EXHIBIT 1
15,000,000 Shares
XXXXXXXXX, XXXXXX & XXXXXXXX, INC.
DLJdirect Common Stock
UNDERWRITING AGREEMENT
June , 1999
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation
DLJdirect Inc.
BT Alex. Xxxxx Incorporated
Xxxxxxx, Sachs & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Xxxxx Barney Inc.
As representatives of the several
Underwriters named in Schedule I hereto
c/x Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc., a Delaware corporation
(the "COMPANY"), proposes to issue and sell 15,000,000 shares (the "FIRM
SHARES") of its Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc. - DLJdirect common stock, par
value $.10 per share ("DLJDIRECT COMMON STOCK") to the several Underwriters
named in Schedule I hereto (the "UNDERWRITERS"). Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation, DLJdirect Inc., BT Alex. Xxxxx Incorporated, Xxxxxxx,
Sachs & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, Xxxxxx Xxxxxxx
& Co. Incorporated and Xxxxxxx Xxxxx Barney Inc. shall act as representatives
(the "REPRESENTATIVES") of the several Underwriters. The Company also proposes
to sell to the several Underwriters not more
than an additional 2,250,000 shares of DLJdirect Common Stock (the "ADDITIONAL
SHARES"), if requested by the Underwriters as provided in Section 2 hereof. The
Firm Shares and the Additional Shares are herein collectively called the
"SHARES."
It is understood that the Shares are intended to track the performance
of DLJdirect, the Company's online discount brokerage and related investment
services business. For purposes of this Agreement, the terms "DLJ" and
"DLJdirect" have the meanings set forth in the Prospectus. It is further
understood that the Company will allocate the net proceeds from 10,000,000 Firm
Shares to DLJdirect and the net proceeds from 5,000,000 Firm Shares to DLJ. The
net proceeds from any sale of Additional Shares will be allocated two-thirds to
DLJdirect and one-third to DLJ.
1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"COMMISSION") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively called the "ACT"), a registration statement on Form S-3
(Registration No. 333-74549), including a prospectus relating to the Shares,
which may be amended. The registration statement as amended at the time when it
becomes effective, including a registration statement (if any) filed pursuant to
Rule 462(b) under the Act increasing the size of the offering registered under
the Act and information (if any) 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; and the prospectus in the form first
used to confirm sales of Shares is hereinafter referred to as the Prospectus.
All references herein to financial statements and schedules and other
information which is "contained," "included" or "stated" in the Registration
Statement, any preliminary prospectus or the Prospectus (or other references of
like import) shall be deemed to mean and include all such financial statements
and schedules and other information which is incorporated by reference in the
Registration Statement, any preliminary prospectus or the Prospectus, as the
case may be; and all references herein to amendments or supplements to the
Registration Statement, any preliminary prospectus or the Prospectus shall be
deemed to mean and include the filing of any document under the Securities
Exchange Act of 1934 (the "1934 ACT") which is incorporated by reference in the
Registration Statement, such preliminary prospectus or the Prospectus, as the
case may be (together, the "INCORPORATED DOCUMENTS").
2. Agreements to Sell and Purchase. The Company hereby agrees
to issue and sell the Shares to the several Underwriters named in Schedule I
hereto, and each of the Underwriters, upon the basis of the representations and
warranties contained in this Agreement, and subject to its terms and conditions,
agrees, severally and not jointly, to purchase from the Company at a price per
share of [_____] (the "PURCHASE PRICE") the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto.
