EXHIBIT 1
$60,000,000
CONVERSE INC.
___% Convertible Subordinated Notes Due 2004
UNDERWRITING AGREEMENT
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May , 1997
XXXXX XXXXXX INC.
XXXXXX, READ & CO. INC.
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
XXXXXXX, SACHS & CO.
c/o XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Converse Inc., a Delaware corporation (the "Company"), proposes,
upon the terms and conditions set forth herein, to issue and sell $60,000,000
aggregate principal amount of its ___% Convertible Subordinated Notes due 2004
(the "Firm Notes") to Xxxxx Xxxxxx Inc., Xxxxxx, Read & Co. Inc., Xxxxxxxxx,
Lufkin & Xxxxxxxx Securities Corporation and Xxxxxxx, Sachs & Co. (the
"Underwriters"). The Company also proposes to issue and sell to the
Underwriters, upon the terms and conditions set forth in Section 2 hereof, up to
an additional $9,000,000 aggregate principal amount of its _____% Convertible
Subordinated Notes due 2004 (the "Additional Notes"). The Firm Notes and the
Additional Notes are hereinafter collectively referred to as the "Notes." The
Notes will be issued pursuant to the provisions of an Indenture to be dated as
of May ___, 1997 (the "Indenture") between the Company and First Union National
Bank, as Trustee (the "Trustee"). The Company's common stock, without par value,
is hereinafter referred to as the "Common Stock."
The Company wishes to confirm as follows its agreement with you
in connection with the several purchases of the Notes by the Underwriters.
1. Registration Statement and Prospectus. The Company has
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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-3 under the Act
(the "registration statement"), including a prospectus subject to completion
relating to the
Notes and the shares of Common Stock issuable upon conversion of the Notes. The
term "Registration Statement" as used in this Agreement means the registration
statement (including all financial schedules and exhibits), as amended at the
time it becomes effective, or, if the registration statement became effective
prior to the execution of this Agreement, as supplemented or amended prior to
the execution of this Agreement. If it is contemplated, at the time this
Agreement is executed, that a post-effective amendment to the registration
statement will be filed and must be declared effective before the offering of
the Notes may commence, the term "Registration Statement" as used in this
Agreement means the registration statement as amended by said post-effective
amendment. If an abbreviated registration statement is prepared and filed with
the Commission in accordance with Rule 462(b) under the Act (an "Abbreviated
Registration Statement"), the term "Registration Statement" as used in this
Agreement includes the Abbreviated Registration Statement. The term "Prospectus"
as used in this Agreement means the prospectus in the form included in the
Registration Statement, or, if the prospectus included in the Registration
Statement omits information in reliance on Rule 430A under the Act and such
information is included in a prospectus filed with the Commission pursuant to
Rule 424(b) under the Act, the term "Prospectus" as used in this Agreement means
the prospectus in the form included in the Registration Statement as
supplemented by the addition of the Rule 430A information contained in the
prospectus filed with the Commission pursuant to Rule 424(b). The term
"Prepricing Prospectus" as used in this Agreement means the prospectus subject
to completion in the form included in the registration statement at the time of
the initial filing of the registration statement with the Commission, and as
such prospectus shall have been amended from time to time prior to the date of
the Prospectus. Any reference in this Agreement to the registration statement,
the Registration Statement, any Prepricing Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Act, as of the date of the
registration statement, the Registration Statement, such Prepricing Prospectus
or the Prospectus, as the case may be, and any reference to any amendment or
supplement to the registration statement, the Registration Statement, any
Prepricing Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after such date under the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder (the
"Exchange Act") which, upon filing, are incorporated by reference therein, as
required by paragraph (b) of Item 12 of Form S-3. As used herein, the term
"Incorporated Documents" means the documents which at the time are incorporated
by reference in the registration statement, the Registration Statement, any
Prepricing Prospectus, the Prospectus, or any amendment or supplement
thereto.
2. Agreements to Sell and Purchase. The Company hereby agrees,
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subject to all the terms and conditions set forth herein, to issue and sell to
each Underwriter and, upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and not jointly,
to purchase from the Company, at a purchase price of ___% of the principal
amount thereof, the principal amount of Notes set forth opposite the name of
such Underwriter in Schedule I hereto (or such principal amount of Notes
increased as set forth in Section 10 hereof).
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The Company also agrees, subject to all the terms and conditions
set forth herein, to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions set forth herein, the Underwriters shall
have the right to purchase from the Company, pursuant to an option (the
"over-allotment option") which may be exercised at any time and from time to
time prior to 9:00 P.M., New York City time, on the 30th day after the date of
the Prospectus (or, if such 30th day shall be a Saturday or Sunday or a holiday,
on the next business day thereafter when the New York Stock Exchange is open for
trading), up to $9,000,000 aggregate principal amount of Additional Notes. The
purchase price of any Additional Notes which the Underwriters may elect to
purchase shall be the same as the purchase price of the Firm Notes, plus accrued
interest, if any, from the date of issuance of the Firm Notes to the date of
delivery of and payment for the Additional Notes. Additional Notes may be
purchased only for the purpose of covering over-allotments made in connection
with the offering of the Firm Notes. Upon any exercise of the over-allotment
option, each Underwriter, severally and not jointly, agrees to purchase from the
Company the principal amount of Additional Notes which bears the same proportion
to the aggregate principal amount of Additional Notes to be purchased by the
Underwriters as the principal amount of Firm Notes set forth opposite the name
of such Underwriter in Schedule I hereto (or such principal amount of Firm Notes
increased as set forth in Section 10 hereof) bears to the aggregate principal
amount of Firm Notes.
3. Terms of Public Offering. The Company has been advised by you
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that you propose to make a public offering of your respective portions of the
Notes as soon after the Registration Statement and this Agreement have become
effective as in your judgment is advisable and initially to offer the Notes upon
the terms set forth in the Prospectus.
4. Delivery of the Notes and Payment Therefor. Delivery to you of
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and payment for the Firm Notes shall be made at the office of Xxxxx Xxxxxx Inc.,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, at 10:00 A.M., New York City time, on
________,1997 (the "Closing Date"). The place of closing for the Firm Notes and
the Closing Date may be varied by agreement between you and the Company.
Delivery to you of and payment for any Additional Notes to be
purchased by you shall be made at the aforementioned office of Xxxxx Xxxxxx Inc.
at such time on such date (the "Option Closing Date"), which may be the same as
the Closing Date but shall in no event be earlier than the Closing Date nor
earlier than two nor later than ten business days after the giving of the notice
hereinafter referred to, as shall be specified in a written notice from you to
the Company of your determination to purchase a number, specified in such
notice, of Additional Notes. The place of closing for any Additional Notes and
the Option Closing Date for such Notes may be varied by agreement between you
and the Company.
