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Exhibit 1
THE XXXXX-XXXXXXX STORES CORP.
2,500,000 Common Shares*
UNDERWRITING AGREEMENT
______________, 1998
XxXxxxxx & Company Securities, Inc.
SBC Warburg Dillon Read Inc.
Xxxxxxx Xxxx & Company L.L.C.
As Representatives of the Several Underwriters
c/x XxXxxxxx & Company Securities, Inc.
XxXxxxxx Investment Center
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Dear Sirs:
1. INTRODUCTORY. The Xxxxx-Xxxxxxx Stores Corp., an Ohio corporation
(the "Company"), proposes to issue and sell 2,500,000 of its common shares, no
par value (the "Common Shares"), which are authorized but unissued, to the
public through the underwriters named in Schedule A annexed hereto (the
"Underwriters") for whom you are acting as the Representatives. The 2,500,000
Common Shares to be purchased from the Company are hereinafter referred to as
the "Firm Stock." The Company also proposes to sell to the Underwriters, at
their option, an aggregate of not more than 375,000 additional Common Shares,
which are hereinafter referred to as the "Option Stock." The Firm Stock and the
Option Stock are hereinafter collectively referred to as the "Stock" and are
more fully described in the Registration Statement and the Prospectus (as
hereinafter defined). The Company hereby confirms its several agreements with
you, acting as the Representatives of the Underwriters.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to each of the Underwriters that:
(a) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than those listed in Exhibit 21
to the Registration
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* Plus an option to purchase up to 375,000 additional shares to cover
over-allotments.
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Statement (as hereinafter defined). The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of Ohio with
power and authority to own and lease its properties and conduct its business as
described in the Prospectus (as hereinafter defined). Each of the Company's
subsidiaries has been duly incorporated and is validly existing as a corporation
in good standing under the laws of its respective jurisdiction of incorporation,
with power and authority to own and lease its properties and conduct its
respective business. The Company and each of its subsidiaries are duly qualified
to do business as a foreign corporation and are in good standing in all
jurisdictions (i) in which the conduct of business, as presently being
conducted, requires such qualification (except for those jurisdictions in which
the failure to so qualify will not in the aggregate have a material adverse
effect on the Company or such subsidiary) and (ii) in which the Company or such
subsidiary owns or leases real property. Except as disclosed in the Registration
Statement, the Company does not own, directly or indirectly, any equity
securities or securities convertible into or exchangeable for equity securities
of any other corporation, partnership, joint venture, Massachusetts or other
business trust or any other business enterprise.
(b) This Agreement has been duly and validly authorized, executed and
delivered on behalf of the Company and constitutes a valid and binding
obligation of the Company enforceable in accordance with its terms.
(c) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission"), in accordance with the provisions of the
Securities Act of 1933, as amended (the "Act"), and the Rules and Regulations of
the Commission thereunder (as hereinafter defined), a registration statement on
Form S-1 (Registration No.333- ________) including a preliminary prospectus
relating to the Company's Stock, and such amendments to such registration
statement as may have been required prior to the date hereof have been similarly
prepared and filed with the Commission. The registration statement as amended at
the time when it becomes effective, or, if applicable, as amended at the time
the most recent post-effective amendment to such registration statement filed
with the Commission prior to the execution and delivery of this Agreement became
effective (the "Effective Date"), and including information (if any) contained
in a prospectus subsequently filed with the Commission pursuant to Rule 424(b)
under the Act, and deemed to be part of the registration statement at the time
of effectiveness pursuant to Rule 430A under the Act is hereinafter referred to
as the "Registration Statement"; the prospectus in the form first used to
confirm sales of Stock, whether or not filed with the Commission pursuant to
Rule 424(b) under the Act is hereinafter referred to as the "Prospectus." If an
abbreviated registration statement is prepared and filed with the Commission in
accordance with Rule 462(b) under the Act (an "Abbreviated Registration
Statement"), the term "Registration Statement" as used in this Agreement
includes the Abbreviated Registration Statement.
(d) As of the Effective Date, and at all times subsequent thereto up to
and including the respective Closing Dates (as hereinafter defined) of the
offering, the Registration Statement and the Prospectus, and any amendments
thereof or supplements thereto, will contain all statements of material facts
which are required to be stated therein in accordance with the Act and the
applicable rules, regulations and interpretive releases of the Commission
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thereunder (the "Rules and Regulations"), and will in all material respects
conform to the requirements of the Act and the Rules and Regulations; and
neither the Registration Statement nor the Prospectus, nor any amendment thereof
or supplement thereto, will include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that the Company
makes no representations, warranties or agreements as to information contained
in the Registration Statement or the Prospectus or any such amendment or
supplement thereto in reliance upon and in conformity with written information
furnished to the Company through you as the Representatives specifically for use
in the preparation thereof.
(e) The Company has a duly authorized and outstanding capitalization as
set forth under "Capitalization" in the Prospectus except for changes due to
payments required by debt agreements, or as otherwise provided in the
Prospectus; all of the outstanding Common Shares are duly authorized and validly
issued, fully paid and nonassessable, are free of any preemptive rights, rights
of first refusal or similar rights, were issued and sold in compliance with the
applicable Federal and state securities laws and conform in all material
respects to the description in the Prospectus; except as described in the
Prospectus, there are no outstanding options, warrants or other rights calling
for the issuance of and there are no commitments, plans or arrangements to issue
any shares of capital stock of the Company or any security convertible or
exchangeable or exercisable for capital stock of the Company. There are no
holders of securities of the Company who, by reason of the filing of the
Registration Statement have the right (and have not waived such right) to
request the Company to include in the Registration Statement securities owned by
them, other than such rights as have been satisfied by the inclusion of
securities in the Registration Statement.
(f) The Common Shares of the Company conform in substance to all
statements in relation thereto contained in the Registration Statement and the
Prospectus; the Stock to be sold by the Company hereunder has been duly
authorized and, when issued and delivered pursuant to this Agreement, will be
validly issued, fully paid and nonassessable and will conform to the description
thereof contained in the Prospectus. All corporate action required to be taken
for the issuance of the Stock by the Company has been validly and sufficiently
taken. No preemptive rights of security holders of the Company exist with
respect to the issuance and sale of the Stock by the Company pursuant hereto.
(g) All the issued shares of capital stock of each subsidiary of the
Company have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned by the Company free and clear of all liens,
encumbrances, equities, security interests, or claims; and there are no
outstanding options, warrants or other rights calling for the issuance of and
there are no commitments, plans or arrangements to issue, any shares of capital
stock of any subsidiary or any security convertible or exchangeable or
exercisable for capital stock of any subsidiary; except as disclosed in the
Registration Statement and except for the shares of stock of each subsidiary
owned by the Company, neither the Company nor any subsidiary owns, directly or
indirectly, any shares of capital stock of any corporation or has any equity
interest in any firm, partnership, joint venture, association or other entity.