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On the basis of the representations and warranties contained
in this Agreement, and subject to its terms and conditions, the Company agrees
to sell to the Underwriters the Additional Shares and the Underwriters shall
have the right to purchase, severally and not jointly, up to 2,250,000
Additional Shares from the Company at the Purchase Price. Additional Shares may
be purchased solely for the purpose of covering over-allotments made in
connection with the offering of the Firm Shares. The Underwriters may exercise
their right to purchase Additional Shares in whole or in part from time to time
by giving written notice thereof to the Company within 30 days after the date of
this Agreement. The Representatives shall give any such notice on behalf of the
Underwriters and such notice shall specify the aggregate number of Additional
Shares to be purchased pursuant to such exercise and the date for payment and
delivery thereof. The date specified in any such notice shall be a business day
(i) no earlier than the Closing Date (as hereinafter defined), (ii) no later
than ten business days after such notice has been given and (iii) no earlier
than two business days after such notice has been given. If any Additional
Shares are to be purchased, each Underwriter, severally and not jointly, agrees
to purchase from the Company the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as the Representatives may determine)
which bears the same proportion to the total number of Additional Shares set
forth opposite the name of such Underwriter in Schedule I bears to the total
number of Firm Shares.
The Company agrees not to, and not to permit any of its
subsidiaries to, offer, sell, contract to sell, grant any option to purchase, or
otherwise dispose of any DLJdirect Common Stock or any securities convertible
into or exercisable or exchangeable for such DLJdirect Common Stock or in any
other manner transfer all or a portion of the economic consequences associated
with the ownership of any such DLJdirect Common Stock (the "LOCK-UP
RESTRICTIONS"), for a period of 180 days after the date of the Prospectus (the
"LOCK-UP PERIOD") without the prior written consent of Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation. Notwithstanding the foregoing, the Company may
(1) grant stock options or stock awards under the Company's existing benefit or
compensation plans, including the DLJdirect 1999 Incentive Compensation Plan,
(2) issue shares of DLJdirect Common Stock upon the exercise of options,
warrants or rights or the conversion of currently outstanding securities, and
(3) issue, offer and sell shares of DLJdirect Common Stock or securities
convertible into or exercisable or exchangeable for DLJdirect Common Stock in
transactions not involving a public offering or in connection with future
acquisitions, as long as each recipient of the securities agrees in writing to
be bound by the restrictions herein. Notwithstanding any of the foregoing, it is
expressly understood that the terms of this paragraph shall not apply to any
other classes of common stock of the Company or securities convertible into or
exercisable or exchangeable for such other classes of common stock.
3. Qualified Independent Underwriter. The Company hereby
confirms its engagement of Xxxxxxx, Xxxxx & Co. ("GOLDMAN") as, and Goldman
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hereby confirms its agreement with the Company to render services as, a
"qualified independent underwriter" within the meaning of Section 2(o) of
Schedule E to the ByLaws of the National Association of Securities Dealers, Inc.
(the "NASD") with respect to the offering and sale of the Shares. Goldman,
solely in its capacity as qualified independent underwriter and not otherwise,
is referred to herein as the "QIU." As compensation for the services of the QIU
hereunder, the Company agrees to pay the QIU $10,000 on the Closing Date.
4. Terms of Public Offering. The Company is advised by you
that the Underwriters propose (i) to make a public offering of the Shares as
soon after the effective date of the Registration Statement as in your judgment
is advisable and (ii) initially to offer the Shares upon the terms set forth in
the Prospectus. Any allocation of the Shares described in the Prospectus as
having been reserved for sale to certain individuals, including directors and
employees of the Company and DLJdirect Inc. and directors, employees and agents
of the Company, shall be made in accordance with timely instructions delivered
by the Company to Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation.
5. Delivery and Payment. Delivery to the Underwriters of and
payment for the Firm Shares shall be made at 10:00 A.M., New York City time, on
June , 1999 (the "CLOSING DATE"), at such place as you shall designate. The
Closing Date and the location of delivery of and the form of payment for the
Firm Shares may be varied by agreement between you and the Company.
Delivery to the Underwriters of and payment for any
Additional Shares to be purchased by the Underwriters shall be made at such
place as the Representatives shall designate at 10:00 A.M., New York City time,
on the date specified in the applicable exercise notice given by you pursuant to
Section 2 (an "OPTION CLOSING DATE"). Any such Option Closing Date and the
location of delivery of and the form of payment for such Additional Shares may
be varied by agreement between the Representatives and the Company.