The Firm Notes and any Additional Notes which you may elect to
purchase will be delivered to you for your several accounts against payment of
the purchase price therefor in immediately available funds and registered in
such names and in such denominations as you shall request prior to 9:30 A.M.,
New York City time, on the second business day
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preceding the Closing Date or any Option Closing Date, as the case may be. The
Notes to be delivered to you shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be.
5. Agreements of the Company. The Company agrees with each of you as
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follows:
(a) If, at the time this Agreement is executed and delivered, it
is necessary for the Registration Statement or a post-effective amendment
thereto or any Abbreviated Registration Statement to be declared effective
before the offering of the Notes may commence, the Company will endeavor to
cause the Registration Statement or such post-effective amendment to become
effective as soon as possible and will advise you promptly and, if requested by
you, will confirm such advice in writing, when the Registration Statement or
such post-effective amendment has become effective.
(b) The Company will advise you promptly and, if requested by
you, will confirm such advice in writing: (i) of any request by the Commission
for amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectus or for additional information; (ii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Notes for
offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) within the period of time referred to in paragraph (f)
below, of any change in the Company's condition (financial or other), business,
prospects, properties, net worth or results of operations, or of the happening
of any event, which makes any statement of a material fact made in the
Registration Statement or the Prospectus (as then amended or supplemented)
untrue or which requires the making of any additions to or changes in the
Registration Statement or the Prospectus (as then amended or supplemented) in
order to state a material fact required by the Act or the regulations thereunder
to be stated therein or necessary in order to make the statements therein not
misleading, or of the necessity to amend or supplement the Prospectus (as then
amended or supplemented) to comply with the Act or any other law. If at any time
the Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible time.
(c) The Company will furnish to you, without charge (i) five
signed copies of the registration statement as originally filed with the
Commission and of each amendment thereto, including financial statements and all
exhibits to the registration statement, (ii) such number of conformed copies of
the registration statement as originally filed and of each amendment thereto,
but without exhibits, as you may reasonably request, (iii) such number of copies
of the Incorporated Documents, without exhibits, as you may reasonably request,
and (iv) five copies of the exhibits to the Incorporated Documents.
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(d) The Company will not file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus or, prior to the
end of the period of time referred to in the first sentence in subsection (f)
below, file any document which, upon filing becomes an Incorporated Document, of
which you shall not previously have been advised or to which, after you shall
have received a copy of the document proposed to be filed, you shall reasonably
object.
(e) Prior to the execution and delivery of this Agreement, the
Company has delivered to you, without charge, in such quantities as you have
requested, copies of each form of the Prepricing Prospectus. The Company
consents to the use, in accordance with the provisions of the Act and with the
securities or Blue Sky laws of the jurisdictions in which the Notes are offered
by you and by dealers, prior to the date of the Prospectus, of each Prepricing
Prospectus so furnished by the Company.
(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion of
counsel for the Underwriters a Prospectus is required by the Act to be delivered
in connection with sales by any Underwriter or dealer, the Company will
expeditiously deliver to each Underwriter and each dealer, without charge, as
many copies of the Prospectus (and of any amendment or supplement thereto) as
you may reasonably request. The Company consents to the use of the Prospectus
(and of any amendment or supplement thereto) in accordance with the provisions
of the Act and with the securities or Blue Sky laws of the jurisdictions in
which the Notes are offered by the Underwriters and by all dealers to whom Notes
may be sold, both in connection with the offering and sale of the Notes and for
such period of time thereafter as the Prospectus is required by the Act to be
delivered in connection with sales by any Underwriter or dealer. If during such
period of time any event shall occur that in the judgment of the Company or in
the opinion of counsel for the Underwriters is required to be set forth in the
Prospectus (as then amended or supplemented) or should be set forth therein in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Prospectus (or to file under the Exchange Act any document which, upon
filing, becomes an Incorporated Document) in order to comply with the Act or any
other law, the Company will forthwith prepare and, subject to the provisions of
paragraph (d) above, file with the Commission an appropriate supplement or
amendment thereto (or to such document), and will expeditiously furnish to the
Underwriters and dealers a reasonable number of copies thereof. In the event
that the Company and you agree that the Prospectus should be amended or
supplemented, the Company, if requested by you, will promptly issue a press
release announcing or disclosing the matters to be covered by the proposed
amendment or supplement.
(g) The Company will cooperate with you and with your counsel in
connection with the registration or qualification of the Notes for offering and
sale by the Underwriters and by dealers under the securities or Blue Sky laws of
such jurisdictions as you may designate and will file such consents to service
of process or other documents necessary or appropriate in order to effect such
registration or qualification; provided that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now so
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qualified or to take any action which would subject it to service of process in
suits, other than those arising out of the offering or sale of the Notes, in any
jurisdiction where it is not now so subject.
(h) The Company will make generally available to its security
holders a consolidated earnings statement, which need not be audited, covering a
twelve month period commencing after the effective date of the Registration
Statement and ending not later than 15 months thereafter, as soon as reasonably
practicable after the end of such period, which consolidated earnings statement
shall satisfy the provisions of Section 11(a) of the Act and Rule 158
thereunder.
(i) During the period of five years hereafter, the Company will
furnish to you at the address specified in Section 13 hereof or at such other
address as you may specify (i) as soon as available, a copy of each report of
the Company mailed to stockholders or filed with the Commission, and (ii) from
time to time such other information concerning the Company as you may reasonably
request.
(j) If this Agreement shall terminate or shall be terminated
after execution pursuant to any provisions hereof (otherwise than pursuant to
the second paragraph of Section 10 hereof or by notice given by you terminating
this Agreement pursuant to Section 10 or Section 11 hereof) or if this Agreement
shall be terminated by you because of any failure or refusal on the part of the
Company to comply with the terms or fulfill any of the conditions of this
Agreement, the Company agrees to reimburse you for all out-of-pocket expenses
(including reasonable fees and expenses of your counsel) incurred by you in
connection herewith.
(k) The Company will apply the net proceeds from the sale of the
Notes substantially in accordance with the description set forth in the
Prospectus.
(l) If Rule 430A of the Act is employed, the Company will timely
file the Prospectus pursuant to Rule 424(b) under the Act and will advise you of
the time and manner of such filing.
(m) The Company will not sell, contract to sell or otherwise
dispose of any Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or grant any options or warrants to purchase
Common Stock, for a period of 90 days after the date hereof, without the prior
written consent of Xxxxx Xxxxxx Inc., except for sales to the Underwriters
pursuant to this Agreement and issuances of Common Stock upon conversion of the
Notes. The foregoing sentence shall not apply to (i) the issuance of shares of
Common Stock upon exercise of options outstanding under the Company's 1994 Stock
Option Plan, as amended and restated (the "1994 Plan") or the Company's 1995
Non-Employee Director Stock Option Plan (the "1995 Plan") and (ii) the grant of
options to purchase shares of Common Stock under the 1994 Plan or the 1995 Plan
in an aggregate amount not to exceed 1,000,000 shares.