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(h) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as set forth or
contemplated in the Prospectus, (i) neither the Company nor any of its
subsidiaries has incurred any material liabilities or obligations, direct or
contingent, nor have any of them entered into any material transaction, (ii)
there has not been and will not have been any change on a pro forma basis or
otherwise in the capital stock or funded debt of the Company and its
subsidiaries which is material or any material adverse change in the business or
the financial position or results of operations of the Company and its
subsidiaries and (iii) no loss or damage (whether or not insured) to the
property of the Company and its subsidiaries have been sustained which
materially and adversely affects the operations of the Company and its
subsidiaries.
(i) The consummation of the transactions herein contemplated and the
fulfillment of the terms hereof will not conflict with or result in a breach of
any of the terms and provisions of or constitute a default under, the Articles
of Incorporation or the Code of Regulations of the Company, or the
organizational documents of any of its subsidiaries, or any indenture, mortgage,
deed of trust or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its subsidiaries
is bound, or any order, rule or regulation applicable to the Company or any of
its subsidiaries of any court or of any federal or state regulatory body or
administrative agency or other governmental body having jurisdiction over the
Company or any of its subsidiaries or any of their properties.
(j) The financial statements of the Company and Stone & Xxxxxx included
in the Registration Statement and the Prospectus fairly present the financial
position and results of operations of the Company and Stone & Xxxxxx at the
respective dates and for the respective periods to which they apply, and such
financial statements have been prepared in conformity with generally accepted
accounting principles consistently applied throughout the periods involved. The
pro forma financial statements of the Company included in the Prospectus fairly
present the pro forma financial position and results of operations of the
Company at the dates and for the periods to which they apply, and have been
prepared to give effect to certain assumptions and proposed transactions made on
reasonable bases which are fully and accurately described in the Prospectus, and
the pro forma adjustments have been properly applied on the bases described
therein.
(k) Deloitte & Touche LLP, who have examined and expressed their opinion
on the financial statements of the Company referenced in their opinions set
forth in the Prospectus, are independent accountants within the meaning of the
Act and the Rules and Regulations.
(l) The Company and its subsidiaries hold all necessary material
authorizations, approvals, orders, licenses, certificates and permits of and
from all governmental regulatory officials and bodies (collectively the
"licenses") required for the conduct of its business as described in the
Prospectus, and all such licenses are valid and in full force and effect, and
the Company and its subsidiaries are operating in compliance in all material
respects with the terms and provisions of such licenses and with all material
laws, regulations, orders and
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decrees applicable to the Company and its subsidiaries, and their respective
businesses and assets.
(m) Neither the Company nor any of its subsidiaries is in violation of
any applicable Federal, state or local laws, statutes, rules, regulations or
ordinances relating to public health, safety or the environment, including,
without limitation, relating to releases, discharges, emissions or disposal to
air water, land or groundwater, to the withdrawal or use of groundwater, to the
use, handling or disposal of polychlorinated biphenyls (PCBs), asbestos or urea
formaldehyde, to the treatment, storage, disposal or management of hazardous
substances (including, without limitation, petroleum, crude oil or any fraction
thereof, or other hydrocarbons), pollutants or contaminants, to exposure to
toxic, hazardous or other controlled, prohibited or regulated substances, which
violation would have a material adverse effect on the business, condition
(financial or other) or results of operations of the Company and its
subsidiaries, or which might materially and adversely affect the consummation of
the transactions contemplated by this Agreement. In addition, and irrespective
of such compliance, neither the Company nor any of its subsidiaries is subject
to any liabilities for environmental remediation or clean-up, including any
liability or class of liability of the lessee under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, or
the Resource Conservation and Recovery Act of 1976, as amended, which liability
would have a material adverse effect on the business, condition (financial or
other) or results of operations of the Company and its subsidiaries, or which
might materially and adversely affect the consummation of the transactions
contemplated by this Agreement.
(n) There are no legal or governmental actions, suits or proceedings
pending or, to the knowledge of the Company, threatened to which the Company or
any of its subsidiaries, or any of their executive officers or directors is a
party or of which the business or property (including, without limitation, any
of the licenses referred to in (l) above) of the Company or any of its
subsidiaries or any of the Company's or any of its subsidiaries' employees is
the subject which could have a material adverse effect on the business,
condition (financial or other) or results of operations of the Company and its
subsidiaries, except as set forth in the Prospectus.
(o) Neither the Company nor any of its subsidiaries is in violation of
its Articles of Incorporation or its Code of Regulations or other organizational
documents, and no default exists by the Company or any of its subsidiaries in
the due performance and observance of any term, covenant or condition of any
agreement material to the Company and its subsidiaries to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound.
(p) The Company and its subsidiaries have good title to, or valid and
enforceable leasehold estates in, all properties and assets used for their
businesses (including the property described in the Prospectus as being owned or
leased by the Company), in each case free and clear of all liens, encumbrances
and defects other than those set forth or referred to in the Registration
Statement or Prospectus or those which do not materially affect the value of
such property or leasehold and do not materially interfere with the use made or
proposed to be
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made of such property or leasehold by the Company and its subsidiaries; and all
of the leases and subleases under which the Company and its subsidiaries hold
such properties are in full force and effect.
(q) Other than as set forth in the Prospectus, the Company and its
subsidiaries own or possess, or can acquire on reasonable terms, the patents,
patent rights, licenses, inventions, copyrights, know-how (including trade
secrets, applications and other unpatented or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks, and
trade names (collectively, "Proprietary Rights") used in or necessary for the
conduct of their businesses as now conducted and as proposed to be conducted as
described in the Prospectus; the Company and its subsidiaries have the right to
use all Proprietary Rights used in or necessary for the conduct of their
businesses without infringing the rights of any person or violating the terms of
any licensing or other agreement to which the Company or any of its subsidiaries
is a party, and to the knowledge of the Company no person is infringing upon any
Proprietary Right which the Company or any of its subsidiaries has the sole and
exclusive right to use; no charges, claims or litigation have been asserted or
to the knowledge of the Company threatened against the Company or any of its
subsidiaries contesting the right of the Company or any of its subsidiaries to
use, or the validity of, any Proprietary Right or challenging or questioning the
validity or effectiveness of any license or agreement pertaining thereto or
asserting the misuse thereof, and, to the Company's knowledge, no valid basis
exists for the assertion of any such charge, claim or litigation; all licenses
and other agreements to which the Company or any of its subsidiaries is a party
relating to Proprietary Rights are in full force and effect and constitute
valid, binding and enforceable obligations of the Company or such subsidiary,
and, to the Company's knowledge, the other respective parties thereto, and there
have not been and there currently are not any defaults which would have a
material adverse effect on the Company and its subsidiaries, and no event has
occurred which (whether by notice or lapse of time or both) would constitute a
default under any license or other agreement affecting Proprietary Rights used
in or necessary for the conduct of the businesses of the Company and its
subsidiaries by any party; and except as set forth in the Prospectus, the
validity, continuation and effectiveness of all such licenses and other
agreements and the current terms thereof will not be affected by the
transactions contemplated by this Agreement.
