EXHIBIT 1.4
FORM OF INTERNATIONAL INDEMNITY AGREEMENT
December [__], 1996
XXXXXXX XXXXX INTERNATIONAL
SALOMON BROTHERS INTERNATIONAL LIMITED
FORUM CAPITAL MARKETS L.P.
as Lead Managers of the several International Managers
c/o Merrill Xxxxx International
Ropemaker Place
00 Xxxxxxxxx Xxxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Ladies and Gentlemen:
Xxxxxxx International Group Inc., a Delaware corporation (the "Company"),
a wholly owned subsidiary of Hay Island Holding Corporation, a Delaware
corporation ("Hay Island") is entering into an agreement dated the date hereof
(the "International Purchase Agreement") with Xxxxxxx Xxxxx International and
each of the other International Managers named in Schedule A to the
International Purchase Agreement (collectively, the "International Managers",
which term shall also include any underwriter substituted as provided in
Section 10 of the International Purchase Agreement), for whom Xxxxxxx Xxxxx
International, Salomon Brothers International Limited and Forum Capital Markets
L.P. are acting as representatives (in such capacity, the "Lead Managers"), with
respect to the issue and sale by the Company and the purchase by the
International Managers, acting severally and not jointly, of the respective
numbers of shares of Class A Common Stock, par value $.01 per share, of the
Company ("Class A Common Stock") set forth in said Schedule A, and with respect
to the grant by the Company to the International Managers, acting severally and
not jointly, of the option described in Section 2(b) of the International
Purchase Agreement to purchase all or any part of 180,000 additional shares of
Class A Common Stock to cover over-allotments, if any. The aforesaid 1,200,000
shares of Class A Common Stock (the "Initial International Securities") to be
purchased by the International Managers and all or any part of the 180,000
shares of Class A Common Stock subject to the option described in Section 2(b)
hereof (the "International Option Securities") are hereinafter called,
collectively, the "International Securities".
Additionally, the Company is entering into an agreement dated the date
hereof (the "Purchase Agreement") providing for the offering by the Company of
an aggregate of 4,800,000 shares of Class A Common Stock (the "Initial U.S.
Securities") through arrangements with certain underwriters in the United States
and Canada (the "U.S. Underwriters") for which Xxxxxxx Xxxxx & Co., Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), Xxxxxxx Xxxxxxxx
Inc and Forum Capital Markets L.P.
2
are acting as representatives (the "U.S. Representatives") and the grant by the
Company to the U.S. Underwriters, acting severally and not jointly, of an option
to purchase all or any part of the U.S. Underwriters' pro rata portion of up to
720,000 additional shares of Class A Common Stock solely to cover
over-allotments, if any (the "U.S. Option Securities" and, together with the
International Option Securities, the "Option Securities"). The Initial U.S.
Securities and the U.S. Option Securities are hereinafter called the "U.S.
Securities."
The International Managers and the U.S. Underwriters are hereinafter
collectively called the "Underwriters," the Initial International Securities and
the Initial U.S. Securities are hereinafter collectively called the "Initial
Securities," and the International Securities and the U.S. Securities are
hereinafter collectively called the "Securities."
The Underwriters will concurrently enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the direction
of Xxxxxxx Xxxxx (in such capacity, the "Global Coordinator").
Hay Island understands that the International Managers propose to make a
public offering of the International Securities as soon as the Lead Managers
deem advisable after the International Purchase Agreement has been executed and
delivered.
Prior to the purchase of the Securities pursuant to the Purchase
Agreements, the Company was a wholly owned subsidiary of Hay Island and after
the sale of the Securities the Company will continue to be controlled by Hay
Island. Whereas the establishment of a public market for the Securities will
provide substantial benefit to Hay Island and, desiring to provide the Company
the opportunity to utilize cash flow to repay the Company's indebtedness and for
use in its business in the event any indemnification claim arises under the
Purchase Agreement, Hay Island has agreed to provide this additional source of
indemnity to the Underwriters.
The Company has filed with the Securities and Exchange Commission a
registration statement on Form S-1 (No. 333-14975) covering the registration of
the Securities under the Securities Act of 1933, as amended (the "1933 Act"),
including the related preliminary prospectus or prospectuses. Promptly after
execution and delivery of the International Purchase Agreement, the Company will
either (i) prepare and file a prospectus in accordance with the provisions of
Rule 430A ("Rule 430A") of the rules and regulations of the Commission under the
1933 Act (the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule
424(b)") of the 1933 Act Regulations or (ii) if the Company has elected to rely
upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term
sheet (a "Term Sheet") in accordance with the provisions of Rule 434 and Rule
424(b). Two forms of prospectus are to be used in connection with the offering
and sale of the Securities: one relating to International Securities (the "Form
of International Prospectus") and one relating to the U.S. Securities (the "Form
of U.S. Prospectus"). The information included in any such prospectus, if any,
or in any such Term Sheet, as the case may be, that was omitted
3
from such registration statement at the time it became effective but that is
deemed to be part of such registration statement at the time it became effective
(a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A
Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as
"Rule 434 Information." Each Form of International Prospectus and Form of U.S.
Prospectus used before such registration statement became effective, and any
prospectus that omitted, as applicable, the Rule 430A Information or the Rule
434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final Form of
International Prospectus and the final Form of U.S. Prospectus in the forms
first furnished to the Underwriters for use in connection with the offering of
the Securities are herein called the "International Prospectus" and the "U.S.