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(n) The Company has furnished or will furnish to you "lock-up"
letters, in form and substance satisfactory to you, signed by the officers,
directors and stockholders listed on Schedule II hereto.
(o) Except as stated in this Agreement and in the Prepricing
Prospectus and Prospectus, the Company has not taken, nor will it take, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock or the Notes to facilitate the sale or resale of the Notes.
(p) The Company will use its best efforts to have the Notes and
the shares of Common Stock issuable upon conversion of the Notes listed, subject
to notice of issuance, on the New York Stock Exchange on or before the Closing
Date.
6. Representations and Warranties of the Company. The Company represents
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and warrants to each of you that:
(a) Each Prepricing Prospectus included as part of the
registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act, complied when
so filed in all material respects with the provisions of the Act. The Commission
has not issued any order preventing or suspending the use of any Prepricing
Prospectus.
(b) The Company and the transactions contemplated by this
Agreement meet the requirements for using Form S-3 under the Act. The
Registration Statement in the form in which it became or becomes effective and
also in such form as it may be when any post-effective amendment thereto shall
become effective and the Prospectus and any supplement or amendment thereto when
filed with the Commission under Rule 424(b) under the Act, complied or will
comply in all material respects with the provisions of the Act and will not at
any such times contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except that this representation and warranty does not
apply to (i) statements in or omissions from the Registration Statement or the
Prospectus made in reliance upon and in conformity with information relating to
you furnished to the Company in writing by you or on your behalf expressly for
use therein, or (ii) the Trustee's Statement of Eligibility and Qualification
(Form T-1) under the Trust Indenture Act of 1939, as amended (the "1939 Act").
(c) The Incorporated Documents heretofore filed, when they were
filed (or, if any amendment with respect to any such document was filed, when
such amendment was filed), conformed in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder, any
further Incorporated Documents so filed will, when they are filed, conform in
all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder; no such document when it was filed (or, if an
amendment with respect to any such document was filed, when such amendment was
filed), contained an untrue statement of
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a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading; and
no such further document, when it is filed, will contain an untrue statement of
a material fact or will omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading.
(d) The execution and delivery of, and the performance by the
Company of its obligations under, the Indenture have been duly and validly
authorized by the Company and, upon its execution and delivery by the Company
and assuming due execution and delivery by the Trustee, will be the valid and
legally binding agreement of the Company, enforceable against the Company in
accordance with its terms, subject to the qualification that the enforceability
of the Company's obligations under the Indenture may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and by general equitable
principles, and has been (or will have been) duly qualified under the 1939 Act
and the Indenture will conform to the description thereof in the Registration
Statement and the Prospectus.
(e) The execution and delivery of, and the performance by the
Company of its obligations under, the Notes have been duly authorized by the
Company and, when executed by the Company and authenticated by the Trustee in
accordance with the Indenture and delivered to you against payment therefor in
accordance with the terms hereof, will have been validly issued and delivered,
and will be the valid and legally binding obligations of the Company entitled to
the benefits of the Indenture and enforceable against the Company in accordance
with their terms, subject to the qualification that the enforceability of the
Company's obligations under the Notes may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights generally and by general equitable principles, and
the Notes will conform to the description thereof in the Registration Statement
and the Prospectus.
(f) All the outstanding shares of Common Stock of the Company
have been duly authorized and validly issued, are fully paid and nonassessable
and are free of any preemptive or similar rights; the shares of Common Stock
issuable upon conversion of the Notes have been duly authorized and reserved for
issuance and, when delivered upon conversion of the Notes in accordance with the
terms of the Indenture, will have been validly issued and fully paid and will be
nonassessable and free of any preemptive or similar rights; and the capital
stock of the Company conforms to the description thereof in the Registration
Statement and the Prospectus.
(g) The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus, and is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does not have
a material adverse effect on the condition (financial or other), business,
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properties, net worth or results of operations of the Company and the
Subsidiaries (as hereinafter defined) taken as a whole (a "Material Adverse
Effect"); and Schedule III hereto sets forth (i) each such jurisdiction in which
the Company is required to be so registered and qualified, except where the
failure so to register or qualify does not have a Material Adverse Effect, and
(ii) the nature of the properties or business requiring such registration and
qualification.
(h) All the Company's subsidiaries (collectively, the
"Subsidiaries") are listed in an exhibit to the Company's Annual Report on Form
10-K which is incorporated by reference into the Registration Statement. Each
Subsidiary (other than Apex One, Inc., as to which no representation or warranty
is made) is a corporation duly organized, validly existing and in good standing
in the jurisdiction of its incorporation, with full corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectus, and is duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify does not have a Material Adverse Effect; all the
outstanding shares of capital stock of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable, and are owned
by the Company directly, or indirectly through one of the other Subsidiaries
(except that with respect to certain foreign Subsidiaries a nominal number of
shares of which is owned by qualified residents of countries in which such
Subsidiaries are located), free and clear of any lien, adverse claim, security
interest, equity, or other encumbrance (except the pledge to secure the
Company's obligations under the Credit Agreement (as defined in the
Prospectus)).
(i) There are no legal or governmental proceedings pending or, to
the knowledge of the Company, threatened, against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or to which
any of their respective properties is subject, that are required to be described
in the Registration Statement or the Prospectus but are not described as
required, and there are no agreements, contracts, indentures, leases or other
instruments that are required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration Statement or any
Incorporated Document that are not described or filed as required by the Act or
the Exchange Act.
(j) Neither the Company nor any of the Subsidiaries is in
violation of its certificate or articles of incorporation or by-laws, or other
organizational documents, or of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of the
Subsidiaries (except for violations that would not have a Material Adverse
Effect) or of any decree of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries or in default in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any agreement,
indenture, lease or other instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their respective
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properties may be bound (except where any such default or defaults would not
have a Material Adverse Effect).
(k) Neither the issuance and sale of the Notes, the issuance of
Common Stock upon conversion of the Notes, the execution, delivery or
performance of this Agreement or the Indenture by the Company nor the
consummation by the Company of the transactions contemplated hereby and thereby
(i) requires any consent, approval, authorization or other order of or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency or official (except such as may be required
for the registration of the Notes under the Act and the Exchange Act,
registration under the Act of the shares of Common Stock issuable upon
conversion of the Notes, qualification of the Indenture under the 1939 Act, and
compliance with the securities or Blue Sky laws of various jurisdictions, all of
which have been or will be effected in accordance with this Agreement) or
conflicts or will conflict with or constitutes or will constitute a breach of,
or a default under, the certificate or articles of incorporation or bylaws, or
other organizational documents, of the Company or any of the Subsidiaries or
(ii) conflicts or will conflict with or constitutes or will constitute a breach
of, or a default under, any agreement, indenture, lease or other instrument to
which the Company or any of the Subsidiaries is a party or by which any of them
or any of their respective properties may be bound, or violates or will violate
any statute, law, regulation or filing (except the securities or Blue Sky laws
of the various jurisdictions, as to which no representation or warranty is made)
or judgment, injunction, order or decree applicable to the Company or any of the
Subsidiaries or any of their respective properties, or will result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of the Subsidiaries pursuant to the terms of any
agreement or instrument to which any of them is a party or by which any of them
may be bound or to which any of the property or assets of any of them is
subject.