(r) No approval, authorization, consent or other order of any public
board or body (other than in connection with or in compliance with the
provisions of the Act and the securities or Blue Sky laws of various
jurisdictions) is legally required for the sale of the Stock by the Company.
(s) The Common Shares have been registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended, and have been authorized for
trading over-the-counter on the Nasdaq National Market ("Nasdaq"), and the Stock
has been authorized for trading on the Nasdaq, subject only to official notice
of issuance.
(t) The outstanding debt, the properties and the business of the Company
and its subsidiaries conform in all material respects to the description thereof
contained in the Registration Statement and the Prospectus.
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(u) The Company and its subsidiaries have filed on a timely basis all
necessary federal, state, local and foreign income and franchise tax returns
required to be filed through the date hereof and have paid all taxes shown as
due thereon; and no tax deficiency has been asserted against the Company or any
of its subsidiaries, nor does the Company know of any tax deficiency which is
likely to be asserted against the Company or any of its subsidiaries which if
determined adversely to the Company or such subsidiary could materially
adversely affect the business, prospects, properties, assets, results of
operations or condition (financial or otherwise) of the Company and its
subsidiaries. All tax liabilities are adequately provided for on the books of
the Company.
(v) The Company and each of its subsidiaries maintain insurance of the
types and in the amounts generally deemed adequate for their businesses and, to
the best of the Company's knowledge, consistent with insurance coverage
maintained by similar companies in similar businesses, including, but not
limited to, insurance covering (i) personal injury claims and (ii) real and
personal property owned or leased by the Company and its subsidiaries against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against, all of which insurance is in full force and effect.
(w) To the best of the Company's knowledge, no labor problem exists with
its employees or is threatened or imminent that could materially adversely
affect the Company and its subsidiaries, and the Company is not aware of any
existing, threatened or imminent labor disturbance by the employees of any of
its principal suppliers, contractors or customers that could be expected to
materially adversely affect the business, prospects, properties, assets, results
of operation or condition (financial or other) of the Company and the
subsidiaries.
(x) The Company has obtained the agreement of each of its executive
officers, directors and certain shareholders that, for a period of 180 days from
the date of the final prospectus, such persons will not, without the prior
written consent of XxXxxxxx & Company Securities, Inc., directly or indirectly
sell, offer to sell, grant any option for the sale of, or otherwise dispose of
any of the Company's Common Shares (including, without limitation, shares of
Common Shares which may be deemed to be beneficially owned by such persons in
accordance with the 1934 Act Regulations) or any securities convertible into
Common Shares.
(y) Neither the Company nor any of its officers, directors or affiliates
(as defined in the Act and the Rules and Regulations), has taken or will take,
directly or indirectly, any action designed to stabilize or manipulate, or which
has constituted, or might in the future reasonably be expected to cause or
result in, stabilization or manipulation of, the price of the Stock of the
Company in order to facilitate the sale or resale of the Stock or otherwise.
(z) The Company's system of internal accounting controls is sufficient
to meet the broad objectives of internal accounting control insofar as those
objectives pertain to the prevention or detection of errors or irregularities in
amounts that would be material in relation to the Company's financial
statements; and, to the best of the Company's knowledge,
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neither the Company nor any employee or agent of the Company or any of its
subsidiaries has made any payment of funds of the Company or any of its
subsidiaries or received or retained any funds and no funds of the Company or
any of its subsidiaries have been set aside to be used for any payment in
violation of any law, rule or regulation.
(aa) Neither the Company nor any of its subsidiaries is or intends to
conduct its business in a manner in which it would become, an "investment
company" under the Investment Company Act of 1940, as amended.
(bb) All contracts and documents which are required to be filed as
exhibits to the Registration Statement have been so filed.
3. SALE, PURCHASE AND DELIVERY OF STOCK. (a) On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company hereby agrees to sell to each
Underwriter, and each Underwriter, severally and not jointly, agrees to purchase
from the Company the respective number of shares of the Firm Stock set forth
opposite the Underwriter's name in Schedule A hereto, at a price of $_______ per
share.
(b) The Company will deliver the Firm Stock to you for the respective
accounts of the several Underwriters at the office of XxXxxxxx & Company
Securities, Inc., XxXxxxxx Investment Center, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxx 00000, at 10:00 A.M., Cleveland time, or to your designee at a specified
place at the same time, against payment of the purchase price at the place of
such Closing by certified or official bank check in next day funds drawn to the
order of the Company on the third full business day after the effective date of
the Registration Statement (or, if the Firm Stock is priced after 4:30 p.m.,
Cleveland time on the effective date of the Registration Statement, the fourth
full business day after the effective date of the Registration Statement), or at
such other time not later than seven full business days after such initial
public offering as you shall determine, such time and place being herein
referred to as the "Closing Date." The certificates for the Firm Stock so to be
delivered will be in such denominations and registered in such names as you may
specify to the Company at or before 3:00 P.M., Cleveland time, on the second
full business day prior to the Closing Date. Such certificates will be made
available for checking and packaging at least 24 hours prior to the Closing
Date.
(c) On the basis of the representations and warranties herein contained,
but subject to the terms and conditions herein set forth, the Company hereby
grants an option to the several Underwriters to purchase, severally and not
jointly, up to 375,000 additional shares in the aggregate of the Option Stock at
the purchase price set forth in Section 3(a) hereof, for use solely in covering
any over-allotments made by the Underwriters in the sale and distribution of the
Firm Stock. The option granted hereunder may be exercised at any time (but not
more than once) within 30 days after the date the Registration Statement becomes
effective, upon written or telegraphic notice by the Representatives to the
Company setting forth the aggregate number of shares of the Option Stock as to
which the Underwriters are exercising the option and the time and place at which
certificates will be delivered, such time (which, unless otherwise determined
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by you and the Company, shall not be earlier than three nor later than seven
full business days after the exercise of said option) being herein called the
"Second Closing Date." The number of shares of the Option Stock to be sold by
the Company to each Underwriter and purchased by such Underwriter from the
Company shall be the same percentage of the total number of shares of the Option
Stock to be purchased by the several Underwriters on the Second Closing Date as
such Underwriter purchased of the total number of shares of the Firm Stock, as
adjusted by the Representatives to avoid fractions and to reflect any adjustment
required by Section 11 hereof. The Company will deliver certificates for the
shares of the Option Stock being purchased by the several Underwriters to you on
the Second Closing Date at the place and time of such Closing, or to your
designee at a specified place at the same time, against payment of the purchase
price at the place of such Closing, by certified or official bank checks in next
day funds drawn to the order of the Company. The certificates for the Option
Stock so to be delivered will be in such denominations and registered in such
names as you may specify to the Company at or before 3:00 P.M., Cleveland time,
on the second full business day prior to the Second Closing Date. Such
certificates will be made available for checking and packaging at least 24 hours
prior to the Second Closing Date. The option granted hereby may be cancelled by
you as the Representatives of the several Underwriters, as to the shares of the
Option Stock for which the option is unexercised, at any time prior to the
expiration of the 30-day period, upon notice to the Company.