Prospectus," respectively, and collectively, the "Prospectuses." If Rule 434 is
relied on, the terms "International Prospectus" and "U.S. Prospectus" shall
refer to the preliminary International Prospectus dated November 29, 1996, and
the preliminary U.S. Prospectus dated November 29, 1996, respectively, each
together with the applicable Term Sheet and all references in this Agreement to
the date of such Prospectuses shall mean the date of the applicable Term Sheet.
For purposes of this Agreement, all references to the Registration Statement,
any preliminary prospectus, the International Prospectus, the U.S. Prospectus or
any Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY HAY ISLAND. Hay Island represents
and warrants to, and agrees with, each International Manager as follows:
(i) GOOD STANDING OF HAY ISLAND. Hay Island has been duly organized
and is validly existing as a corporation in good standing under the laws of
the State of Delaware and has corporate power and authority to enter into
and perform its obligations under this Agreement and the U.S. Indemnity
Agreement.
(ii) AUTHORIZATION OF AGREEMENT. This Agreement and the U.S.
Indemnity Agreement have been duly authorized, executed and delivered by
Hay Island.
4
(iii) THIRD PARTY CONSENTS. All authorizations and consents
necessary for the execution and delivery by Hay Island of this Agreement
and the U.S. Indemnity Agreement have been given and are in full force and
effect on the date hereof.
(b) OFFICER'S CERTIFICATES. Any certificate signed by any officer of Hay
Island delivered to the Global Coordinator, the Lead Managers or to counsel for
the International Managers in connection with this Agreement shall be deemed a
representation and warranty by Hay Island to each International Manager as to
the matters covered thereby.
SECTION 2. INDEMNIFICATION.
(a) INDEMNIFICATION OF INTERNATIONAL MANAGERS. (1) Hay Island agrees to
indemnify and hold harmless each International Manager and each person, if any,
who controls any International Manager within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectuses (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that any such settlement is
effected with the written consent of Hay Island and the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Xxxxxxx Xxxxx),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any
5
claim whatsoever based upon any such untrue statement or omission, to the
extent that any such expense is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
International Manager through the Lead Managers expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectuses (or any amendment or supplement thereto).
(2) The obligations of Hay Island pursuant to this Section are joint and
several with respect to the obligations of the Company under the International
Purchase Agreement; PROVIDED, HOWEVER, that Hay Island's aggregate liability
under this Section shall be limited to an amount equal to $____ million.
(b) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 2(a)(1)
above, counsel to the indemnified parties shall be selected by Xxxxxxx Xxxxx.
An indemnifying party may participate at its own expense in the defense of any
such action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 2 or Section 3 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
6
(c) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 2(a)(1)(ii) effected without its written consent if (i) such settlement
is entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such indemnifying party shall have received notice
of the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 3. CONTRIBUTION. If the indemnification provided for in
Section 2 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits to Hay Island and
the Company on the one hand and the International Managers on the other hand
from the offering of the Securities pursuant to the International Purchase
Agreement or (ii) if the allocation provided by clause (i) 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
Hay Island and the Company on the one hand and of the International Managers on
the other hand in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations, PROVIDED that Hay Island's aggregate
liability under this Section 3 (together with any liability of Hay Island under
Section 3 of the U.S. Purchase Agreement) shall be limited to the aggregate
amount of $____ million.
Hay Island and the International Managers agree that it would not be just
and equitable if contribution pursuant to this Section 3 were determined by pro
rata allocation (even if the International Managers were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 3.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 3 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any
7
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 3, no International Manager
shall be required to contribute any amount in excess of the amount by which the
total price at which the International Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such International Underwriter has otherwise been required to pay
by reason of any 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 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 3, each person, if any, who controls an
International Manager within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
International Manager, and each person, if any, who controls Hay Island within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as Hay Island. The International Managers'
respective obligations to contribute pursuant to this Section 3 are several in
proportion to the number of Initial International Securities set forth opposite
their respective names in Schedule A to the International Purchase Agreement and
not joint.
SECTION 4. TERMINATION OF AGREEMENT. This Agreement shall terminate
three years from the date hereof; PROVIDED, HOWEVER, that this Agreement shall
survive and remain in full force and effect with respect to any claim made prior
to such date of termination.
SECTION 5. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
International Managers shall be directed to the Lead Managers at North Tower,
World Financial Center, New York, New York 10281-1201, attention of [_______]
and notices to Hay Island shall be directed to it at [__________], attention of
[__________].
SECTION 6. PARTIES. This Agreement shall each inure to the benefit
of and be binding upon the International Managers and Hay Island and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the International Managers and Hay Island and
8
their respective successors and the controlling persons and officers and
directors referred to in Sections 3 and 4 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the International Managers and Hay Island and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any International
Manager shall be deemed to be a successor by reason merely of such purchase.
SECTION 7. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 8. EFFECT OF HEADINGS. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to Hay Island a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the International Managers and Hay Island in accordance with its terms.
Very truly yours,
HAY ISLAND HOLDING CORPORATION
By
--------------------------
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX INTERNATIONAL
SALOMON BROTHERS INTERNATIONAL LIMITED
FORUM CAPITAL MARKETS L.P.
9
By: XXXXXXX XXXXX INTERNATIONAL
By
--------------------------------------------
Authorized Signatory
For itself and as Lead Managers of the other International Managers named in
Schedule A of the International Purchase Agreement.
