Exhibit 1.2
XXXXXXXXX WORLD INDUSTRIES, INC.
7,000,000
__% Participating Exchangeable Premium Securities-SM-
due July 1, 2001
(Payable in Shares of Common Stock,
Par Value $.01 per Share, of Dal-Tile International Inc.)
9,000,000
Shares of Common Stock, Par Value $.01 per Share
of Dal-Tile International Inc.
UNDERWRITING AGREEMENT
June __, 1998
The Underwriters named on Schedules I and II hereto
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
Xxxxxxxxx World Industries, Inc., a Pennsylvania corporation ("AWI"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "PEPS UNDERWRITERS") an aggregate of __________ of its __%
Participating Exchangeable Premium Securities due _________, 2001 (the "FIRM
PEPS") to be issued pursuant to the provisions of the Indenture dated as of
August 6, 1996 (as supplemented by the First Supplemental Indenture dated as of
June __, 1998, the "INDENTURE"), by and between AWI and Chase Manhattan, N.A.,
as Trustee (the "TRUSTEE") relating to Senior Debt Securities (as such term is
defined in the Indenture) of AWI.
AWI also proposes to issue and sell to the several PEPS Underwriters not
more than an additional 1,050,000 __% Participating Exchangeable Premium
Securities due 2001 (the "ADDITIONAL PEPS") if and to the extent that you, as
the Managers of the offering, shall have determined to exercise, on behalf of
the PEPS Underwriters, the right to purchase such securities granted to the
Underwriters in Section 2(a) hereof. The Firm PEPS and the Additional PEPS are
hereinafter collectively referred to as the "PEPS." At maturity the principal
amount of each PEPS will be mandatorily exchanged by AWI into shares of the
Common Stock, par value $.01 (the "COMMON STOCK"), of Dal-Tile International
Inc. ("DAL-TILE"), subject to AWI's right to pay cash in lieu of delivering such
shares.
AWI has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus, relating to,
among other securities, senior debt securities of AWI of which the PEPS will
represent a class, and has filed with, or transmitted for filing to, or shall
promptly hereafter file with or transmit for filing to, the Commission a
prospectus supplement (the "AWI PROSPECTUS SUPPLEMENT") specifically relating to
the PEPS pursuant to Rule 424 under the Securities Act of 1933, as amended (the
"SECURITIES ACT"). The term "AWI REGISTRATION STATEMENT" means the registration
statement filed on Form S-3 and declared effective on November 1, 1996,
including the exhibits thereto, as amended to the date of this Agreement.
The term "BASIC AWI PROSPECTUS" means the prospectus included in the AWI
Registration Statement. The term "AWI PROSPECTUS" means the Basic AWI
Prospectus together with the AWI Prospectus Supplement. The term "AWI
PRELIMINARY PROSPECTUS" means a preliminary prospectus supplement specifically
relating to the PEPS, together with the Basic AWI Prospectus. As used herein,
the terms "Basic AWI Prospectus," "AWI Prospectus" and "AWI preliminary
prospectus" shall include in each case the documents, if any, incorporated by
reference therein.
Additionally, AWI and Xxxxxxxxx Enterprises, Inc., a Vermont corporation
("AEI") and a direct wholly-owned subsidiary of AWI (AEI and AWI, collectively
being referred to as the "SELLERS"), jointly and severally propose to sell to
the several Underwriters named in Schedule II hereto (the "Secondary Shares
Underwriters," and together with the PEPS Underwriters, the "UNDERWRITERS") an
aggregate 9,000,000 shares (the "FIRM SHARES") of Common Stock. The Sellers
also propose to sell to the several Secondary Shares Underwriters not more than
an additional 1,315,822 shares of Common Stock (the "ADDITIONAL SHARES") if and
to the extent that you, as the Managers of the offering, shall have determined
to exercise, on behalf of the Secondary Shares Underwriters, the right to
purchase such shares of Common Stock granted to the Secondary Shares
Underwriters in Section 2(b) hereof. The Firm Shares and the Additional Shares
are hereinafter collectively referred to as the "SECONDARY SHARES."
In connection with the foregoing and pursuant to the Shareholders Agreement
dated December 29, 1995 (as amended July 15, 1996, the "SHAREHOLDERS AGREEMENT")
by and among Dal-Tile International Inc., AEA Investors Inc. DTI Investors LLC,
AWI, AEI and Xxxxxxxxx Cork Finance Corporation, Dal-Tile has filed with the
Commission a registration statement, including, (i) a prospectus relating to
AWI's offer for sale of 7,000,000 shares (the "PEPS SHARES") of Common Stock
deliverable to holders of the PEPS at the maturity thereof and (ii) a prospectus
relating to the Secondary Shares. The registration statement as amended at the
time it becomes effective, including the information (if any) deemed to be part
of the registration statement at the time of effectiveness pursuant to Rule 430A
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), is
hereinafter referred to as the "DAL-TILE REGISTRATION STATEMENT"; each of the
prospectus in the form first used to confirm sales of Secondary Shares (the
"SECONDARY SHARES PROSPECTUS") and the prospectus in the form first used to
confirm sales of PEPS Shares deliverable upon mandatory exchange of the PEPS
(the "PEPS SHARES PROSPECTUS") is hereinafter referred to as a "DAL-TILE
PROSPECTUS." The term "DAL-TILE PRELIMINARY PROSPECTUS" means a preliminary
prospectus relating to either the Secondary Shares or the PEPS Shares. As used
herein, the terms "Dal-Tile Prospectus" and "Dal-Tile
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preliminary prospectus" shall include in each case the documents, if any,
incorporated by refinance therein. If Dal-Tile has filed an abbreviated
registration statement to register additional shares of Common Stock pursuant to
Rule 462(b) under the Securities Act (the "RULE 462 DAL-TILE REGISTRATION
STATEMENT"), then any reference herein to the term "DAL-TILE REGISTRATION
STATEMENT" shall be deemed to include such Rule 462 Dal-Tile Registration
Statement.
The terms "SUPPLEMENT," "AMENDMENT" and "AMEND" as used herein shall
include all documents subsequently filed by AWI or Dal-Tile with the Commission
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), that are deemed to be incorporated by reference in the AWI Prospectus or
either Dal-Tile Prospectus, respectively.