4. OFFERING BY UNDERWRITERS. Subject to the terms and conditions hereof,
the several Underwriters agree that (i) they will offer the Stock to the public
as set forth in the Prospectus as soon after the Registration Statement becomes
effective as may be practicable, but in no event later than 5:00 p.m., Cleveland
time, on the 15th business day subsequent to the date that the Registration
Statement becomes effective, and (ii) they will offer and sell the Stock to the
public only in those jurisdictions, and in such amounts, where due qualification
and/or registration has been effected or an exemption from such qualification
and/or registration is available under the applicable securities or Blue Sky
laws of such jurisdiction; it being understood, however, that such agreement
only covers the initial sale of the Stock by the Underwriters and not any
subsequent sale of such Stock in any trading market which may develop after the
public offering.
5. COVENANTS OF THE COMPANY. The Company covenants and agrees with each
of the Underwriters that:
(a) The Company will make every reasonable effort to cause the
Registration Statement to become effective and will advise you when it is
effective under the Act. The Company will not file any amendment to the
Registration Statement, or supplement to the Prospectus, of which you have not
been previously advised and furnished with a copy, or to which you have
reasonably objected in writing.
(b) The Company will advise you promptly of any request of the
Commission for amendment of the Registration Statement or Prospectus or for
additional information and of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the institution
of any proceedings for that
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purpose of which it has knowledge, and the Company will make every reasonable
effort to prevent the issuance of any such stop order and to obtain as soon as
possible the lifting thereof, if issued.
(c) The Company will comply, to the best of its ability, with the Act
so as to permit the continuance of sales of and dealings in the Stock under the
Act for such period as may be required by the Act; whenever it is necessary to
amend or supplement the Prospectus to make the statements therein not
misleading, furnish, without charge to you as the Representatives, either
amendments to the Prospectus or supplemental information, so that the statements
in the Prospectus as so amended or supplemented will not be misleading; and file
a post-effective amendment to the Registration Statement whenever such an
amendment may be required and furnish, without charge to you, a reasonable
number of copies of any such amendment and related Prospectus.
(d) Not later than the 45th day following the end of the fiscal
quarter first occurring after the first anniversary of the Effective Date, the
Company will make generally available to its security holders and deliver to you
an earnings statement (which need not be audited) covering a period of at least
12 months beginning not earlier than the Effective Date which shall satisfy the
provisions of Section 11(a) of the Act and/or Rule 158 promulgated under the
Act.
(e) The Company will furnish to you copies of the Registration
Statement (two of which will be signed and will include all exhibits thereto),
each preliminary prospectus, the Prospectus, all amendments of and supplements
to such documents, and all correspondence between the Commission and the Company
or its counsel or accountants relating thereto, in each case as soon as
available and in such quantities as you may reasonably request.
(f) For a period of three years from the date of the Prospectus, the
Company will deliver to you (i) within 90 days after the end of each fiscal
year, consolidated balance sheets, statements of income, statements of cash flow
and statements of changes in stockholders' equity of the Company and its
consolidated subsidiaries, if any, as at the end of and for such year and the
last preceding year, all in reasonable detail and certified by independent
accountants, (ii) within 45 days after the end of each of the first three
quarterly periods in each fiscal year, unaudited consolidated balance sheets and
statements of income, statements of cash flow and statements of changes in
stockholders' equity of the Company and its consolidated subsidiaries, if any,
as at the end of and for such period, all in reasonable detail, (iii) as soon as
available, all such proxy statements, financial statements and reports as the
Company shall send or make available to its stockholders or the stockholders of
any subsidiary any of whose stock is owned by any person other than the Company
or any subsidiary, and (iv) copies of all annual or periodic reports as the
Company or any subsidiary shall file with the Commission as required by the Act,
the Exchange Act and any rules or regulations thereunder, which are available
for public inspection at the Commission, or any material reports filed in
connection with the Company's listing on any stock exchange.
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(g) The Company will apply the net proceeds from the sale of the
Stock sold by it in the manner set forth in the Prospectus.
(h) If, at the time that the Registration Statement becomes
effective, any information shall have been omitted therefrom in reliance upon
Rule 430A promulgated under the Act, then immediately following the execution of
this Agreement, the Company will prepare, and file or transmit for filing with
the Commission in accordance with Rule 430A and Rule 424(b) promulgated under
the Act, copies of an amended Prospectus or, if required by such Rule 430A, a
post-effective amendment (including an amended Prospectus), containing all
information so omitted.
(i) The Company will file with the NASD all documents and notices
required of companies that have issued securities that are traded in the
over-the-counter market and quotations for which are reported by the Nasdaq.
(j) The Company will cooperate with you and your counsel to qualify
the Stock for sale under the securities or Blue Sky laws of such jurisdictions
within the United States as you designate, including furnishing such information
and executing such instruments as may be required, and will continue such
qualifications in effect for a period of at least three months from the date
hereof, provided, however, the Company shall not be required to register or
qualify as a foreign corporation or as a dealer in securities nor, except as to
matters and transactions relating to the offer and sale of the Stock, consent to
a service of process in any jurisdiction.
(k) For a period of 180 days from the time of the initial public
offering of the Stock by the Underwriters, the Company will not publicly sell,
except with your prior written consent, any Common Shares or securities
convertible into Common Shares for cash, except pursuant to the exercise of any
outstanding stock options of the Company that are described in the Prospectus.
(1) The Company and the Subsidiaries are in compliance with the
financial record-keeping requirements and internal accounting control
requirements of Section 13(b)(2) of the Exchange Act.
(m) The Company, during the period when the Prospectus is required to
be delivered under the Act, will file all documents required to be filed with
the Commission pursuant to Sections 13, 14 or 15 of the Exchange Act within the
time periods required by the Exchange Act and the rules and regulations
promulgated thereunder.