Certificatets for the Shares shall be registered in such
names and issued in such denominations as you shall request in writing not
later than two full business days prior to the Closing Date or an Option
Closing Date, as the case may be. Such certificates shall be made available to
you for inspection not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or an Option Closing Date, as the
case may be. Certificates in definitive form evidencing the Shares shall be
delivered to you through the facilities of the Depository Trust Company ("DTC")
on the Closing Date or an Option Closing Date, as the case may be, with any
transfer taxes thereon duly paid by the Company, for the respective accounts of
the several Underwriters, against payment to DLJdirect of the Purchase Price in
respect of Firm shares and any Additional Shares for which the proceeds are
allocated to DLJdirect and to the Company of the Purchase Price in respect of
Firm Shares
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and any Additional Shares for which the proceeds are allocated to DLJ by wire
transfer of Federal or other funds immediately available in New York City.
6. Agreements of the Company. The Company agrees with you
that:
(a) The Company shall use its best efforts to cause the
Registration Statement to become effective at the earliest possible
time.
(b) The Company will advise you promptly and, if requested by
you, confirm such advice in writing, (i) when the Registration
Statement has become effective and when any post-effective amendment
to it becomes effective, (ii) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information, (iii) of the issuance
by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of the suspension of qualification of
the Shares for offering or sale in any jurisdiction, or the initiation
of any proceeding for such purposes, and (iv) of the happening of any
event during the period referred to in paragraph (e) below which makes
any statement of a material fact made in the Registration Statement or
the Prospectus untrue or which requires the making of any additions to
or changes in the Registration Statement or the Prospectus in order to
make the statements therein not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, the Company will make every reasonable
effort to obtain the withdrawal or lifting of such order at the
earliest possible time.
(c) The Company will furnish to you, without charge, five
signed copies of the Registration Statement as first filed with the
Commission and of each amendment to it, including all exhibits, and
will furnish to you and each Underwriter designated by you such number
of conformed copies of the Registration Statement as so filed and of
each amendment to it, without exhibits, as you may reasonably request.
(d) The Company will not file any amendment or supplement to
the Registration Statement, whether before or after the time when it
becomes effective, or make any amendment or supplement to the
Prospectus (including the issuance or filing of any term sheet within
the meaning of Rule 434 under the Act) of which you shall not
previously have been advised or to which you shall reasonably object;
and the Company will prepare and file with the Commission, promptly
upon your reasonable request, any amendment to the Registration
Statement or supplement to the Prospectus (including the issuance or
filing of any term sheet within the meaning of Rule 434 under the Act)
which may be necessary or advisable in connection with the
distribution of the Shares
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by you, and the Company shall use its best efforts to cause the same
to become promptly effective.
(e) Promptly after the Registration Statement becomes
effective, and from time to time thereafter for such period as in the
opinion of counsel for the Underwriters a prospectus is required by
law to be delivered in connection with sales by an Underwriter or a
dealer, the Company will furnish to each Under writer and dealer as
many copies of the Prospectus (and of any amendment or supplement to
the Prospectus) as such Underwriter or dealer may reasonably request.
(f) If during the period specified in paragraph (e) any event
shall occur as a result of which, in the opinion of counsel for the
Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of
the circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the
Prospectus to comply with any law, the Company will forthwith prepare
and file with the Commission an appropriate amendment or supplement to
the Prospectus so that the statements in the Prospectus, as so amended
or supplemented, will not, in the light of the circumstances when it
is so delivered, be misleading, or so that the Prospectus will comply
with law, and the Company will furnish to each Underwriter and such
dealers as you shall specify such number of copies thereof as such
Underwriter or dealers may reasonably request.