Pursuant to the Shareholders Agreement, Dal-Tile has also entered into an
indemnification agreement (the "DAL-TILE INDEMNIFICATION AGREEMENT") dated as of
the date hereof with the Underwriters, relating to the offering of the PEPS and
the Secondary Shares and the above-referenced registration statement filed by
Dal-Tile.
1. REPRESENTATIONS AND WARRANTIES OF SELLERS. (a) AWI represents and
warrants to and agrees with each of the Underwriters that:
(i) The AWI Registration Statement became effective on
November 1, 1996; no stop order suspending the effectiveness of the
AWI Registration Statement is in effect and, no proceedings for such
purpose are pending before, or to AWI's knowledge after reasonable
investigation, threatened by the Commission.
(ii) (A)Each document, if any, filed or to be filed pursuant
to the Exchange Act and incorporated by reference in the AWI
Prospectus complied or will comply when so filed in all material
respects with the Exchange Act and the applicable rules and
regulations of the Commission thereunder,(B) each part of the AWI
Registration Statement, when such part became effective, did not
contain, and each such part, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading,(C) the AWI
Registration Statement and the AWI Prospectus comply, and, as amended
or supplemented, if applicable, will comply in all material respects
with the Securities Act and the applicable rules and regulations of
the Commission thereunder and (D) the AWI Prospectus does not contain
and, as amended or supplemented, if
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applicable, will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, except that the representations and warranties set
forth in this Section 1(a)(ii) do not apply (1) to statements or
omissions in the AWI Registration Statement or the AWI Prospectus
based upon information relating to any PEPS Underwriter furnished to
AWI in writing by any such PEPS Underwriter through the Managers
expressly for use therein or (2) to that part of the AWI Registration
Statement that constitutes the Statement of Eligibility (Form T-1)
under the Trust Indenture Act of 1939, as amended (the "TRUST
INDENTURE ACT"), of the Trustee.
(iii) AWI has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the AWI
Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or to be in
good standing would not have a material adverse effect on AWI and its
subsidiaries, taken as a whole.
(iv) Each "significant subsidiary" (as that term is used in
Rule 1-02(w) of Regulation S-X under the Securities Act), which shall
include, without limitation, AEI, Xxxxxxxxx World Industries
(Delaware), Inc., Xxxxxxxxx World Industries Ltd., Xxxxxxxxx World
Industries GmbH, Xxxxxxxxx Cork Finance Corporation, (each, a
"MATERIAL SUBSIDIARY") of AWI has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the AWI Prospectus and is duly qualified to transact business and
is in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or to be in good standing would not have a material adverse
effect on AWI and its subsidiaries, taken as a whole. All of the
issued shares of capital stock of each Material Subsidiary of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable and are
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owned directly by the Company, free and clear of all liens,
encumbrances, equities or claims.
(v) The Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by
AWI and is a valid and binding agreement of AWI, enforceable in
accordance with its terms except as (A) the enforceability thereof may
be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (B) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability.
(vi) The PEPS have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Underwriters in accordance with the
terms of this Agreement, will be entitled to the benefits of the
Indenture and will be valid and binding obligations of AWI enforceable
in accordance with their terms except as (A) the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (B) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability.
(vii) There has not occurred any material adverse change, or
any development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings, business or
operations of AWI and its subsidiaries, taken as a whole, from that
set forth in the AWI Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(viii) There are no legal or governmental proceedings pending
or, to the best of AWI's knowledge, threatened to which AWI or any of
its subsidiaries is a party or to which any of the properties of AWI
or any of its subsidiaries is subject that are required to be
described in the AWI Registration Statement or the AWI Prospectus and
are not so described or any statutes, regulations, contracts or other
documents that are required to be described in the AWI Registration
Statement or the AWI Prospectus or to be filed or incorporated by
reference as exhibits to the AWI Registration Statement that are not
described, filed or incorporated as required.
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(ix) Each preliminary prospectus filed as part of the AWI
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities
Act and the applicable rules and regulations of the Commission
thereunder.
(x) AWI and its subsidiaries (A) are in compliance with any
and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"),(B) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (C) are
in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of
such permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on AWI and its subsidiaries,
taken as a whole.
(xi) To the best of AWI's knowledge, there are no costs or
liabilities associated with Environmental Laws (including, without
limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws
or any permit, license or approval, any related constraints on
operating activities and any potential liabilities to third parties)
which would, singly or in the aggregate, in AWI's judgment reasonably
be expected to have a material adverse effect on AWI and its
subsidiaries, taken as a whole.
(b) Each of the Sellers represents and warrants to and agrees with
each of the Underwriters that:
(i) This Agreement has been duly authorized, executed and
delivered by AWI and AEI.
(ii) AEI has, and immediately prior to any delivery of the
PEPS Shares pursuant to the terms of the PEPS, AWI will have valid
title to such PEPS Shares and the legal right and power to sell,
transfer and deliver such PEPS Shares, and delivery of such PEPS
Shares pursuant to the terms of the PEPS will pass title to
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such PEPS Shares free and clear of any security interests, claims,
liens, equities and other encumbrances.
(iii) Each of AWI and AEI is not, and after giving effect to
the offering and sale of the PEPS and the Secondary Shares and the
application of the proceeds thereof as described in the AWI Prospectus
or the Secondary Shares Prospectus, as the case may be, will not be an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended.
(iv) AEI has, and on the Closing Date will have, valid title
to the Secondary Shares and the legal right and power to sell,
transfer and deliver such Secondary Shares, and delivery of the
Secondary Shares to be sold by the Sellers pursuant to this Agreement
will pass title to such Secondary Shares free and clear of any
security interests, claims, liens, equities and other encumbrances.
(v) The execution and delivery by AWI of, and the performance
by AWI of its obligations under, this Agreement, the Indenture and the
PEPS and the execution and delivery by AEI of, and the performance by
AEI of its obligations under, this Agreement will not contravene any
provision of applicable law or the articles of incorporation or
by-laws of AWI or any of its subsidiaries or any agreement or other
instrument binding upon AWI or any of its subsidiaries, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over AWI or any subsidiary, and no consent,
approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by AWI of
its obligations under this Agreement, the Indenture or the PEPS or by
AEI of its obligations under this Agreement.