6. PAYMENT OF EXPENSES. The Company will pay or cause to be paid all
costs and expenses incident to the performance of the obligations of the Company
hereunder, including, but not limited to, the reasonable fees and disbursements
of its counsel; the reasonable fees, costs and expenses of preparing, printing
and delivering the certificates for the Stock; the reasonable fees, costs and
expenses of the transfer agent and registrar for the Common Shares; the
reasonable fees and disbursements of its accountants; the filing fees and
reasonable expenses
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incurred in connection with the qualification, registration or exemption of the
Stock under state securities or Blue Sky laws and the fees and disbursements of
counsel for the Underwriters in connection with such qualification, registration
or exemption and the preparation and printing of the preliminary and final Blue
Sky Surveys; the filing fees and reasonable expenses paid and incurred by the
Underwriters, including fees and disbursements of counsel for Underwriters, in
connection with the review of the terms of the underwriting arrangements by the
NASD; the costs and expenses in connection with the preparation, printing and
filing of the Registration Statement (including exhibits thereto) and the
Prospectus and the furnishing to the Underwriters of such copies of each
preliminary and final Prospectus as the Underwriters may reasonably require; and
the costs and expenses in connection with the printing of this Agreement, the
Agreement Among Underwriters, the Selected Dealers Agreement and other documents
distributed to the Underwriters.
7. CONDITIONS OF THE OBLIGATION OF THE UNDERWRITERS. The obligations of
the several Underwriters to purchase and pay for the Firm Stock on the Closing
Date and the Option Stock on the Second Closing Date shall be subject to the
condition that the representations and warranties made by the Company herein are
true and correct as of the date hereof and as of the respective Closing Dates,
to the condition that the written statements of Company officers made pursuant
to the provisions hereof are true and correct, and to the performance by the
Company of their obligations hereunder and to the following additional
conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 P.M., Cleveland time, on the date of this Agreement, or at such later
time as shall have been consented to by you, and prior to each Closing Date no
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been instituted or
shall be pending, or to the knowledge of the Company or you, shall be
contemplated by the Commission.
(b) You shall not have advised the Company that the Registration
Statement or Prospectus or any amendment thereof or supplement thereto contains
an untrue statement of fact which, in the reasonable opinion of Xxxxxx, Halter &
Xxxxxxxx LLP, counsel for the Underwriters, is material, or omits to state a
fact which, in the opinion of such counsel, is material and is required to be
stated therein or is necessary to make the statements therein not misleading.
(c) You shall have received as of each Closing Date (or prior thereto
as indicated) the following:
(i) An opinion of Xxxxx, Day, Xxxxxx & Xxxxx, dated the
respective Closing Dates, to the effect that:
(aa) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of Ohio with corporate
power and authority to own its properties and conduct its business as described
in the Prospectus. Each
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of the Company's subsidiaries has been duly incorporated and is validly existing
as a corporation in good standing under the laws of its respective jurisdiction
of incorporation, with power and authority to own and lease its properties and
conduct its respective business. The Company and each of its subsidiaries are
duly qualified to do business as a foreign corporation and are in good standing
in all jurisdictions (i) in which the conduct of business, as presently being
conducted requires such qualification (except for those jurisdictions in which
the failure to so qualify will not in the aggregate have a material adverse
effect on the Company and its subsidiaries) and (ii) in which the Company or
such subsidiary owns or leases real property.
(bb) The authorized capital stock of the Company is as set
forth under "Capitalization" in the Prospectus; all issued and outstanding
Common Shares of the Company have been duly authorized and validly issued, are
free of preemptive rights of stockholders, rights of first refusal or similar
rights and are fully paid and nonassessable. Except as described in the
Prospectus, there are no outstanding options, warrants or other rights calling
for the issuance of, and there are no commitments, plans or arrangements to
issue any shares of capital stock of the Company or any security convertible or
exchangeable or exercisable for capital stock of the Company. There are no
holders of securities of the Company who, by reason of the filing of the
Registration Statement have the right (and have not waived such right) to
request the Company to include in the Registration Statement securities owned by
them, other than such rights as have been satisfied by the inclusion of
securities in the Registration Statement.
(cc) The Common Shares of the Company to be issued and sold
by the Company hereunder have been duly authorized, and, when issued, delivered
and paid for pursuant to this Agreement, will be validly issued, fully paid and
nonassessable. No preemptive rights of security holders of the Company exist
with respect to the issuance and sale of the stock by the Company pursuant to
this Agreement. The Common Shares of the Company conform to the description
thereof contained in the Prospectus and the certificates for the Common Shares
of the Company (including the Stock) are in due and legal form under Ohio law.
(dd) The Company has the corporate power and authority to
enter into and perform this Agreement, and to issue and deliver the Stock as
provided herein. The execution, delivery and performance of this Agreement by
the Company has been duly authorized by all necessary action of the Company.
This Agreement constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, except as rights to indemnity
may be limited by public policy and applicable federal or state securities laws
and except as enforcement thereof may be limited by bankruptcy, insolvency or
other laws of general application affecting the enforcement of creditors' rights
or by limitations upon the availability of certain remedies that may be
precluded by general principles of equity.
(ee) All the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and are owned by the Company free and clear of all
liens, encumbrances, equities, security interests, or claim; and there are no
outstanding options, warrants or other rights calling for the issuance of, and,
to such counsel's knowledge, there are no commitments,
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plans or arrangements to issue, any shares of capital stock of any subsidiary or
any security convertible or exchangeable or exercisable for capital stock of any
subsidiary; except as disclosed in the Registration Statement and except for the
shares of stock of each subsidiary owned by the Company, neither the Company nor
any subsidiary owns, directly or indirectly, any shares of capital stock of any
corporation or has any equity interest in any firm, partnership, joint venture,
association or other entity.
(ff) The Registration Statement has become effective under
the Act and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are pending or
contemplated under the Act. The Registration Statement and the Prospectus, and
each amendment thereof or supplement thereto (except for the financial
statements and schedules included therein as to which such counsel need express
no opinion) comply as to form in all material respects with the requirements of
the Act and the Rules and Regulations; the descriptions in the Registration
Statement and the Prospectus of the Common Shares, statutes, regulations,
leases, employee benefit plans, contracts and other documents are materially
accurate and fairly present the information required to be shown; and such
counsel does not know of any legal or governmental proceedings which are
required by the Act and the Rules and Regulations to be described in the
Prospectus and which are not described as so required, or of any leases,
contracts or other documents of a character which are required by the Act and
the Rules and Regulations to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement and which
are not described and/or filed as so required.