(g) Prior to any public offering of the Shares, the Company
will cooperate with you and counsel for the Underwriters in connection
with the registration or qualification of the Shares for offer and
sale by the several Underwriters and by dealers under the state
securities or Blue Sky laws of such jurisdictions as you may request,
and the Company will continue such qualification in effect so long as
required for the distribution of the Shares and will file such
consents to service of process or other documents as may be necessary
in order to effect such registration or qualification; provided,
however, that the Company shall not be required in connection
therewith to qualify as a foreign corporation in any jurisdiction in
which it is not now so qualified or to take any action that would
subject it to general consent to service of process or taxation other
than as to matters and transactions relating to the Prospectus, the
Registration Statement, any preliminary prospectus or the offering or
sale of the Shares, in any jurisdiction in which it is not now so
subject.
(h) The Company will mail and make generally available to
holders of DLJdirect Common Stock as soon as reasonably practicable an
earnings statement, covering a period of at least twelve months after
the effective date of the Registration Statement (but in no event
commencing later than 90 days after
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such date) which satisfies the provisions of Section 11(a) of the Act,
and will advise you in writing when such statement has been so made
available.
(i) The Company will, for a period of five years from the
date of this Agreement, mail as soon as reasonably practicable after
the end of each fiscal year to the record holders of DLJdirect Common
Stock a financial report of DLJdirect, such financial report to
include a combined statement of financial condition, a combined
statement of operations, a combined statement of changes in equity,
and a combined statement of cash flows as of the end of and for such
fiscal year, together with comparable information as of the end of and
for the preceding year.
(j) For a period of five years from the date of this
Agreement, the Company shall mail and make generally available as soon
as reasonably practicable after the end of each quarterly period
(except for the last quarterly period of each fiscal year) to holders
of DLJdirect Common Stock a combined statement of operations with
respect to DLJdirect, a combined balance sheet and a combined
statement of cash flows for DLJdirect as of the end of and for such
period, and for the period from the beginning of such year to the
close of such quarterly period, together with comparable information
for the corresponding periods of the preceding year.
(k) During the period referred to in paragraph (i), the
Company will furnish to you as soon as available a copy of each report
or other publicly available information of the Company mailed to the
holders of DLJdirect Common Stock or filed with the Commission and
such other publicly available information concerning the Company and
its subsidiaries and DLJdirect as you may reasonably request.
(l) The Company will use its best efforts to list, subject to
notice of issuance, the Shares on the New York Stock Exchange, Inc.
(the "NEW YORK STOCK EXCHANGE") and to maintain the listing of the
Shares on the New York Stock Exchange for a period of five years after
the effective date of the Registration Statement.
(m) The Company shall use its best efforts to do and perform
all things required or necessary to be done and performed under this
Agreement by it prior to the Closing Date or any Option Closing Date,
as the case may be, and to satisfy all conditions precedent to the
delivery of the Shares.
(n) The Company will pay all costs, expenses, fees and taxes
incident to (i) the preparation, printing, filing and distribution
under the Act of the Registration Statement (including financial
statements and exhibits), each preliminary prospectus and all
amendments and supplements to any of them
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prior to or during the period specified in Section 5(e), (ii) the
printing and delivery of the Prospectus and all amendments or
supplements to it during the period specified in Section 5(e), (iii)
the printing and delivery of this Agreement, the Preliminary and
Supplemental Blue Sky Memoranda and all other agree ments, memoranda,
correspondence and other documents printed and delivered in connection
with the offering of the Shares (including, in each case, any
disbursements of counsel for the Underwriters relating to such
printing and delivery), (iv) the registration or qualification of the
Shares for offer and sale under the securities or Blue Sky Laws of the
several states (including in each case the fees and disbursements of
counsel for the Underwriters relating to such registration or
qualification and memoranda relating thereto), (v) filings and
clearance with the NASD in connection with the offering, (vi) the
listing of the Shares on the New York Stock Exchange, (vii) furnishing
such copies of the Registration Statement, the Prospectus and all
amendments and supplements thereto as may be requested for use in
connection with the offering or sale of the Shares by the Underwriters
or by dealers to whom Shares may be sold and (viii) the performance by
the Company of its other obligations under this Agreement.
7. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) (i) Each part of the 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, (ii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all
material respects with the requirements of the Act and (iii) the
Prospectus does not contain and, as amended or supplemented, if
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 paragraph (b) do not apply to statements or omissions in
the Registration Statement or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein.
(c) Each preliminary prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed
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pursuant to Rule 424 under the Act, complied when so filed in all
material respects with the Act; and did 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, in
the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth
in this paragraph do not apply to statements or omissions in any
preliminary prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter
through you expressly for use therein.
(d) The Company, DLJdirect Holdings Inc., DLJdirect Inc.,
iNautix Inc. and each of the Company's "significant subsidiaries" as
such term is defined in Rule 1-02 of Regulation S-X under the Act
(collectively, the "SUBSIDIARIES") has been duly incorporated, is
validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation and has the corporate power and
authority to carry on its business as it is currently being conducted
and to own, lease and operate its properties, and each is duly
qualified and is in good standing as a foreign corporation authorized
to do business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not
have a material adverse effect on the Company and its Subsidiaries,
taken as a whole.
(e) The businesses, assets and properties identified in the
Prospectus as comprising the businesses, assets and properties of
DLJdirect constitute all of the material businesses, assets and
properties actually used in the business of DLJdirect, and there are
no material restrictions, conditions or limitations on their use or
any material claims, charges, security interests or other encum
brances of any third parties, relating to or otherwise affecting any
of such businesses, assets or liabilities, except as expressly set
forth in the Prospectus and the Registration Statement.
(f) All of the outstanding shares of capital stock of, or other
ownership interests in, each of the Subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable,
and are owned by the Company, free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature.
(g) All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully
paid, non-assessable and not subject to any preemptive or similar
rights; and the Shares to be issued and sold by the Company hereunder
have been duly authorized and, when issued and delivered to the
Underwriters against payment therefor as provided by this Agreement,
will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not be subject to any preemptive or
similar rights.
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(h) The authorized capital stock of the Company, including the
DLJdirect Common Stock, conforms as to legal matters to the description
thereof contained in the Prospectus.
(i) Neither the Company nor any of its Subsidiaries is in
violation of its respective charter or by-laws or in default in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any
other agreement, indenture or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or their respective property is bound, in each case, which
is material to the conduct of the business of the (i) Company and its
Subsidiaries, taken as a whole, or (ii) DLJdirect.
(j) The execution, delivery and performance by the Company of
this Agreement, compliance by the Company with all of the provisions
hereof and the consummation of the transactions contemplated hereby will
not (i) require any consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other governmental
body (except as such may be required under the Act or state securities
or Blue Sky laws), (ii) conflict with or constitute a breach of any of
the terms or provisions of, or a default under, the charter or by-laws
of the Company or any of its subsidiaries, or any agreement, indenture
or other instrument material to the Company and its Subsidiaries, taken
as a whole, to which the Company or any of its Subsidiaries is a party
or by which the Company or any of its Subsidiaries or their respective
property is bound, or (iii) violate or conflict with any laws,
administrative regulations or rulings or court decrees applicable to the
Company, any of its Subsidiaries or their respective property.
(k) Except as otherwise set forth in the Prospectus, there are no
material legal or governmental proceedings pending to which the Company
or any of its Subsidiaries is a party or of which any of their
respective properties is the subject, and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated. No
contract or document of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement is not so described or filed as required.
(l) Neither the Company nor any of its Subsidiaries has violated
any foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants (collectively,
"ENVIRONMENTAL LAWS"), nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees nor any
applicable federal or state wages and hours laws, nor any provisions of
the Employee Retirement Income Security Act or the rules and
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regulations promulgated thereunder, which in each case might result in
any material adverse change in the business, prospects, financial
condition or results of operations of the Company and its Subsidiaries,
taken as a whole, or of DLJdirect.