2. AGREEMENTS TO SELL AND PURCHASE. (a) AWI hereby agrees to sell to the
several PEPS Underwriters, and each PEPS Underwriter upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from AWI at
$______ per PEPS (the "PEPS PURCHASE PRICE") the number of Firm PEPS set forth
in Schedule I hereto opposite the name of such PEPS Underwriter.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, AWI agrees to sell to the
Underwriters the Additional PEPS, and the PEPS Underwriters shall have a
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one-time right to purchase, severally and not jointly, up to 1,050,000
Additional PEPS at the PEPS Purchase Price. If Xxxxxx Xxxxxxx & Co.
Incorporated and Xxxxx Xxxxxx Inc., as representatives of the PEPS Underwriters
(the "PEPS MANAGERS"), on behalf of the PEPS Underwriters, elect to exercise
such option, the PEPS Managers shall so notify AWI in writing not later than 30
days after the date of this Agreement, which notice shall specify the number of
Additional PEPS to be purchased by the PEPS Underwriters and the date on which
such Additional PEPS are to be purchased. Such date may be the same as the
Closing Date (as defined below) but not earlier than the Closing Date nor later
than ten business days after the date of such notice. Additional PEPS may be
purchased as provided in Section 4 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm PEPS. If any
Additional PEPS are to be purchased, each PEPS Underwriter agrees, severally and
not jointly, to purchase the number of Additional PEPS (subject to such
adjustments to eliminate fractional PEPS as the PEPS Managers may determine)
that bears the same proportion to the total number of Additional PEPS to be
purchased as the number of Firm PEPS set forth in Schedule I hereto opposite the
name of such PEPS Underwriter bears to the total number of Firm PEPS.
(b) The Sellers hereby jointly and severally agree to sell to the
several Secondary Shares Underwriters, and each Secondary Shares
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees,
severally and not jointly, to purchase from the Sellers at $______ a share
(the "SECONDARY SHARES PURCHASE PRICE") the number of Firm Shares set forth
in Schedule II hereto opposite the name of such Secondary Shares
Underwriter.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Sellers jointly and
severally agree to sell to the Secondary Shares Underwriters the Additional
Shares, and the Secondary Shares Underwriters shall have a one-time right
to purchase, severally and not jointly, up to 1,315,822 Additional Shares
at the Secondary Shares Purchase Price. If Xxxxxx Xxxxxxx & Co.
Incorporated, Xxxxx Xxxxxx Inc. and Lazard Freres & Co., LLC, as
representatives of the Secondary Shares Underwriters (the "SECONDARY
MANAGERS"), on behalf of the Secondary Shares Underwriters, elect to
exercise such option, the Secondary Managers shall so notify AWI in writing
not later than 30 days after the date of this Agreement, which notice shall
specify the number of Additional Shares to be purchased by the Secondary
Shares Underwriters and the date on which such shares are to be purchased.
Such date may be the same as the Closing Date but not earlier than the
Closing Date nor later than ten business days after the date of such
notice. Additional Shares may be purchased as provided in Section 4 hereof
solely for the purpose of covering over-allotments made in connection with
the offering of the
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Firm Shares. If any Additional Shares are to be purchased, each Secondary
Shares Underwriter agrees, severally and not jointly, to purchase the
number of Additional Shares (subject to such adjustments to eliminate
fractional shares as the Managers may determine) that bears the same
proportion to the total number of Additional Shares to be purchased as the
number of Firm Shares set forth in Schedule II hereto opposite the name of
such Secondary Shares Underwriter bears to the total number of Firm Shares.
(c) Each of AWI and AEI agrees that, without the prior written
consent of Xxxxxx Xxxxxxx & Co. Incorporated, it will not, during the
period ending 90 days after the date of this Agreement, (i) offer, pledge,
loan, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant
to purchase or otherwise transfer or dispose of, directly or indirectly,
any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for shares of Common Stock or (ii) enter into
any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of the ownership of shares of Common
Stock, whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of shares of Common Stock or such other
securities, in cash or otherwise; PROVIDED that the prohibitions contained
in (i) and (ii) above shall not apply to transfers between AWI and AEI. In
addition, each of AWI and AEI agrees that, without the prior written
consent of Xxxxxx Xxxxxxx & Co. Incorporated, it will not, during the
period ending 90 days after the date of this Agreement make any demand for
or exercise any right with respect to the registration of any shares of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock. The foregoing sentence shall not apply to
(A) the PEPS and the Secondary Shares to be sold hereunder or (B) the PEPS
Shares offered hereunder.
3. TERMS OF PUBLIC OFFERING. (a) AWI is advised by the PEPS Managers
that the PEPS Underwriters propose to make a public offering of their respective
portions of the PEPS as soon after this Agreement has become effective as in the
PEPS Managers' judgment is advisable. The terms of the public offering of the
PEPS are set forth in the AWI Prospectus. AWI is further advised by the PEPS
Managers that the PEPS are to be offered to the public initially at a purchase
price per PEPS of $___ (the "PEPS PUBLIC OFFERING PRICE") and to certain dealers
selected by the PEPS Managers at a price that represents a concession not in
excess of $___ per PEPS under the PEPS Public Offering Price, and that the PEPS
Managers may allow, and such dealers may reallow, a concession, not in excess of
$___ per PEPS, to certain dealers.
(b) The Sellers are advised by the Secondary Managers that the
Secondary Shares Underwriters propose to make a public offering of their
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respective portions of the Secondary Shares as soon after the Dal-Tile
Registration Statement and this Agreement have become effective as in the
Secondary Managers' judgment is advisable. AWI is further advised by the
Secondary Managers that the Secondary Shares are to be offered to the
public initially at $___ a share (the "SECONDARY SHARES PUBLIC OFFERING
PRICE") and to certain dealers selected by the Secondary Managers at a
price that represents a concession not in excess of $____ a share under the
Secondary Shares Public Offering Price, and that any Secondary Shares
Underwriter may allow, and such dealers may reallow, a concession, not in
excess of $___ a share, to any Secondary Shares Underwriter or to certain
other dealers.
4. PAYMENT AND DELIVERY. (a) (i) Payment for the Firm PEPS to be sold by
AWI shall be made to AWI in Federal or other funds immediately available in New
York City against delivery of such Firm PEPS for the respective accounts of the
several PEPS Underwriters on the Closing Date at 10:00 A.M., New York City time,
on July __, 1998, or at such other time on the same or such other date, not
later than July __, 1998, as shall be designated in writing by the PEPS
Managers. The time and date of such payment are hereinafter referred to as the
"CLOSING DATE."