(gg) The consummation of the transactions herein
contemplated and the fulfillment of the terms hereof will not result in a breach
of any of the terms and provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or other agreement or instrument to which the
Company or any of its subsidiaries is a party and of which such counsel has
knowledge after reasonable investigation, or the Articles of Incorporation or
By-laws of the Company, or the organizational documents of any of its
subsidiaries, or, to the knowledge of such counsel, any order, rule or
regulation applicable to the Company or any of its subsidiaries of any court or
of any federal or state regulatory body or administrative agency or other
governmental body having jurisdiction over the Company or any of its
subsidiaries or the properties of any of them, except for such breaches or
defaults as will not have a material adverse effect on the consummation of the
transactions herein contemplated and the fulfillment of the terms hereof by the
Company.
(hh) All approvals, consents and orders of all governmental
bodies required in connection with the valid authorization, issuance and sale of
the Stock as contemplated by this Agreement have been obtained, except such as
may be required under the securities or Blue Sky laws of any jurisdiction as to
which such counsel need express no opinion.
(ii) To such counsel's knowledge, neither the Company nor
any of its subsidiaries is in violation of its Articles of Incorporation or its
Code of
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Regulations or other organizational documents, and no default exists by the
Company or any of its subsidiaries in the due performance and observance of any
term, covenant or condition of any agreement material to the Company and its
subsidiaries to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound.
(jj) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(kk) No facts have come to the attention of such counsel
which would lead such counsel to believe that either the Registration Statement
at the time it became effective and at the Closing Date or the Second Closing
Date, as the case may be, contained an untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus as of the date
thereof and as of the Closing Date or the Second Closing Date, as the case may
be, contained an untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no belief or opinion with respect to the
financial statements and schedules and other financial data included therein).
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the United
States and jurisdictions in which they are admitted, to the extent specified in
such opinion, if at all, upon an opinion or opinions of other counsel, familiar
with the applicable laws; and (B) as to matters of fact on certificates of
officers of the Company and certificates or other written statements of officers
of departments of various jurisdictions having custody of documents respecting
the corporate existence or good standing of the Company and its subsidiaries.
The opinion of such counsel for the Company shall state that the opinion of any
such other counsel is in form satisfactory to such counsel and, in their
opinion, you and they are justified in relying thereon.
(ii) An opinion of Xxxxx X. Xxxxxx, Esq., General Counsel of the
Company, dated the respective Closing Dates, to the effect that:
(aa) To the best of his knowledge, the Company and its
subsidiaries hold and are in compliance with all necessary material
authorizations, approvals, orders, licenses, certificates and permits of and
from all governmental regulatory officials and bodies (collectively, the
"licenses") required for the conduct of its business as described in the
Prospectus, except where the failure to so hold or comply with any license would
not have, individually or in the aggregate, a material adverse effect on the
business, condition (financial or other) or results of operations of the Company
and its subsidiaries, taken as a whole.
(bb) Except as set forth in the Prospectus, such counsel
does not know of any past, pending or threatened action, suit, proceeding,
inquiry or investigation before any court or before or by any public, regulatory
or governmental body or
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board against or involving the business or property of the Company or any of its
subsidiaries which, if successful, could have a material adverse effect on the
business, condition (financial or other) or results of operations of the Company
and its subsidiaries, taken as a whole.
(cc) No facts have come to the attention of such counsel
which would lead such counsel to believe that either the Registration Statement
at the time it became effective and at the Closing Date or the Second Closing
Date, as the case may be, contained an untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus as of the date
thereof and as of the Closing Date or the Second Closing Date, as the case may
be, contained an untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no belief or opinion with respect to the
financial statements and schedules and other financial data included therein).
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the United
States and jurisdictions in which he is admitted, to the extent specified in
such opinion, if at all, upon an opinion or opinions of other counsel, familiar
with the applicable laws; and (B) as to matters of fact on certificates of
officers of the Company. The opinion of Xx. Xxxxxx shall state that the opinion
of any such other counsel is in form satisfactory to him and, in his opinion,
you and they are justified in relying thereon.
(iii) Such opinion or opinions of Xxxxxx, Halter & Xxxxxxxx LLP,
counsel for the Underwriters, dated the respective Closing Dates, with respect
to the sufficiency of all corporate proceedings and other legal matters relating
to this Agreement, the validity of the Stock, the Registration Statement, the
Prospectus, and other related matters as you may reasonably request, and the
Company shall have furnished to such counsel such documents as they may request
for the purpose of enabling them to pass upon such matters. In connection with
such opinions, such counsel may rely on representations or certificates of
officers of the Company.
(iv) A certificate of the Company executed by the principal
executive officer and the principal financial and accounting officer of the
Company, dated each respective Closing Date, to the effect that:
(aa) The representations and warranties of the Company in
Section 2 of this Agreement are true and correct as of each respective Closing
Date, and the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to each
respective Closing Date.
(bb) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted
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or are pending or, to the knowledge of the respective signers of the
certificate, are contemplated under the Act.
(cc) The signers of the certificate have carefully examined
the Registration Statement and the Prospectus; no facts have come to their
attention which would lead them to believe that either the Registration
Statement at the time it became effective (or any amendment thereof or
supplement thereto made prior to the Closing Date or the Second Closing Date, as
the case may be, as of the date of such amendment or supplement) contained an
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus as of the date thereof (or any amendment
thereof or supplement thereto made prior to the Closing Date or the Second
Closing Date, as the case may be, as of the date of such amendment or
supplement) contained an untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; since the latest respective dates as of which information is
given in the Registration Statement, there has been no material adverse change
in the financial position, business or results of operations of the Company and
its subsidiaries, except as set forth in or contemplated by the Prospectus; and
since the Effective Date of the Registration Statement there has occurred no
event required to be set forth in an amended or supplemented Prospectus which
has not been set forth.
(v) Letters from Deloitte & Touche LLP dated respectively the
date of this Agreement and each respective Closing Date, addressed to you and in
form and substance previously approved by you, with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus.
(d) Prior to the Closing Date, the Company shall have furnished to
you such further certificates and documents as you may reasonably request.
(e) Prior to each Closing Date no stop orders suspending the
qualification of the Stock under the securities or Blue Sky laws of the states
in which the Stock is to be offered and sold shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending, or
to the knowledge of the Company or you, shall be contemplated by the applicable
state securities administrators.
If any condition of the Underwriters' obligations hereunder to be
satisfied prior to any Closing Date is not so satisfied, this Agreement may be
terminated by you prior to such Closing Date, by notice in writing or by
telegram confirmed in writing to the Company.
