEMENT. The Underwriters shall have the right to
terminate this Agreement at any time prior to the Closing Date (and with
respect to the Option Debentures, the Option Closing Date) by notice to the
Company from the Underwriters, without liability (other than with respect to
Section 7) on the Underwriters' part to the Company if, on or prior to such
date, (i) the Company shall have failed, refused or been unable to perform in
any material respect any agreement on its part to be performed hereunder,
(ii) any other condition to the obligations of the Underwriters hereunder as
provided in Section 8 is not fulfilled when and as required in any material
respect, (iii) trading in securities generally on the New York Stock
Exchange, the AMEX or the NASD Automated Quotation System shall have been
suspended or materially limited, or minimum prices shall have been
established on such exchange or system by the Commission, or by such exchange
or system or other regulatory body or governmental authority having
jurisdiction, (iv) a general banking moratorium shall have been declared by
Federal, New York or Illinois State authorities, (v) there is a material
outbreak or escalation of armed hostilities involving the United States on or
after the date hereof, or if there has been a declaration by the United
States of a national emergency or war, the effect of which shall be, in the
Underwriters' reasonable judgment, to make it inadvisable or impracticable to
proceed with the public offering or delivery of the Debentures on the terms
and in the manner contemplated in the Prospectus as supplemented or amended
prior to the occurrence of such
20
event, (vi) in the Underwriters' reasonable opinion any material adverse
change shall have occurred since the respective dates as of which information
is given in the Registration Statement or the Prospectus (as supplemented or
amended prior to the occurrence of such event) in the condition (financial or
other) of the Company whether or not arising in the ordinary course of
business other than as set forth in the Prospectus as supplemented or amended
prior to the occurrence of such event, or (vii) there shall have been such a
material adverse change in general economic, political or financial
conditions or if the effect of international conditions on the financial
markets in the United States shall be such as, in the Underwriters'
reasonable opinion, makes it inadvisable or impracticable to proceed with the
delivery of the Debentures as contemplated hereby. Notice of such
cancellation shall be given to the Company by telecopy or telephone but shall
be subsequently confirmed by letter.
11. MISCELLANEOUS.
(a) Except as otherwise provided in Sections 9 and 10 hereof,
notice given pursuant to any of the provisions of this Agreement shall be in
writing and shall be delivered (a) if to the Company, at the office of the
Company at 0000 XxXxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000. Attention:
Chairman and Chief Executive Officer, or (b) if to the Underwriters, at the
offices of EVEREN Securities, Inc., 00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxx, or in any case to such
other address as the person to be notified may have requested in writing.
(b) This Agreement is made solely for the benefit of the several
Underwriters, the Company, their directors and officers and other controlling
persons referred to in Section 7 hereof, and their respective successors and
assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" as used in this
Agreement shall not include a purchaser from any of the several Underwriters
of any of the Debentures in his status as such purchaser.
12. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois.
21
13. COUNTERPARTS. This Agreement may be signed in various counterparts
which together shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the
agreement among the Company and the several Underwriters.
Very truly yours,
MERCURY AIR GROUP, INC.
By:__________________________________
Xxxxxxx Xxxx
Chairman and Chief Executive Officer
Accepted and delivered as of the date first written above.
EVEREN Securities, Inc.
Xxxxxxx, Xxxxxx & Co.
By: EVEREN SECURITIES, INC.
By:___________________________
22
MERCURY AIR GROUP, INC.
SCHEDULE I
UNDERWRITERS
PRINCIPAL AMOUNT
NAME OF FIRM DEBENTURES
---- ------------------
EVEREN Securities, Inc . . . . . . . . . . . . . .
Xxxxxxx, Xxxxxx & Co. . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . $25,000,000
-----------
23