(m) The Company and each of its Subsidiaries have such permits,
licenses, franchises and authorizations (collectively, "PERMITS") of and
from, and have made such declarations and filings with, governmental or
regulatory authorities, including, without limitation, self-regulatory
organizations ("SROS"), as are necessary to own, lease and operate their
respective properties and to conduct their respective businesses
(including without limitation the business of DLJdirect) except where
the failure to obtain such permits or to make such declarations or
filings would not, singly or in the aggregate, have a material adverse
effect on the Company and its Subsidiaries, taken as a whole, or on
DLJdirect; the Company and each of its Subsidiaries have fulfilled and
performed all of their respective material obligations with respect to
such permits and no event has occurred which allows, or after notice or
lapse of time would allow, revocation or termination thereof or results
in any other material impairment of the rights of the holder of any such
permit; and, except as described in the Prospectus, such permits contain
no restrictions that are materially burdensome to the Company or any of
its Subsidiaries.
(n) Except as otherwise set forth in the Prospectus or such as
are not material to the business, prospects, financial condition or
results of operations of the Company and its Subsidiaries, taken as a
whole, or to DLJdirect, the Company and each of its Subsidiaries have
good and marketable title, free and clear of all liens, claims,
encumbrances and restrictions except liens for taxes not yet due and
payable, to all property and assets described in the Registration
Statement as being owned by them. All leases to which the Company or any
of its Subsidiaries is a party are valid and binding and no default has
occurred or is continuing thereunder, which might result in any material
adverse change in the business, prospects, financial condition or
results of operations of the Company and its Subsidiaries, taken as a
whole, or to DLJdirect, and the Company and its Subsidiaries enjoy
peaceful and undisturbed possession under all such leases to which any
of them is a party as lessee with such exceptions as do not materially
interfere with the use made by the Company or any such Subsidiary.
(o) The Company and each of its Subsidiaries maintain reasonably
adequate insurance.
(p) KPMG LLP are independent public accountants with respect to
the Company, DLJ and DLJdirect, as required by the Act.
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(q) The financial statements, together with related schedules and
notes, included in or incorporated by reference in the Registration
Statement and the Prospectus (and any amendment or supplement thereto),
present fairly the consolidated financial position, results of
operations and changes in financial position of each of (i) the Company
and its Subsidiaries and (ii) DLJdirect, as the case may be, on the
basis stated in the Registration Statement and the Prospectus at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved, except as disclosed therein;
and the other financial and statistical information and data set forth
in the Registration Statement and the Prospectus (and any amendment or
supplement thereto) is, in all material respects, accurately presented
and prepared on a basis consistent with such financial statements and
the books and records of the Company and its Subsidiaries.
(r) The Company is not an "investment company" and upon receipt
of the proceeds will not be an investment company within the meaning of
the Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY
ACT").
(s) The Company has filed a Registration Statement pursuant to
Section 12(b) of the Exchange Act to register the DLJdirect Common
Stock, has filed an application to list the Shares on the New York Stock
Exchange and has received notification that the listing has been
approved, subject to notice of issuance of the Shares.
(t) There are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or liens
related to or entitling any person to purchase or otherwise to acquire
any shares of the capital stock of, or other ownership interest in, the
Company (including, without limitation, any DLJdirect Common Stock) or
any subsidiary thereof, except as otherwise disclosed in the
Registration Statement.
(u) The Company and each of its Subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
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(v) All material tax returns required to be filed by the Company
and each of its Subsidiaries in any jurisdiction have been filed, other
than those filings being contested in good faith, and all material
taxes, including withhold ing taxes, penalties and interest,
assessments, fees and other charges due pursuant to such returns or
pursuant to any assessment received by the Company or any of its
Subsidiaries have been paid, other than those being contested in good
faith and for which adequate reserves have been provided.