(l) The accountants, Price Waterhouse LLP and KPMG Peat Marwick
LLP, who have certified or shall certify the financial statements included or
incorporated by reference in the Registration Statement and the Prospectus (or
any amendment or supplement thereto) are independent public accountants as
required by the Act.
(m) The historical and pro forma financial statements, together
with related schedules and notes, included or incorporated by reference in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), comply as to form in all material respects with the requirements of
the Act. Such historical financial statements present fairly in accordance with
generally accepted accounting principles the consolidated financial position,
results of operations and cash flows of the Company and the Subsidiaries on the
basis stated in the Registration Statement at the respective dates or for the
respective periods to which they apply. Such historical statements and related
schedules and notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except as disclosed therein. The pro forma financial statements included or
incorporated by reference in the Registration Statement and the Prospectus (and
any amendment or supplement thereto), have been prepared on a basis consistent
with such historical financial
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statements, except for the pro forma adjustments specified therein, and give
effect to assumptions made on a reasonable basis and present fairly in
accordance with generally accepted accounting principles the historical and
proposed transactions contemplated by this Agreement and the Prospectus (and any
amendment or supplement thereto). The other financial and statistical
information and data included or incorporated by reference in the Registration
Statement and the Prospectus (and any amendment or supplement thereto) are
accurately presented and prepared on a basis consistent with such financial
statements and the books and records of the Company and the Subsidiaries.
(n) The execution and delivery of, and the performance by the
Company of its obligations under, this Agreement have been duly and validly
authorized by the Company, and this Agreement has been duly executed and
delivered by the Company and constitutes the valid and legally binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except as rights to indemnity and contribution hereunder may be limited by
federal or state securities laws and subject to the qualification that the
enforceability of the Company's obligations hereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights generally, and by general
equitable principles.
(o) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), neither
the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any change in the capital
stock, or material increase in the short-term debt or long-term debt, of the
Company or any of the Subsidiaries, or any material adverse change, or any
development involving or which may reasonably be expected to involve, a
prospective material adverse change, in the condition (financial or other),
business, net worth or results of operations of the Company and the
Subsidiaries, taken as a whole.
(p) With only such exceptions as would not have a Material
Adverse Effect, each of the Company and the Subsidiaries has good and, in the
case of real property, marketable title to all property (real and personal)
owned by it, free and clear of all liens, claims, security interests or other
encumbrances except such as are described in the Registration Statement and the
Prospectus or in a document filed as an exhibit to the Registration Statement
and all the property being held under lease by each of the Company and the
Subsidiaries is held by it under valid, subsisting and enforceable leases.
(q) The Company has not distributed and, prior to the later to
occur of (i) the Closing Date and (ii) completion of the distribution of the
Notes, will not distribute any offering material in connection with the offering
and sale of the Notes other than the Registration
-11-
Statement, the Prepricing Prospectus, the Prospectus or other materials, if any,
permitted by the Act.
(r) The Company and each of the Subsidiaries has such material
permits, licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own its respective properties and to
conduct its business in the manner described in the Prospectus, subject to such
qualifications as may be set forth in the Prospectus; the Company and each of
the Subsidiaries has fulfilled and performed all its material obligations with
respect to such permits and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the holder of any such permit,
subject in each case to such qualification as may be set forth in the
Prospectus; and, except as described in the Prospectus, none of such permits
contains any restriction that is materially burdensome to the Company or any of
the Subsidiaries.
(s) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(t) To the Company's knowledge, neither the Company nor any of
its Subsidiaries nor any employee or agent of the Company or any Subsidiary has
made any payment of funds of the Company or any Subsidiary or received or
retained any funds in violation of any law, rule or regulation, which payment,
receipt or retention of funds is of a character required to be disclosed in the
Prospectus.
(u) The Company and each of the Subsidiaries have filed all
material tax returns required to be filed, which returns are complete and
correct in all material respects, and neither the Company nor any Subsidiary is
in default in the payment of any taxes which were payable pursuant to said
returns or any assessments with respect thereto.
(v) Except as has been waived, no holder of any security of the
Company has any right to require registration of shares of Common Stock or any
other security of the Company because of the filing of the Registration
Statement or consummation of the transactions contemplated by this Agreement.
(w) The Company and the Subsidiaries own or possess all patents,
trademarks, trademark registrations, service marks, service xxxx registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Prospectus as being owned by them or any of them or necessary
for the conduct of their respective businesses as conducted on the date hereof,
and the Company is not aware of any claim to the contrary or any challenge by
any
-12-
other person to the rights of the Company and the Subsidiaries with respect
to the foregoing which would have a Material Adverse Effect.
(x) The Company has complied with all provisions of Florida
Statutes, Section 517.075, relating to issuers doing business with Cuba.
(y) The Company and each of the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are customary in the businesses in which they are
engaged; all policies of insurance and fidelity or surety bonds insuring the
Company or any of the Subsidiaries or their respective businesses, assets,
employees, officers and directors are in full force and effect; the Company and
the Subsidiaries are in compliance with the terms of such policies and
instruments in all material respects; and there are no material claims by the
Company or any of the Subsidiaries under any such policy or instrument as to
which any insurance company is denying liability or defending under a
reservation of rights clause.
(z) To the Company's knowledge, no labor problem exists with its
employees or with employees of any Subsidiary or is imminent that could
materially adversely affect the Company and the Subsidiaries, taken as a whole,
and the Company is not aware of any existing or imminent labor disturbance by
the employees of any of its or the Subsidiaries' principal suppliers,
contractors or customers that could be expected to have a Material Adverse
Effect.
(aa) The Company, and the Subsidiaries are (i) 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"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) 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. Neither the Company nor any of the Subsidiaries have been named
as a "potentially responsible party" under the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended ("CERCLA").
(bb) In the ordinary course of its business, the Company conducts
a periodic review of the effect of Environmental Laws on its and its
Subsidiaries business, operations and properties, 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, the Company has
reasonably concluded that such associated costs and liabilities would not have a
Material Adverse Effect.
-13-
(cc) Converse Europe, Inc. and Converse Japan, Inc. (the
"Material Subsidiaries") are the only significant subsidiaries of the Company,
as such term is defined in Rule 1-02 of Regulation S-X.