(ii) Payment for any Additional PEPS shall be made to AWI in
Federal or other funds immediately available in New York City against
delivery of such Additional PEPS for the respective accounts of the
several PEPS Underwriters at 10:00 A.M., New York City time, on the
date specified in the notice described in Section 2(a) or at such
other time on the same or on such other date, in any event not later
than July __, 1998, as shall be designated in writing by the PEPS
Managers. The time and date of such payment are hereinafter referred
to as the "ADDITIONAL PEPS CLOSING DATE."
(iii) Certificates for the Firm PEPS and Additional PEPS shall
be in definitive form and registered in such names and in such
denominations as the PEPS Managers shall request in writing not later
than one full business day prior to the Closing Date or the Additional
PEPS Closing Date, as the case may be. The certificates evidencing
the Firm PEPS and Additional PEPS shall be delivered to the PEPS
Managers on the Closing Date or the Additional PEPS Closing Date, as
the case may be, for the respective accounts of the several PEPS
Underwriters, with any transfer taxes payable in connection with the
transfer of the PEPS to the PEPS Underwriters duly paid, against
payment of the PEPS Purchase Price therefor.
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(b) (i) Payment for the Firm Shares to be sold by the Sellers shall
be made to AEI in Federal or other funds immediately available in New York
City against delivery of such Firm Shares for the respective accounts of
the several Secondary Shares Underwriters at 10:00 A.M., New York City
time, on the Closing Date.
(ii) Payment for any Additional Shares shall be made to AEI in
Federal or other funds immediately available in New York City against
delivery of such Additional Shares for the respective accounts of the
several Secondary Shares Underwriters at 10:00 A.M., New York City
time, on the date specified in the notice described in Section 2(b) or
at such other time on the same or on such other date, in any event not
later than July __, 1998, as shall be designated in writing by the
Secondary Managers. The time and date of such payment are hereinafter
referred to as the "ADDITIONAL SHARES CLOSING DATE."
(iii) Certificates for the Firm Shares and Additional Shares
shall be in definitive form and registered in such names and in such
denominations as the Secondary Managers shall request in writing not
later than one full business day prior to the Closing Date or the
Additional Shares Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to
the Secondary Managers on the Closing Date or the Additional Shares
Closing Date, as the case may be, for the respective accounts of the
several Secondary Shares Underwriters, with any transfer taxes payable
in connection with the transfer of the Secondary Shares to the
Secondary Shares Underwriters duly paid, against payment of the
Secondary Shares Purchase Price therefor.
The term "ADDITIONAL SHARES CLOSING DATE" as used herein shall mean
the Additional PEPS Closing Date or the Additional Shares Closing Date, in
each case as the context shall require.
5. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. (i) The obligation of
AWI to sell the PEPS to the PEPS Underwriters and the several obligations of the
PEPS Underwriters to purchase and pay for the PEPS and (ii) the obligation of
the Sellers to sell the Secondary Shares to the Secondary Shares Underwriters
and the several obligations of the Secondary Shares Underwriters to purchase and
pay for the Secondary Shares are subject to the respective conditions that (x)
the AWI Registration Statement and the Dal-Tile Registration Statement, in the
case of clause (i), and the Dal-Tile Registration Statement, in the case of
clause (ii), shall have become effective not later than 5:00 P.M. (New York City
time) on the date hereof.
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The several obligations of the PEPS Underwriters to purchase the PEPS
and the several obligations of the Secondary Shares Underwriters to
purchase the Secondary Shares are each subject to the following further
conditions:
(a) Subsequent to the execution and delivery of this Underwriting
Agreement and prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of AWI's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of
each of AWI or Dal-Tile and its respective subsidiaries, taken as a
whole, from that set forth in the AWI Prospectus or the Dal-Tile
Prospectuses, as the case may be (in either case, exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement), that, in the judgment of the PEPS Managers or the
Secondary Managers, as the case may be, is material and adverse and
that makes it, in the judgment of the PEPS Managers, impracticable (i)
with respect only to the several obligations of the PEPS Underwriters,
to market the PEPS on the terms and in the manner contemplated in the
AWI Prospectus or (ii) with respect only to the several obligations of
the Secondary Shares Underwriters, to market the Secondary Shares on
the terms and in the manner contemplated in the Secondary Shares
Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
AWI, to the effect set forth in clause 5(a)(i) above and to the effect that
the representations and warranties of AWI contained in this Agreement are
true and correct as of the Closing Date and that each of the Sellers has
complied with all of the agreements and satisfied all of the conditions on
its part to be performed or satisfied hereunder on or before the Closing
Date. The officer signing and delivering such certificate may rely upon
the best of his or her knowledge as to proceedings threatened.
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(c) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxxxx Xxxxxxxxx Professional Corporation, counsel for AWI,
dated the Closing Date, to the effect that:
(i) AWI is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in the AWI Prospectus.