All such opinions, certificates, letters and documents furnished to you
pursuant to this Section 7 will be in compliance with the provisions hereof only
if they are in all material respects satisfactory to you and to Xxxxxx, Halter &
Xxxxxxxx LLP, counsel for the Underwriters, as to which both you and such
counsel shall act reasonably. The Company will furnish you with such executed
and conformed copies of such opinions, certificates, letters and documents as
you may request.
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You, on behalf of the Underwriters, may waive in writing the compliance
by the Company of any one or more of the foregoing conditions or extend the time
for their performance.
8. REPRESENTATIONS OF THE UNDERWRITERS. Each of the Underwriters
severally represents and warrants to the Company that the information furnished
to the Company in writing by such Underwriters or by you expressly for use in
the preparation of the Registration Statement or the Prospectus does not, and
any amendments thereof or supplements thereto thus furnished will not, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading.
Through you each Underwriter has only furnished to the Company expressly for
such use, the statements made in the last paragraph of the cover page of the
Prospectus and the statements relating to the terms of the offering by the
several Underwriters set forth in the first, second, sixth, seventh and eighth
paragraphs under the caption "Underwriting" in the Prospectus.
9. TERMINATION OF AGREEMENT. This Agreement shall become effective: (i)
upon the execution and delivery hereof by the parties hereto; or (ii) if, at the
time this Agreement is executed and delivered, it is necessary for the
registration statement or a post-effective amendment thereto to be declared
effective before the offering of the Stock may commence, when notification of
the effectiveness of the registration statement or such post-effective amendment
has been released by the Commission. At any time before the happening of such
occurrence, the Company may, by notice to you, terminate this Agreement; and at
any time prior to such time, you, as the Representatives of the several
Underwriters, may, by notice to the Company, terminate this Agreement.
This Agreement may also be terminated by you, as the Representatives of
the several Underwriters, by notice to the Company on or after the Effective
Date of the Registration Statement and prior to each respective Closing Date, if
at any time during such period any of the following has occurred: (i) except as
disclosed in or contemplated by the Registration Statement, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, any material adverse change or any development involving a
prospective material adverse change in or affecting the condition, financial or
otherwise, of the Company and its subsidiaries taken as a whole or the earnings,
business affairs, management or business prospects of the Company and its
subsidiaries taken as a whole, whether or not arising in the ordinary course of
business; (ii) any outbreak of hostilities or escalation in existing hostilities
anywhere in the world or other national or international calamity or crisis or
change in economic or political conditions, if the effect of such outbreak,
escalation, calamity, crisis or change on the financial markets in the United
States would, in your reasonable judgment, make it impracticable to offer for
sale or to enforce contracts made by the Underwriters for the resale of the
Stock agreed to be purchased hereunder; (iii) any general suspension of trading
in securities on the New York Stock Exchange or the American Stock Exchange or
the Nasdaq or any general limitation on prices for such trading or any general
restrictions on the distribution of securities, all to such a degree as would in
your reasonable judgment materially adversely affect the market for the Stock;
or (iv) a
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banking moratorium shall have been declared by either Federal, Ohio or New York
State authorities.
This Agreement may also be terminated as provided in Sections 7 and 11
hereof.
If this Agreement shall be terminated by you because of any failure on
the part of the Company to comply with any of the terms or to fulfill any of the
conditions of this Agreement, or if for any reason the Company shall be unable
to perform its obligations under this Agreement, the Company shall pay, in
addition to the costs and expenses referred to in Section 6, all reasonable
out-of-pocket expenses incurred by the Underwriters in contemplation of the
performance by them of their obligations hereunder, including but not limited to
the reasonable fees and disbursements of counsel for the Underwriters, the
Underwriters' reasonable printing and traveling expenses and postage, telegraph
and telephone charges relating directly to the offering contemplated by the
Prospectus, and also including reasonable advertising expenses of the
Representatives incurred after the Effective Date of the Registration Statement
and so relating, it being understood that such out-of-pocket expenses shall not
include any compensation, salaries or wages of the officers, partners or
employees of any of the Underwriters. Only such out-of-pocket expenses as shall
be accounted for by the Underwriters shall be paid to the Underwriters by the
Company.
The Company shall not in any event be liable to the several Underwriters
for damages on account of loss of anticipated profits arising out of the
transactions contemplated by this Agreement.
10. INDEMNIFICATION. (a) The Company will indemnify and hold harmless
each Underwriter, and each person, if any, who controls each Underwriter within
the meaning of the Act, against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter or such controlling person may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
in whole or in part on any inaccuracy in the representations and warranties of
the Company contained herein or any failure of the Company to perform its
obligations hereunder, or arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any related preliminary prospectus (if used prior to the Effective
Date), the Prospectus or any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and, subject to the provisions of Section 10(c), will
reimburse each Underwriter and each such controlling person for any legal or
other expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this Section 10(a) with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter or to the benefit of any person
controlling such Underwriter in respect of any loss, claim, damage, liability or
action asserted by a person who purchases shares of the Stock from such
Underwriter, if such Underwriter failed to send or give a copy of the Prospectus
(as the same may then be amended or supplemented) to such person with or prior
to written confirmation of the sale to such person;
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and provided, further, that the Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon any untrue statement or omission or alleged omission made in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendment thereof or supplement thereto in reliance upon or in conformity with
written information furnished to the Company by an Underwriter specifically for
use in the preparation thereof, as referred to in the last sentence of Section 8
hereof. This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company,
each person, if any, who controls the Company within the meaning of the Act,
each of its directors, and each of its officers who have signed the Registration
Statement against any losses, claims, damages or liabilities to which the
Company, or any such director or officer may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
any preliminary prospectus, the Prospectus, or any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any preliminary prospectus, the Prospectus or any amendment thereof
or supplement thereto in reliance upon or in conformity with written information
furnished to the Company by such Underwriter through you, as the Representatives
of the Underwriters, specifically for use in the preparation thereof, as
referred to in the last sentence of Section 8 of this Agreement; and will
reimburse the Company and each such director or officer for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action. This indemnity
agreement will be in addition to any liability which the Underwriters may
otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section, notify each party against whom indemnification is to be
sought in writing of the commencement thereof, but the omission so to notify an
indemnifying party will not relieve it from any liability which they may have to
any indemnified party otherwise than under this Section. In case any such action
is brought against any indemnified party, and it notifies the Company of the
commencement thereof, the Company will be entitled to participate in, and to the
extent that it may wish, to assume the defense thereof, with counsel approved by
such indemnified party (which approval shall not be unreasonably withheld), and
after notice from the Company to such indemnified party of its election so to
assume the defense thereof, the Company will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof except as
provided below and except for the reasonable costs of investigation subsequently
incurred by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any such action,
but the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of counsel by such indemnified party
has been authorized in writing by the
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indemnifying parties, (ii) the named parties to any such action include both the
indemnifying party and the indemnified party, and the indemnified party shall
have reasonably concluded that there is an actual or potential conflict of
interest between the indemnifying parties and the indemnified party in the
conduct of the defense of such action (in which case the indemnifying parties
shall not have the right to direct the defense of such action on behalf of the
indemnified party) or (iii) the indemnifying parties shall not have employed
counsel to assume the defense of such action within a reasonable time after
notice of the commencement thereof, in each of which cases the fees and expenses
of counsel shall be at the expense of the indemnifying parties. In no event
shall the indemnifying party or parties be liable for the fees and expenses of
more than one counsel for all indemnified parties in connection with any one or
separate but similar or related actions in the same jurisdiction arising out of
the same allegations or circumstances. Anything in this Section to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent.