7. Indemnification and Contribution. (a) The Company agrees to
--------------------------------
indemnify and hold harmless each of the Underwriters and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Prepricing Prospectus or in the Registration
Statement or the Prospectus or in any amendment or supplement thereto, or
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with the information
relating to such Underwriter furnished in writing to the Company by or on behalf
of any Underwriter expressly for use in connection therewith; provided, however,
that the indemnification contained in this paragraph (a) with respect to any
Prepricing Prospectus shall not inure to the benefit of any Underwriter (or to
the benefit of any person controlling such Underwriter) on account of any such
loss, claim, damage, liability or expense arising from the sale of the Notes by
such Underwriter to any person if a copy of the Prospectus shall not have been
delivered or sent to such person within the time required by the Act and the
regulations thereunder, and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in such Prepricing
Prospectus was corrected in the Prospectus, provided that the Company has
delivered the Prospectus to the Underwriters in requisite quantity on a timely
basis to permit such delivery or sending. The foregoing indemnity agreement
shall be in addition to any liability which the Company may otherwise have.
(b) If any action, suit or proceeding shall be brought against
any Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the Company in writing and the Company
shall assume the defense thereof, including the employment of counsel and
payment of all fees and expenses. Such Underwriter or any such controlling
person shall have the right to employ separate counsel in any such action, suit
or proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless (i) the Company has agreed in writing to pay such fees
and expenses, (ii) the Company has failed to assume the defense and employ
counsel, or (iii) the named parties to any such action, suit or proceeding
(including any impleaded parties) include both such Underwriter or such
controlling person and the Company and such Underwriter or such controlling
person shall have been advised by its counsel in writing, with a copy furnished
to the Company, that representation of such indemnified party and the Company by
the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or
-14-
potential differing interests between them (in which case the Company shall not
have the right to assume the defense of such action, suit or proceeding on
behalf of such Underwriter or such controlling person). It is understood,
however, that the Company shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Underwriters and controlling persons not having actual or potential
differing interests with you or among themselves, which firm shall be designated
in writing by Xxxxx Xxxxxx Inc., and that all such fees and expenses shall be
reimbursed as they are incurred. The Company shall not be liable for any
settlement of any such action, suit or proceeding effected without its written
consent, but if settled with such written consent, or if there be a final
judgment for the plaintiff in any such action, suit or proceeding, the Company
agrees to indemnify and hold harmless any Underwriter, to the extent provided in
the preceding paragraph, and any such controlling person from and against any
loss, claim, damage, liability or expense by reason of such settlement or
judgment.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the same
extent as the foregoing indemnity from the Company to each Underwriter, but only
with respect to information relating to such Underwriter furnished in writing by
or on behalf of such Underwriter expressly for use in the Registration
Statement, the Prospectus or any Prepricing Prospectus, or any amendment or
supplement thereto. If any action, suit or proceeding shall be brought against
the Company, any of its directors, any such officer, or any such controlling
person based on the Registration Statement, the Prospectus or any Prepricing
Prospectus, or any amendment or supplement thereto, and in respect of which
indemnity may be sought against any Underwriter pursuant to this paragraph (c),
such Underwriter shall have the rights and duties given to the Company by
paragraph (b) above (except that if the Company shall have assumed the defense
thereof such Underwriter shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof, but the fees and
expenses of such counsel shall be at such Underwriter's expense), and the
Company, its directors, any such officer, and any such controlling person shall
have the rights and duties given to the Underwriters by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which the
Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Notes, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the
-15-
Company on the one hand and the Underwriters on the other in connection with the
statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or by the Underwriters on the other hand
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
a pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages,
liabilities and expenses referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
any claim or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price of the Notes
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective principal amounts of Firm Notes set forth opposite their names in
Schedule I hereto (or such principal amounts of Firm Notes increased as set
forth in Section 10 hereof) and not joint.
(f) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 7 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7
-16-
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, its directors or officers, or any
person controlling the Company, (ii) acceptance of any Notes and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor to
any Underwriter or any person controlling any Underwriter, or to the Company,
its directors or officers, or any person controlling the Company, shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 7.
8. Conditions of Underwriters' Obligations. The several
---------------------------------------
obligations of the Underwriters to purchase the Firm Notes hereunder are subject
to the following conditions:
(a) If, at the time this Agreement is executed and delivered, it
is necessary for the Registration Statement or a post-effective amendment
thereto (or an Abbreviated Registration Statement) to be declared effective
before the offering of the Notes may commence, the Registration Statement or
such post-effective amendment or Abbreviated Registration Statement shall have
become effective not later than 5:30 P.M., New York City time, on the date
hereof, or at such later date and time as shall be consented to in writing by
you, and all filings, if any, required by Rules 424 and 430A under the Act shall
have been timely made; no stop order suspending the effectiveness of the
registration statement shall have been issued and no proceeding for that purpose
shall have been instituted or, to the knowledge of the Company or any
Underwriter, threatened by the Commission, and any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to your reasonable
satisfaction.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the Company or the
Subsidiaries not contemplated by the Prospectus, which in your opinion, would
materially adversely affect the market for the Notes, or (ii) any event or
development relating to or involving the Company or any officer or director of
the Company which makes any statement made in the Prospectus untrue or which, in
the opinion of the Company and its counsel or the Underwriters and their
counsel, requires the making of any addition to or change in the Prospectus in
order to state a material fact required by the Act or any other law to be stated
therein or necessary in order to make the statements therein not misleading, if
amending or supplementing the Prospectus to reflect such event or development
would, in your reasonable opinion, materially adversely affect the market for
the Notes.