(ii) this Agreement has been duly authorized, executed and
delivered by AWI and AEI;
(iii) the Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by
AWI and is a valid and binding agreement of AWI, enforceable in
accordance with its terms except as (a) the enforceability thereof may
be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (b) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability;
(iv) the PEPS have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Underwriters in accordance with the
terms of this Agreement, will be entitled to the benefits of the
Indenture, will conform to the description thereof contained in the
AWI Prospectus and will be valid and binding obligations of AWI
enforceable in accordance with their terms except as (a) the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (b) rights of
acceleration and the availability of equitable remedies may be limited
by equitable principles of general applicability;
(v) the statements in the AWI Prospectus under the captions,
"Relationship between Xxxxxxxxx and Dal-Tile," "Description of Debt
Securities," Description of Capital Stock," "Description of Depositary
Shares" and "Description of the PEPS," insofar as such statements
constitute a summary of the legal matters, documents or proceedings
referred to therein, fairly present the information called for and
fairly summarize the matters referred to therein, and the statements
in the AWI Prospectus under the captions "Prospectus Supplement
Summary -- The PEPS
13
Offering -- United States Taxation" and "United States Taxation"
fairly present, subject to the limitations expressed therein, the
principal United States federal income tax consequences of an
investment in the PEPS;
(vi) the execution and delivery by AWI of, and the performance
by each of AWI and AEI of its respective obligations under, this
Agreement, and the performance by AWI of its obligations under the
Indenture and the PEPS will not contravene any provision of applicable
law (except to the extent that the federal securities laws may limit
or restrict any indemnification provisions set forth in this
Agreement) or the articles of incorporation or by-laws of AWI or AEI,
and no consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the performance
by AWI or AEI of its obligations under this Agreement, or the
performance by AWI of its obligations under the Indenture or the PEPS;
(vii) delivery of the Secondary Shares to be sold by AEI
pursuant to this Agreement will pass title to such Secondary Shares
free and clear of any security interests, claims, liens, equities and
other encumbrances to each of the several Underwriters who have
purchased such Secondary Shares without notice of an "adverse claim"
thereto (as defined in Section 8-102 of the UCC);
(viii) upon delivery of the PEPS Shares pursuant to the terms of
the PEPS, registration of the transfer of the PEPS Shares to, and
registration of the PEPS Shares in the name of, Cede & Co. ("Cede") or
such other nominee as may be designated by the Depository Trust
Company ("DTC") and crediting of the PEPS Shares on the books of DTC
to securities accounts (the "Securities Accounts") of the various
beneficial owners of the PEPS who are direct participants in DTC
(assuming that each of such beneficial owners, DTC and Cede (or such
other nominee as may be designated by DTC) lacks notice of any
"adverse claim" (as defined in Section 8-102 of the Uniform Commercial
Code as in effect in the State of New York (the "UCC")) to the PEPS
Shares), (A) Cede or such other nominee designated by DTC will be a
"protected purchaser" of the PEPS Shares within the meaning of Section
8-303 of the UCC, (B) the beneficial owners of the PEPS Shares who are
direct participants in DTC will acquire valid "security entitlements"
in respect of the PEPS Shares within the meaning of Section 8-102 of
the UCC and (C) no action based on
14
any "adverse claim" (within the meaning of Section 8-102 of the UCC)
to the PEPS Shares may be asserted against such beneficial owners with
respect to such security entitlements (assuming that such beneficial
owners lack notice of any such adverse claim);
(ix) each of AWI and AEI is not, and after giving effect to
the offering and sale of the PEPS and the Secondary Shares and the
application of the proceeds thereof as described in the AWI Prospectus
or the Secondary Shares Prospectus, as the case may be, will not be an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended;
(x) Dal-Tile Corporation is validly existing as a corporation
in good standing under the laws of the Commonwealth of Pennsylvania
and has the corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the
Dal-Tile Registration Statement and each Dal-Tile Prospectus; and
(xi) such counsel is of the opinion that (A)each document, if
any, filed pursuant to the Exchange Act and incorporated by reference
in the AWI Prospectus (except for financial statements and related
schedules and other financial data included therein as to which such
counsel need not express any opinion) complied when so filed as to
form in all material respects with the Exchange Act and the applicable
rules and regulations of the Commission thereunder and (B) the AWI
Registration Statement and the AWI Prospectus comply as to form in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder; PROVIDED, HOWEVER, that such
counsel need not express any opinion or belief as to, with respect to
clause (B) above, the financial statements, including the notes and
schedules thereto, and financial or statistical data contained or
referred to in, or incorporated by reference to in, or incorporated by
reference in, the AWI Registration Statement or the AWI Prospectus.
Such counsel shall also state in such opinion that such counsel has no
reason to believe that (A) each part of the AWI Registration Statement, at
the time it became effective, and as of the date such opinion is delivered,
contains any untrue statement of a material fact or omitted or omits to
state any material fact required to be stated therein or necessary to make
the statements
15
therein not misleading; and (B) the AWI Prospectus, as of the date of the
AWI Prospectus and as of the date such opinion is delivered, contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that such counsel need not express any opinion or belief as to (1)
with respect to clause (A) above, that part of the AWI Registration
Statement which constitutes the Statement of Eligibility (Form T-1 under
the Trust Indenture Act) of the Trustee or (2) with respect to clauses (A)
and (B) above, the financial statements, including the notes and schedules
thereto, and any financial or statistical data contained or referred to in,
or incorporated by reference in, the AWI Registration Statement or the AWI
Prospectus.
In rendering its opinion, Xxxxxxxx Xxxxxxxxx Professional Corporation
may rely (i) as to matters of New York law, on the opinion of Xxxxx Xxxx &
Xxxxxxxx referred to in Section 5(e) hereof, and (ii) as to factual
matters, on certificates of officers of AWI and its subsidiaries and on
certificates of public officials. With respect to matters of Vermont law,
Xxxxxxxx Ingersoll Professional Corporation may state that in rendering
their opinion they have assumed that there are no differences material to
such opinion between the laws of the State of Vermont and the laws of the
Commonwealth of Pennsylvania. With respect to Section 5(c)(xi) and the
immediately preceding paragraph Xxxxxxxx Xxxxxxxxx Professional Corporation
may state that their opinion and belief are based upon their participation
in the preparation of the AWI Registration Statement and AWI Prospectus and
any amendments or supplements thereto and documents incorporated therein by
reference and review and discussion of the contents thereof, but are
without independent check or verification, except as specified.
The opinion of Xxxxxxxx Ingersoll Professional Corporation described
in this Section 5(c) shall be rendered to the Underwriters at the request
of AWI and shall so state therein.