(d) In order to provide for contribution in circumstances in which the
indemnification provided for in this Section is for any reason held to be
unavailable from the Company or the Underwriters or is insufficient to hold
harmless a party indemnified hereunder, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnification provisions (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company, any contribution received by
the Company from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company within the meaning
of the Act, officers of the Company who signed the Registration Statement and
directors of the Company) to which the Company and one or more of the
Underwriters may be subject, in such proportions as is appropriate to reflect
the relative benefits received by the Company and the Underwriters from the
offering of the Stock or, if such allocation is not permitted by applicable law
or indemnification is not available as a result of the indemnifying party not
having received notice as provided in this Section, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company and the Underwriters in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Underwriters shall be
deemed to be in the same proportion as (x) the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Company and (y) the underwriting discounts and commissions
received by the Underwriters, respectively, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company and
of the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omissions or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 10(d) 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
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which does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this Section 10(d), (i) in no case shall any
Underwriter (except as may be provided in the Agreement Among Underwriters) be
liable or responsible for any amount in excess of the underwriting discounts and
commissions applicable to the Stock purchased by such Underwriter hereunder and
(ii) no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person, if
any, who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 10(d), each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act shall have the same rights to contribution as
such Underwriter, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to clauses
(i) and (ii) of this Section 10(d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 10(d), notify such
party or parties from whom contribution may be sought, but the omission to so
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 10(d) or otherwise. No party shall be liable for contribution for any
settlement of any action or claim effected without its written consent.
11. DEFAULT OF THE UNDERWRITERS. If any Underwriter or Underwriters
default in their obligations to purchase the Stock hereunder and arrangements
satisfactory to you and the Company, evidenced by a writing or writings signed
by you and the Company, for the purchase of such Stock by other persons are not
made within 36 hours after such default, this Agreement will terminate without
liability on the party of any non-defaulting Underwriter and the Company (except
that the Company shall be liable for the expenses to be paid by it pursuant to
the provisions of Section 6), provided, however, that if the number of shares of
the Stock which all such defaulting Underwriters have agreed but failed to
purchase shall not exceed 10% of the number of shares of the Firm Stock or the
Option Stock, as the case may be, agreed to be purchased pursuant to this
Agreement (other than the shares agreed to be taken up hereunder which the
defaulting Underwriters failed to purchase) by all non-defaulting Underwriters,
the non-defaulting Underwriters shall be obligated proportionately to take up
and pay for the shares of the Firm Stock or the Option Stock which such
defaulting Underwriters failed to purchase.
If any such default occurs, either you or the Company shall have the
right to postpone the Closing Date for not more than seven business days in
order that the necessary changes in the Registration Statement, Prospectus and
any other documents, as well as any other arrangement, may be effected. As used
in this Agreement, the term "Underwriters" includes any person substituted for
an Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from its liability to the other several Underwriters and the Company
for its default hereunder.
12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The respective
indemnities, agreements, representations and warranties of the Company and the
several Underwriters, set forth in or made pursuant to this Agreement, will
remain in full force and
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effect, regardless of any investigation made by or on behalf of any Underwriter,
the Company or any of its officers or directors or any controlling person, and
will survive delivery of and payment for the Stock and, in the case of the
agreements contained in Sections 6, 9 and 10 hereof, will survive any
termination of this Agreement.
13. NOTICES. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to you at XxXxxxxx & Company Securities, Inc., XxXxxxxx Investment Center, 000
Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000, Attention: Xxxxxx X. Xxxxxx, with a copy
to Xxxxxx, Halter & Xxxxxxxx LLP, 1400 XxXxxxxx Investment Center, 000 Xxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxx 00000, Attention: Xxxxxx X. XxXxx, Esq., or if sent to
the Company, will be mailed, delivered or telegraphed and confirmed to the
Company at 0000 Xx-Xxx Xxxx, Xxxxxx, Xxxx 00000, Attention: [Xxxxx X. Xxxxxx,
Senior Vice President, General Counsel and Secretary], with a copy to Xxxxx,
Day, Xxxxxx & Xxxxx, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000, Attention:
Xxxxxxxxxxx X. Xxxxx.
14. SUCCESSORS, GOVERNING LAW. This Agreement will inure solely to the
benefit of and be binding upon the parties hereto and the officers and directors
and controlling persons referred to in Section 10 hereof and their respective
successors, assigns, heirs, executors and administrators, and no other persons
will have any right or obligation hereunder. This Agreement will be governed by
and construed in accordance with the laws of the State of Ohio, without giving
effect to the principles of conflicts of laws thereof.
15. EXECUTION IN COUNTERPARTS. This Agreement may be executed by any one
or more of the parties hereto in any number of counterparts, each of which shall
be deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
16. AUTHORITY OF THE REPRESENTATIVES. You represent and warrant that you
have been authorized by the several Underwriters to enter into this Agreement on
their behalf and to act for them in the manner hereinbefore provided.
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon it
will become a binding agreement by and among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
THE XXXXX-XXXXXXX STORES CORP.
By:___________________________
Its:__________________________
The foregoing Agreement is hereby confirmed and
accepted by us in Cleveland, Ohio, acting on our
own behalf and as the Representatives of the
several Underwriters named on Schedule A annexed
hereto, as of the date first above written.
XxXXXXXX & COMPANY SECURITIES, INC.
SBC WARBURG DILLON READ INC.
XXXXXXX XXXX & COMPANY L.L.C.
As Representatives of the Several Underwriters
BY: XxXXXXXX & COMPANY SECURITIES, INC.
By:___________________________
Managing Director
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SCHEDULE A
UNDERWRITERS
Number of Shares to
Underwriter be Purchased
----------- -------------------
XxXxxxxx & Company Securities, Inc.........
SBC Warburg Dillon Read Inc................
Xxxxxxx Xxxx & Company L.L.C...............
Total..............................
A-1