(c) You shall have received on the Closing Date, an opinion of
Xxxxxx, Xxxxx & Xxxxxxx LLP, counsel for the Company, dated the Closing Date and
addressed to you, to the effect that:
(i) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware with all
necessary corporate power and
-17-
authority to own, lease and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectus (and any amendment
or supplement thereto), and is duly registered and qualified to conduct its
business and is in good standing in the States of Massachusetts, North Carolina,
California and Texas;
(ii) Each of the Material Subsidiaries is a corporation duly
incorporated and validly existing in good standing under the laws of the
jurisdiction of its incorporation, with all necessary corporate power and
authority to own, lease, and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectus (and any amendment
or supplement thereto); and all the outstanding shares of capital stock of each
of the Material Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable, and are owned by the Company directly, or
indirectly through one of the other Material Subsidiaries, free and clear of any
perfected security interest (except the pledge to secure obligations of the
Company under the Credit Agreement (as defined in the Prospectus)), or, to the
knowledge of such counsel, any other security interest, lien, adverse claim,
equity or other encumbrance;
(iii) The authorized and outstanding capital stock of the Company
is as set forth under the caption "Capitalization" in the Prospectus; and the
authorized capital stock of the Company conforms in all material respects as to
legal matters to the description thereof contained in the Prospectus under the
caption "Description of Capital Stock";
(iv) The Company has the corporate power and authority to enter
into the Indenture and to perform its obligations thereunder and the Indenture
has been duly authorized, executed and delivered by the Company and, assuming
due execution and delivery by the Trustee, is a valid, legal and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, subject to the qualification that the enforceability of the Company's
obligations thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium or other laws relating to or affecting
creditors' rights generally and by general equitable principles, and has been
duly qualified under the 1939 Act;
(v) The Company has the corporate power and authority to issue
the Notes and to perform its obligations thereunder and the Notes have been duly
authorized and executed by the Company and, assuming due authentication of the
Notes by the Trustee, upon delivery to the Underwriters against payment therefor
in accordance with the terms hereof, will have been validly issued and
delivered, and will constitute valid, legal and binding obligations of the
Company entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, subject to the qualification that the
enforceability of the Company's obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or
other laws relating to or affecting creditors' rights generally and by general
equitable principles;
-18-
(vi) The Notes and the Indenture conform in all material respects
to the descriptions thereof contained in the Prospectus;
(vii) The shares of Common Stock issuable upon conversion of the
Notes have been validly authorized and reserved for issuance and, when delivered
upon conversion of the Notes in accordance with the terms of the Indenture, will
have been validly issued and fully paid and will be nonassessable and free of
any preemptive or, to the knowledge of such counsel, similar rights that will
entitle any person to acquire any shares of Common Stock upon issuance thereof
by the Company;
(viii) The Registration Statement and all post-effective
amendments, if any, have 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 are pending before
or contemplated by the Commission; and any required filing of the Prospectus
pursuant to Rule 424(b) has been made in accordance with Rule 424(b);
(ix) The Company has corporate power and authority to enter into
the Underwriting Agreement and to issue, sell and deliver the Notes to the
Underwriters as provided therein, and the Underwriting Agreement has been duly
authorized, executed and delivered by the Company and is a valid, legal and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except as enforcement of rights to indemnity and contribution
thereunder may be limited by Federal or state securities laws or principles of
public policy and subject to the qualification that the enforceability of the
Company's obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally, and by general equitable principles;
(x) Neither the offer, sale or delivery of the Notes, the
issuance of Common Stock upon conversion of the Notes, the execution, delivery
or performance of the Underwriting Agreement or the Indenture, compliance by the
Company with the provisions of the Underwriting Agreement or the Indenture nor
consummation by the Company of the transactions contemplated by the Underwriting
Agreement or by the Indenture conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, the certificate or articles of
incorporation or bylaws, or other organizational documents, of the Company or
any of the Material Subsidiaries or any agreement, indenture, lease or other
instrument to which the Company or any of the Material Subsidiaries is a party
or by which any of them or any of their respective properties is bound that is
an exhibit to the Registration Statement or to any Incorporated Document, or is
known to such counsel or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of the
Material Subsidiaries, nor will any such action result in any violation of any
existing law, regulation, ruling (assuming compliance with all applicable state
securities and Blue Sky laws), judgment, injunction, order or decree known to
such counsel, applicable to the Company, the Material Subsidiaries or any of
their respective properties;
-19-
(xi) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency, or official is required on the part of the
Company (except as have been obtained under the Act or the 1939 Act or such as
may be required under state securities or Blue Sky laws governing the purchase
and distribution of the Notes and the shares of Common Stock issuable upon
conversion of the Notes) for the valid issuance and sale of the Notes to the
Underwriters as contemplated by the Underwriting Agreement;
(xii) The Registration Statement and the Prospectus and any
supplements or amendments thereto (except for the financial statements and the
notes thereto and the schedules and other financial and statistical data
included therein, as to which such counsel need not express any opinion) comply
as to form in all material respects with the requirements of the Act; and each
of the Incorporated Documents (except for the financial statements and the notes
thereto and the schedules and other financial and statistical data included
therein, as to which counsel need not express any opinion) complies as to form
in all material respects with the Exchange Act and the rules and regulations of
the Commission thereunder;
(xiii) To the knowledge of such counsel, (A) other than as
described or contemplated in the Prospectus (or any supplement thereto), there
are no legal or governmental proceedings pending or threatened against the
Company or any of the Material Subsidiaries, or to which the Company or any of
the Material Subsidiaries, or any of their property, is subject, which are
required to be described in the Registration Statement or Prospectus (or any
amendment or supplement thereto) and (B) there are no agreements, contracts,
indentures, leases or other instruments, that are required to be described in
the Registration Statement or the Prospectus (or any amendment or supplement
thereto) or to be filed as an exhibit to the Registration Statement or any
Incorporated Document that are not described or filed as required, as the case
may be;
(xiv) The statements in (a) the Prospectus under the captions
"Prospectus Summary-Recent Developments-Commitment for New Credit Facility",
"Prospectus Summary-Recent Developments- Favorable Resolution of Outstanding
Litigation; Cancellation of Notes and Warrants", "Risk Factors-Anti-Takeover
Provisions", "Management's Discussion and Analysis of Financial Condition and
Results of Operations-Liquidity and Capital Resources-Financing Arrangements",
"Business-Legal Proceedings", "Certain Transactions", "Description of Capital
Stock" and "Certain United States Federal Tax Consequences", (b) the Company's
Annual Report on Form 10-K for the year ended December 28, 1996 under the
captions "Risk Factors-Anti-Takeover Provisions", "Legal Proceedings-A.
Apex-related Litigation" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Liquidity and Capital Resources-Financing
Arrangements", (c) the Company's Form 10/A, Amendment No. 2 filed with the
Commission on November 23, 1994 under the caption "Description of Capital
Stock-Converse Common Stock" and (d) the Company's definitive proxy statement
for the Annual Meeting of Stockholders to be held June 18, 1997 under the
captions "Employment Contracts", "Executive Compensation and Stock Option
Committee Report", "Compensation Committee Interlocks and Insider Participation"
and "Certain Transactions",
-20-
insofar as they are descriptions of contracts, agreements or other legal
documents, or refer to statements of law or legal conclusions, are accurate and
present fairly the information required to be shown; and
(xv) Although counsel has not undertaken, except as otherwise
indicated in their opinion, to determine independently, and does not assume any
responsibility for, the accuracy or completeness of the statements in the
Registration Statement, such counsel has participated in the preparation of the
Registration Statement and the Prospectus, including review and discussion of
the contents thereof (including review and discussion of the contents of all
Incorporated Documents), and nothing has come to the attention of such counsel
that has caused them to believe that the Registration Statement (including the
Incorporated Documents) at the time the Registration Statement became effective,
or the Prospectus, as of its date and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that any amendment or
supplement to the Prospectus, as of its respective date, and as of the Closing
Date or the Option Closing Date, as the case may be, contained any untrue
statement of a material fact or omitted 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 (it being understood that such counsel need
express no belief with respect to the financial statements and the notes thereto
and the schedules and other financial and statistical data included in the
Registration Statement or the Prospectus or any Incorporated Document).
In rendering such opinion as aforesaid, counsel may limit their
opinion to the federal laws of the United States, the General Corporation Law of
the State of Delaware and the laws of the State of New York.