(d) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxxx X. Xxxx, General Counsel of AWI, dated the Closing Date,
to the effect that:
16
(i) each Material Subsidiary is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the AWI
Prospectus; and each of AWI and each of its Material Subsidiaries is
duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on AWI and its subsidiaries, taken as a
whole;
(ii) the statements (A) in the AWI Registration Statement
under Item 15,(B) in "Item 3 - Legal Proceedings" of AWI's most recent
annual report on Form 10-K incorporated by reference in the AWI
Prospectus and (C) in "Item 1 - Legal Proceedings" of Part II of AWI's
quarterly reports on Form 10-Q filed since such annual report, in each
case insofar as such statements constitute summaries of the legal
matters, documents or proceedings referred to therein, and, in each
case, as modified by any subsequently filed Current Report on Form
8-K, and in the AWI Prospectus under "Recent Developments," fairly
present the information called for with respect to such legal matters,
documents and proceedings and fairly summarize the matters referred to
therein;
(iii) after due inquiry, such counsel does not know of any
legal or governmental proceedings pending or threatened to which AWI
or any of its Material Subsidiaries is a party or to which any of the
properties of AWI or any of its Material Subsidiaries is subject that
are required to be described in the AWI Registration Statement or the
AWI Prospectus and are not so described, or of any statutes,
regulations, contracts or other documents that are required to be
described in the AWI Registration Statement or the AWI Prospectus or
to be filed or incorporated by reference as exhibits to the AWI
Registration Statement that are not described, filed or incorporated
as required;
(iv) to the best of AWI's knowledge, after due inquiry, AWI
and its Subsidiaries (i) are in compliance with any and all applicable
Environmental Laws, (ii) have received all material 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
17
of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on AWI and
its subsidiaries, taken as a whole;
(v) to the best of AWI's knowledge, after due inquiry, there
are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to
third parties) which would, singly or in the aggregate, in AWI's
judgment reasonably be expected to have a material adverse effect on
AWI and its subsidiaries, taken as a whole, and which have not been
previously disclosed in the AWI Registration Statement;
(vi) the execution and delivery by AWI of, and the performance
by AWI of its obligations under, this Agreement, the Indenture and the
PEPS will not contravene any provision of the articles of
incorporation or by-laws of AWI or, to the best of such counsel's
knowledge, any agreement or other instrument binding upon AWI or any
of its subsidiaries that is material to AWI and its subsidiaries,
taken as a whole, or, to the best of such counsel's knowledge, any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over AWI or any subsidiary;
(vii) AEI has valid title to the Secondary Shares and AWI will
have, upon settlement of the PEPS title to the PEPS Shares and the
legal right and power to sell, transfer and deliver the Secondary
Shares and the PEPS Shares;
(e) The Underwriters shall have received on the Closing Date an
opinion of Xxxxx Xxxx & Xxxxxxxx, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in Sections 5(c)(ii),
5(c)(iii), 5(c)(iv) and 5(c)(v) (but only as to the statements under
"Description of the PEPS" and "Underwriters") and clause (A) of the
antepenultimate paragraph of Section 5(c) (but only as of the date such
opinion is delivered) and clauses, 5(c)(xi)(A) and 5(c)(xi)(B) above, in
each case subject to the applicable clauses of the provisos contained in
18
Section 5(c)(xi) and the antepenultimate paragraph of Section 5(c) . In
rendering such opinion, Xxxxx Xxxx & Xxxxxxxx may rely as to all matters of
Pennsylvania law upon the opinion of Xxxxxxxx Ingersoll referred to in
Section 5(c) above. With respect to clause (A) of the antepenultimate
paragraph of Section 5(c) and clauses 5(c)(xi)(A) and 5(c)(xi)(B) above,
Xxxxx Xxxx & Xxxxxxxx may state that their opinion and belief are based
upon their participation in the preparation of the AWI Registration
Statement and AWI Prospectus and any amendments or supplements thereto (but
not including documents incorporated therein by reference) and review and
discussion of the contents thereof (including documents incorporated
therein by reference), but are without independent check or verification,
except as specified.
(f) The Underwriters shall have received on the Closing Date an
opinion of Xxxxx Xxxx & Xxxxxxxx, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in Sections 2(c)(vi),
2(c)(xii) (but only as to the statements in each Dal-Tile Prospectus under
"Description of Capital Stock," in the Secondary Shares Prospectus under
"Underwriting" and in the PEPS Shares Prospectus under "Plan of
Distribution") and 2(c)(xii) of the Dal-Tile Indemnification Agreement.
With respect to such Section 2(c)(xii) of the Dal-Tile Indemnification
Agreement, Xxxxx Xxxx & Xxxxxxxx may state that their opinion and belief
are based upon its participation in the preparation of the Dal-Tile
Registration Statement and each Dal-Tile Prospectus and any amendments or
supplements thereto and review and discussion of the contents thereof, but
are without independent check or verification, except as specified.
(g) The Underwriters shall have received on each of the date hereof
and the Closing Date letters dated the date hereof or the Closing Date, as
the case may be, in form and substance satisfactory to the Underwriters,
from AWI's and Triangle Pacific Corp.'s respective independent public
accountants, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to
the financial statements and certain financial information contained in or
incorporated by reference into the AWI Prospectus; PROVIDED that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than
the date hereof.
(h) The "lock-up" agreements between the you and certain
shareholders, officers and directors of each of AWI and AEI relating to
sales and certain other dispositions of shares of Common Stock and certain
19
other securities, delivered to you on or before the date hereof, shall be
in full force and effect on the Closing Date.
(i) The Dal-Tile Indemnification Agreement shall be in effect as of
the Closing Date; the representations and warranties of Dal-Tile contained
in the Dal-Tile Indemnification Agreement shall be true and correct as of
the date hereof and as of the Closing Date; Dal-Tile shall have complied
with all of the agreements and satisfied all of the conditions on its part
to be performed or satisfied under the Dal-Tile Indemnification Agreement
on or before the Closing Date; the Underwriters shall have received on the
Closing Date the certificates, opinions and letters described in Sections
2(c), 2(d), 2(e) and 2(f) of the Dal-Tile Indemnification Agreement; and
the Underwriters shall have received on the Closing Date a certificate,
dated the Closing Date and signed by an executive officer of Dal-Tile, to
the effect that the representations and warranties of Dal-Tile contained in
the Dal-Tile Indemnification Agreement are true and correct as of the
Closing Date and that Dal-Tile has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or satisfied
thereunder on or before the Closing Date.
(j) The Shares shall have been listed or approved for listing on the
New York Stock Exchange.
The several obligations of the Underwriters to purchase Additional Shares
or Additional PEPS hereunder are subject to the delivery to you on the
Additional Shares Closing Date and Additional PEPS Closing Date, respectively,
of such documents as you may reasonably request with respect to the good
standing of AWI, AEI and/or Dal-Tile, the due authorization and issuance of the
Additional Shares or Additional PEPS, as the case may be, and other matters
related to the issuance of the Additional Shares or Additional PEPS, as the case
may be.
6. COVENANTS OF AWI. In further consideration of the agreements of the
Underwriters herein contained, AWI covenants with each Underwriter as follows:
(a) To furnish the PEPS Managers, without charge, 5 signed copies of
the AWI Registration Statement (including exhibits thereto) and 5 copies of
the AWI Prospectus and for delivery to each other PEPS Underwriter a
conformed copy of the AWI Registration Statement (without exhibits thereto)
and a copy of the AWI Prospectus in each case not later than 10:00 A.M. on
the day following the date hereof and, during the period mentioned in
paragraph 6(c) below, as many copies of the AWI Prospectus, any documents
incorporated by reference therein and any
20
supplements and amendments thereto or to the AWI Registration Statement as
the PEPS Managers may reasonably request.
(b) Before amending or supplementing the AWI Registration Statement
or the AWI Prospectus with respect to the PEPS, to furnish to the PEPS
Managers a copy of each such proposed amendment or supplement and not to
file any such proposed amendment or supplement to which the PEPS Managers
reasonably object.
(c) If, during such period after the first date of the public
offering of the PEPS as, in the opinion of counsel for the Underwriters,
the AWI Prospectus is required by law to be delivered in connection with
sales by an Underwriter or dealer, any event shall occur or condition exist
as a result of which it is necessary to amend or supplement the AWI
Prospectus in order to make the statements therein, in the light of the
circumstances when the AWI Prospectus is delivered to a purchaser, not
misleading, or if, in the reasonable judgment of AWI or in the opinion of
counsel for the Underwriters, it is necessary to amend or supplement the
AWI Prospectus to comply with applicable law, AWI will forthwith prepare
and file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses the PEPS
Managers will furnish to AWI) to which PEPS may have been sold by the PEPS
Managers on behalf of the Underwriters and to any other dealers upon
request, either amendments or supplements to the AWI Prospectus so that the
statements in the AWI Prospectus as so amended or supplemented will not, in
the light of the circumstances when the AWI Prospectus is delivered to a
purchaser, be misleading or so that the AWI Prospectus, as amended or
supplemented, will comply with applicable law.
(d) To cooperate with Underwriter's counsel to qualify the PEPS for
offer and sale under the securities or Blue Sky laws of such jurisdictions
as the PEPS Managers shall reasonably request and to maintain such
qualification for as long as the PEPS Managers shall reasonably request;
PROVIDED that in connection therewith AWI shall not be required to qualify
as a foreign corporation or file a general consent to service of process in
any jurisdiction.
(e) To make generally available to AWI's security holders and to the
PEPS Managers as soon as practicable an earnings statement covering a
twelve month period beginning on the first day of the first full fiscal
quarter after the date of this Agreement, which earning statement shall
satisfy the provisions of Section 11(a) of the Securities Act and the rules
and regulations of the Commission thereunder. If such fiscal quarter is
the
21
last fiscal quarter of AWI's fiscal year, such earning statement shall be
made available not later than 90 days after the close of the period covered
thereby and in all other cases shall be made available not later than 45
days after the close of the period covered thereby.
(f) To pay all expenses incident to the performance of its
obligations under this Agreement, including: (i) the preparation and
filing of the AWI Prospectus and all amendments and supplements thereto;
(ii) the preparation, issuance and delivery of the PEPS; (iii) the fees and
disbursements of AWI's counsel and accountants and of the Trustee and its
counsel; (iv) the qualification of the PEPS and the Shares under state
securities or Blue Sky laws in accordance with the provisions of Section
6(d) and Section 3(d) of the Dal-Tile Indemnification Agreement, including
filing fees and the fees and disbursements of counsel for the Underwriters
in connection therewith and in connection with the preparation of any Blue
Sky or Legal Investment Memoranda (the cost of which shall not exceed
$3,000); (v) the printing and delivery to the Underwriters in quantities as
herein above stated of copies of, and all amendments thereto of any
preliminary prospectus and the AWI Prospectus; (vi) the printing and
delivery to the Underwriters of copies of any Blue Sky or Legal Investment
Memoranda; (vii) any fees charged by rating agencies for the rating of the
PEPS; (viii) the filing fees and expenses, if any, incurred with respect to
any filing with the National Association of Securities Dealers, Inc. made
in connection with the PEPS; (ix) all document production charges and
expenses of counsel to the Underwriters incurred in connection with the
preparation of this Agreement, the Indemnification Agreement and the
Indenture; (x) all costs and expenses related to the transfer and delivery
of the Shares to the Underwriters, including any transfer or other taxes
payable thereon; (xi) any expenses incurred by AWI in connection with a
"road show" presentation to potential investors, including, without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with
the road show presentations with the prior approval of AWI, travel and
lodging expenses of the representatives and officers of AWI and any such
consultants, and the cost of any aircraft chartered in connection with the
road show; and (xii) all other costs and expenses incident to the
performance of the obligations of AWI hereunder for which provision is not
otherwise made in this Section.
The provisions of this Section shall not supersede or otherwise affect any
agreement that Dal-Tile and AWI may otherwise have for the allocation of such
expenses among themselves.
22
7. INDEMNIFICATION AND CONTRIBUTION. (a) AWI agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred by any Underwriter or any such controlling person in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the AWI Registration Statement or any amendment thereof, any preliminary
prospectus of AWI or the AWI Prospectus (as amended or supplemented if AWI shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, (A) except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to AWI in writing by such
Underwriter through the Managers expressly for use therein, or (B) except that
AWI shall not be liable to any Underwriter under this Section 7 to the extent
that any such loss, claim, liability or judgment results solely from an untrue
statement of a material fact contained in, or the omission of a material fact
from, an AWI preliminary prospectus if such untrue statement or omission was
completely corrected in the applicable AWI Prospectus Supplement prior to the
written confirmation of the sale of the PEPS or Shares, as the case may be,
giving rise to such loss, claim, liability or judgment if AWI shall sustain the
burden of proving (x) that such Underwriter sold the PEPS or Shares, as the case
may be, to the person alleging such loss, claim, damage or liability without
sending or giving the applicable AWI Prospectus Supplement or applicable
Dal-Tile Prospectus, as the case may be, to such person at or prior to the time
of written confirmation of the sale of the PEPS or Shares, as the case may be,
giving rise to such loss, claim, liability or judgment and that such delivery to
such person was required by law, (y) that AWI had furnished copies of the
applicable AWI Prospectus Supplement or applicable Dal-Tile Prospectus, as the
case may be, to such Underwriter reasonably prior to the written confirmation of
such sale, and (z) such Underwriter would not have been subject to such
liability if it had delivered the applicable AWI Prospectus Supplement or
applicable Dal-Tile Prospectus, as the case may be, to such person at or prior
to the time of written confirmation of such sale.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless AWI, its directors, its officers who sign the AWI
Registration Statement and each person, if any, who controls AWI within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from AWI to such
Underwriter, but only with reference to information relating
23
to such Underwriter furnished to AWI in writing by such Underwriter through
the Managers expressly for use in any preliminary prospectus, the AWI
Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to either paragraph (a) or (b) of this Section 7, such
person (the "indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in writing and
the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in
such proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party
shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless
(i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any
such proceeding (including any impeded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for the fees and expenses of more than
one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed
as they are incurred. Such firm shall be designated in writing by Xxxxxx
Xxxxxxx & Co. Incorporated, in the case of parties indemnified pursuant to
paragraph 7(a) above, and by AWI, in the case of parties indemnified
pursuant to paragraph 7(b) above. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment
for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of
the aforesaid request and (ii) such indemnifying party shall not have
24
reimbursed the indemnified party in accordance with such request prior to
the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of
any pending or threatened proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph 7(a)
or 7(b) of this Section is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such paragraph, in
lieu of indemnifying such indemnified party thereunder, shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by AWI on the one
hand and the Underwriters on the other hand from the offering of the PEPS
or the Shares, as the case may be, 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 AWI on the one hand and of
the Underwriters on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by AWI on the one hand and the Underwriters on the other hand in
connection with the offering of the PEPS (or the Shares, as the case may
be) shall be deemed to be in the same respective proportions as the net
proceeds from the offering of such PEPS (or the Shares, as the case may be)
(before deducting expenses) received by AWI and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the AWI Prospectus Supplement (or
Dal-Tile Prospectus, as the case may be), bear to the aggregate public
offering price of the PEPS (or the Shares, as the case may be). The
relative fault of AWI 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 AWI or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the
25
respective principal amounts of PEPS they have purchased hereunder, and not
joint.