(d) You shall have received on the Closing Date, an opinion of
Xxxx X. Xxxxx, Esq., General Counsel of the Company, dated the Closing Date and
addressed to you, to the effect that:
(i) The Company and each of the Subsidiaries (other than
Subsidiaries organized under the laws of foreign countries, as to which no
opinion need be expressed) has all necessary corporate power and authority, and,
to such counsel's knowledge, all necessary governmental authorizations,
approvals, orders, licenses, certificates, franchises and permits of and from
all governmental regulatory officials and bodies (except where the failure so to
have any such authorizations, approvals, orders, licenses, certificates,
franchises or permits would not have a Material Adverse Effect), to own their
respective properties and to conduct their respective businesses as now being
conducted, as described in the Prospectus;
(ii) Except as disclosed in the Prospectus, the Company owns of
record, directly or indirectly, all the outstanding shares of capital stock of
each of the Subsidiaries (except that with respect to certain foreign
Subsidiaries, a nominal number of shares of which is owned by qualified
residents of the countries in which such Subsidiaries are located) free and
-21-
clear of any lien, adverse claim, security interest, equity, or other
encumbrance (except the pledge to secure the Company's obligations under the
Credit Agreement (as defined in the Prospectus));
(iii) Other than as described or contemplated in the Prospectus
(or any supplement thereto), to such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or any of
their property, is subject, which are required to be described in the
Registration Statement or Prospectus (or any amendment or supplement
thereto);
(iv) To such counsel's knowledge, there are no agreements,
contracts, indentures, leases or other instruments, that are required to be
described in the Registration Statement or the Prospectus (or any amendment or
supplement thereto) or to be filed as an exhibit to the Registration Statement
or any Incorporated Document that are not described or filed as required, as the
case may be;
(v) The Company and the Subsidiaries own all patents, trademarks,
trademark registrations and other intellectual property described in the
Prospectus under the caption "Business-Trademarks and Patents" as being owned by
them or any of them, and such counsel is not aware of any claim to the contrary
or any challenge by any other person to the rights of the Company and the
Subsidiaries with respect to the foregoing or any other intellectual property
that would have a Material Adverse Effect;
(vi) To such counsel's knowledge, neither the Company nor any of
the Subsidiaries is in violation of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of the
Subsidiaries or of any decree of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries except for any such
violations that would not have a Material Adverse Effect;
(vii) Except as described in the Prospectus, to such counsel's
knowledge there are no outstanding options, warrants or other rights calling for
the issuance of, and such counsel does not know of any commitment, plan or
arrangement to issue, any shares of capital stock of the Company or any security
convertible into or exchangeable or exercisable for capital stock of the
Company;
(viii) Except as described in the Prospectus, to the knowledge of
such counsel, there is no holder of any security of the Company or any other
person who has the right, contractual or otherwise, to cause the Company to sell
or otherwise issue to them, or to permit them to underwrite the sale of, the
Notes or the right to have any Common Stock or other securities of the Company
included in the Registration Statement or the right, as a result of the filing
of the Registration Statement, to require registration under the Act of any
shares of Common Stock or other securities of the Company; and
-22-
(ix) Neither the Company nor any of the Material Subsidiaries is
in violation of its respective certificate or articles of incorporation or
bylaws, or other organizational documents, or to the knowledge of such counsel,
is in default in the performance of any material obligation, agreement or
condition contained in any bond, debenture, note or other evidence of
indebtedness, except as may be disclosed in the Prospectus.
(e) You shall have received on the Closing Date an opinion of
Xxxxxx & Xxxxxxx, counsel for the Underwriters, dated the Closing Date and
addressed to you, with respect to the matters referred to in clauses (iv), (v),
(vii), (viii), (ix), (xii) and (xv) of the foregoing paragraph (c) and such
other related matters as you may reasonably request.
(f) You shall have received letters addressed to you, and dated
the date hereof and the Closing Date from Price Waterhouse LLP and KPMG Peat
Marwick LLP, independent certified public accountants, substantially in the
forms heretofore approved by you.
(g) (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-term or long-term debt of the Company (other than in the
ordinary course of business) from that set forth or contemplated in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto); (iii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement and the Prospectus (or
any amendment or supplement thereto), except as may otherwise be stated in the
Registration Statement and Prospectus (or any amendment or supplement thereto),
any material adverse change in the condition (financial or other), business,
prospects, properties, net worth or results of operations of the Company and the
Subsidiaries taken as a whole; (iv) the Company and the Subsidiaries shall not
have any liabilities or obligations, direct or contingent (whether or not in the
ordinary course of business), that are material to the Company and the
Subsidiaries, taken as a whole, other than those reflected in the Registration
Statement or the Prospectus (or any amendment or supplement thereto); and (v)
all the representations and warranties of the Company contained in this
Agreement shall be true and correct on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date, and you shall have
received a certificate, dated the Closing Date and signed by the chief executive
officer and the chief financial officer of the Company (or such other officers
as are acceptable to you), to the effect set forth in this Section 8(g) and in
Section 8(h) hereof.
(h) The Company shall not have failed at or prior to the Closing
Date to have performed or complied with any of its agreements herein contained
and required to be performed or complied with by it hereunder at or prior to the
Closing Date.
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(i) Prior to the Closing Date the Notes and the shares of Common
Stock issuable upon conversion of the Notes shall have been listed, subject to
notice of issuance, on the New York Stock Exchange.
(j) The Company shall have furnished or caused to be furnished to
you such further certificates and documents as you shall have reasonably
requested.
All such opinions, certificates, letters and other documents will
be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.
Any certificate or document signed by any officer of the Company
and delivered to you, or to counsel for the Underwriters, shall be deemed a
representation and warranty by the Company to each Underwriter as to the
statements made therein.
The several obligations of the Underwriters to purchase
Additional Notes hereunder are subject to the satisfaction on and as of any
Option Closing Date of the conditions set forth in this Section 8, except that,
if any Option Closing Date is other than the Closing Date, the certificates,
opinions and letters referred to in paragraphs (c) through (g) shall be dated
the Option Closing Date in question and the opinions called for by paragraphs
(c), (d) and (e) shall be revised to reflect the sale of Additional Notes.
9. Expenses. The Company agrees to pay the following costs and
--------
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction, and
filing with the Commission of the registration statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, the Prospectus,
each amendment or supplement to any of them, this Agreement, the Indenture and
the Statement of Eligibility and Qualification of the Trustee; (ii) the printing
(or reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the registration
statement, each Prepricing Prospectus, the Prospectus, the Incorporated
Documents, and all amendments or supplements to any of them, as may be
reasonably requested for use in connection with the offering and sale of the
Notes; (iii) the preparation, printing, authentication, issuance and delivery of
the Notes, including any stamp taxes in connection with the original issuance
and sale of the Notes; (iv) the printing (or reproduction) and delivery of this
Agreement, the preliminary and supplemental Blue Sky Memoranda and all other
agreements or documents printed (or reproduced) and delivered in connection with
the offering of the Notes; (v) the registration of the Notes under the Exchange
Act and the listing of the Notes and the shares of Common Stock issuable upon
conversion of the Notes on the New York Stock Exchange; (vi) the registration or
qualification of the Notes and the shares of Common Stock issuable upon
conversion of the Notes for offer and sale under the securities or Blue Sky laws
of the several states as provided in Section 5(g) hereof (including the
reasonable fees, expenses and disbursements of counsel for the Underwriters
relating to the preparation, printing or reproduction, and delivery of Blue Sky
Memoranda and such registration and qualification); (vii) the filing fees in
connection with any filings required to be
-24-
made with the National Association ofSecurities Dealers, Inc.; (viii) the fees
and expenses of the Trustee; (ix) the fees and expenses associated with
obtaining ratings for the Notes from nationally recognized statistical rating
organizations; (x) the transportation and other expenses incurred by or on
behalf of Company representatives in connection with presentations to
prospective purchasers of the Notes; and (xi) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local and
special counsel) for the Company.
10. Effective Date of Agreement. This Agreement shall become
---------------------------
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto to be
declared effective before the offering of the Notes may commence, when
notification of the effectiveness of the registration statement or such
post-effective amendment has been released by the Commission. Until such time as
this Agreement shall have become effective, it may be terminated by the Company,
by notifying you, or by you, by notifying the Company.
If any one or more of the Underwriters shall fail or refuse to
purchase Firm Notes which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate principal amount of Firm Notes which such
defaulting Underwriter or Underwriters are obligated but fail or refuse to
purchase is not more than one-tenth of the aggregate principal amount of Firm
Notes, each non-defaulting Underwriter shall be obligated, severally, in the
proportion which the principal amount of Firm Notes set forth opposite its name
in Schedule I hereto bears to the aggregate principal amount of Firm Notes set
forth opposite the names of all non-defaulting Underwriters or in such other
proportion as you may specify, to purchase the Firm Notes which such defaulting
Underwriter or Underwriters are obligated, but fail or refuse, to purchase. If
any one or more of the Underwriters shall fail or refuse to purchase Firm Notes
which it or they are obligated to purchase on the Closing Date and the aggregate
principal amount of Firm Notes with respect to which such default occurs is more
than one-tenth of the aggregate principal amount of Firm Notes and arrangements
satisfactory to you and the Company for the purchase of such Firm Notes by one
or more non-defaulting Underwriters or other party or parties approved by you
and the Company are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Underwriter
or the Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any such default of any such Underwriter under this Agreement. The term
"Underwriter" as used in this Agreement includes, for all purposes of this
Agreement, any party not listed in Schedule I hereto who, with your approval and
the approval of the Company, purchases Notes which a defaulting Underwriter is
obligated, but fails or refuses, to purchase.
-25-
Any notice under this Section 10 may be given by telegram,
telecopy or telephone but shall be subsequently confirmed by letter.
11. Termination of Agreement. This Agreement shall be subject to
------------------------
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company by notice to the Company, if prior to the Closing
Date or any Option Closing Date (if different from the Closing Date and then
only as to the Additional Notes), as the case may be, (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market shall have been suspended or materially limited, (ii) a
general moratorium on commercial banking activities in New York shall have been
declared by either federal or state authorities, or (iii) there shall have
occurred any outbreak or escalation of hostilities or other international or
domestic calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States is
such as to make it, in your judgment, impracticable or inadvisable to commence
or continue the offering of the Notes on the terms set forth on the cover page
of the Prospectus or to enforce contracts for the resale of the Notes by the
Underwriters. Notice of such termination may be given to the Company by
telegram, telecopy or telephone and shall be subsequently confirmed by letter.
12. Information Furnished by the Underwriters. The statements set
-----------------------------------------
forth in the last paragraph on the cover page, the stabilization legend on the
inside front cover, and the statements in the first, third and sixth paragraphs
under the caption "Underwriting" in any Prepricing Prospectus and in the
Prospectus, constitute the only information furnished by you or on your behalf
as such information is referred to in Sections 6(b) and 7 hereof.
13. Miscellaneous. Except as otherwise provided in Sections 5, 10
-------------
and 11 hereof, notice given pursuant to any provision of this Agreement shall be
in writing and shall be delivered (i) if to the Company, at the office of the
Company at Xxx Xxxxxxx Xxxx, Xxxxx Xxxxxxx, XX 00000, Attention: Xxxx X. Xxxxx,
General Counsel; or (ii) if to you, care of Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Manager, Investment Banking
Division.
This Agreement has been and is made solely for the benefit of the
Underwriters, the Company, its directors and officers, and the other controlling
persons referred to in Section 7 hereof and their respective successors and
assigns, to the extent provided herein, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from any Underwriter of any of the Notes in his status
as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be
----------------------------
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which
together constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become
-26-
effective unless at least one counterpart hereof shall have been executed and
delivered on behalf of each party hereto.
-27-
Please confirm that the foregoing correctly sets forth the
agreement between the Company and you.
Very truly yours,
CONVERSE INC.
By
-------------------------
Chairman of the Board and
Chief Executive Officer
Confirmed as of the date first
above mentioned.
XXXXX XXXXXX INC.
XXXXXX, READ & CO. INC.
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
XXXXXXX, SACHS & CO.
By XXXXX XXXXXX INC.
By:
----------------------
Managing Director
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SCHEDULE I
CONVERSE INC.
Principal Amount
Underwriter of Notes
----------- ----------------
Xxxxx Xxxxxx Inc. .
Xxxxxx, Read & Co. Inc.
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Xxxxxxx, Sachs & Co.
-----------
Total $60,000,000
===========
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SCHEDULE II
Lock-up Letters
Xxxxx X. Xxxx
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxxx
Apollo Investment Fund, L.P.
Lion Advisors, L.P.
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SCHEDULE III
Jurisdictions in which the Company is required to be registered and qualified
to do business
State Nature of Properties or Business
----- --------------------------------
Arizona Retail Store
Arkansas Retail Store
California Retail Store & Sales Office
District of Columbia Former Retail Store
Florida Retail Stores
Georgia Former Retail Store
Hawaii Retail Store
Idaho Retail Store
Illinois Former Sales Office
Kansas Retail Store
Louisiana Retail Store
Maine Retail Store
Massachusetts Corporate Headquarters & 2
Retail Stores
Nebraska Retail Store
New Hampshire Retail Store
New Jersey Former Sales Office
New Mexico Retail Store
New York Retail Store
Nevada Retail Store
North Carolina Retail Store & Manufacturing/
Distribution Facilities
Oklahoma Retail Store
Oregon Retail Store
Rhode Island Retail Store
South Carolina Former Warehouse
Tennessee Retail Store
Texas 2 Retail Stores and
Manufacturing Facility
Virginia Retail Store
Washington Retail Store
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