(e) AWI and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 7 were determined by PRO
RATA allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph 7(d) of
this Section. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the PEPS
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The remedies provided for in this
Section 7 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in
equity.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of AWI
contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter or AWI, its officers or directors or any person
controlling AWI and (iii) acceptance of and payment for any of the PEPS or
Shares.
8. TERMINATION. This Agreement shall be subject to termination by notice
given by Xxxxxx Xxxxxxx & Co. Incorporated to AWI, if (a) after the execution
and delivery of this Agreement and prior to the Closing Date (i) trading
generally shall have been suspended or materially limited on or by, as the case
may be, any of the New York Stock Exchange, the American Stock Exchange or the
National Association of Securities Dealers, Inc., (ii) trading of any securities
of AWI or Dal-Tile shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
26
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in the judgment of Xxxxxx Xxxxxxx & Co. Incorporated, is material and
adverse and (b) in the case of any of the events specified in clauses (a)(i)
through (iv), such event, singly or together with any other such event, makes
it, in the judgment of Xxxxxx Xxxxxxx & Co. Incorporated, impracticable to
market the PEPS on the terms and in the manner contemplated in the AWI
Prospectus or the Secondary Shares on the terms and in the manner contemplated
in the Secondary Shares Prospectus.
9. DEFAULTING UNDERWRITERS. If, on the Closing Date or the applicable
Option Closing Date, as the case may be, any one or more of the Underwriters
shall fail or refuse to purchase PEPS (or Shares) that it has or they have
agreed to purchase hereunder on such date, and the aggregate number of PEPS (or
Shares) which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase is not more than one-tenth of the aggregate number of the
PEPS (or Shares) to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm PEPS (or Firm
Shares) set forth opposite their respective names in Schedule I (or, in the case
of Shares, Schedule II) to this Agreement bears to the aggregate principal
amount of PEPS (or Shares) set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as Xxxxxx Xxxxxxx &
Co. Incorporated may specify, to purchase the PEPS (or Shares) which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date; provided that in no event shall the number of PEPS (or Shares)
that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 9 by an amount in excess of one-ninth of such
number of PEPS (or Shares) without the written consent of such Underwriter. If,
on the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm PEPS (or Firm Shares) and the aggregate principal amount of PEPS
(or Shares) with respect to which such default occurs is more than one-tenth of
the aggregate principal amount of PEPS (or Shares) to be purchased on such date,
and arrangements satisfactory to Xxxxxx Xxxxxxx & Co. Incorporated and AWI for
the purchase of such PEPS (or Shares) are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or AWI. In any such case either Xxxxxx Xxxxxxx & Co.
Incorporated or AWI 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 AWI Registration Statement and in the AWI Prospectus (or the Dal-Tile
Registration Statement and in the Dal-Tile Prospectus) or in 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 default
of such Underwriter under this Agreement.
27
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of AWI to comply with the terms or
to fulfill any of the conditions of this Agreement, or if for any reason AWI
shall be unable to perform its obligations under this Agreement, AWI will
reimburse the Underwriters or such Underwriters as have so terminated this
Agreement with respect to themselves, severally, for all out-of-pocket expenses
(including the fees and disbursements of their counsel) reasonably incurred by
such Underwriters in connection with this Agreement or the offering contemplated
hereunder.
10. EFFECTIVENESS. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
11. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
13. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
28
Please confirm your agreement by having an authorized officer sign a copy
of this Agreement in the space set forth below.
Very truly yours,
XXXXXX XXXXXXX & CO. INCORPORATED
Acting on behalf of itself and
the several Underwriters named herein
By: XXXXXX XXXXXXX & CO. INCORPORATED
By:
---------------------------
Name:
Title:
Accepted:
XXXXXXXXX WORLD INDUSTRIES, INC.
By:
-----------------------------
Name:
Title:
XXXXXXXXX ENTERPRISES, INC.
By:
-----------------------------
Name:
Title:
29
SCHEDULE I
NUMBER OF
FIRM PEPS SHARES
UNDERWRITER TO BE PURCHASED
-------------------------------------------------- -------------------------
Xxxxxx Xxxxxxx & Co. Incorporated . . . . . . . .
Xxxxx Xxxxxx Inc. . . . . . . . . . . . . . . . .
-------------------------
Total: . . . . . . . . . . . . . . . . . . .
=========================
SCHEDULE II
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
-------------------------------------------------- -------------------------
Xxxxxx Xxxxxxx & Co. Incorporated . . . . . . . .
Lazard Freres & Co LLC. . . . . . . . . . . . . .
Xxxxx Xxxxxx Inc. . . . . . . . . . . . . . . . .
[NAMES OF OTHER UNDERWRITERS] . . . . . . . . . .
-------------------------
Total: . . . . . . . . . . . . . . . . . . .
=========================