(w) DLJdirect Inc. is registered as a broker-dealer with the
Commis sion and is a member of NASD and the Securities Investor
Protection Corpora tion and is in compliance in all material respects
with all applicable laws, rules, regulations, orders and similar
requirements in connection therewith.
(x) The documents incorporated or deemed to be incorporated by
reference in the Registration Statement and the Prospectus, at the time
they were filed with the Commission, complied and will comply in all
material respects with the requirements of the 1934 Act and the rules
and regulations of the Commission thereunder (the "1934 ACT
REGULATIONS"), and, when read together with the other information in the
Prospectus, at the time the Registration Statement became effective, at
the time the Prospectus was issued and at the Closing Date, did not and
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.
8. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
from and against any and all losses, claims, damages, liabilities and judgments
caused by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, 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, except insofar as such
losses, claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriters furnished in writing to the Company by
or on behalf of any Underwriter through you expressly for use therein.
(b) In case any action shall be brought against any Underwriter
or any person controlling such Underwriter, based upon any preliminary
prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, and with respect to which indemnity may be sought against
the Company, such Underwriter shall promptly notify the Company in writing and
the Company shall assume the
13
defense thereof, including the employment of counsel reasonably satisfactory to
such indemnified party and payment of all fees and expenses. Any Underwriter or
any such controlling person shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless (i) the employment of such counsel shall have been
specifically authorized in writing by the Company, (ii) the Company shall have
failed to assume the defense and employ counsel or (iii) the named parties to
any such action (including any impleaded parties) include both such Underwriter
or such controlling person and the Company, as the case may be, and such
Underwriter or such controlling person shall have been advised by such counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the Company (in which case the Company
shall not have the right to assume the defense of such action on behalf of such
Underwriter or such controlling person, it being understood, however, that the
Company shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all such Underwriters and controlling persons, which firm shall be
designated in writing by Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation and
that all such fees and expenses shall be reimbursed as they are incurred). The
Company shall not be liable for any settlement of any such action effected
without the written consent of the Company, but if settled with the written
consent of the Company, the Company agrees to indemnify and hold harmless any
Underwriter and any such controlling person from and against any loss or
liability by reason of such settlement. Notwithstanding the immediately
preceding sentence, if in any case where the fees and expenses of counsel are at
the expense of the indemnifying party and an indemnified party shall have
requested the indemnifying party to reimburse the indemnified party for such
fees and expenses of counsel as incurred, such indemnifying party agrees that it
shall be liable for any settlement of any action effected without its written
consent if (i) such settlement is entered into more than thirty days after the
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall have failed to reimburse the indemnified party in
accordance with such request for reimbursement 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.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of its directors, its officers who
sign the Registration Statement, and any person controlling the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act to the
same extent as the
14
foregoing indemnity from the Company to each Underwriter but only with reference
to information relating to such Underwriter furnished in writing by or on behalf
of such Underwriter through you expressly for use in the Registration Statement,
the Prospectus or any preliminary prospectus. In case any action shall be
brought against the Company, any of its directors, any such officer or any
person controlling the Company based on the Registration Statement, the
Prospectus or any preliminary prospectus and in respect of which indemnity may
be sought against any Underwriter, the Underwriter shall have the rights and
duties given to the Company (except that if the Company shall have assumed the
defense thereof, such Underwriter shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such Underwriter), and the
Company, its directors, any such officers and any person controlling the Company
shall have the rights and duties given to the Underwriter, by Section 10(b)
hereof.
(d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Underwriters in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or judgments, 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 the total
net proceeds from the offering (before deducting expenses) received by the
Company, and the total underwriting discounts and commissions received by the
Underwriters, bear to the total price to the public of the Shares, in each case,
as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company and the Underwriters shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission 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 8(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 which does not take account
of the equitable consider ations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to
15
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 8, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Shares underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 8(d) are several in proportion to the
respective number of Shares purchased by each of the Underwriters hereunder and
not joint.
9. Indemnification of Qualified Independent Underwriter. (a) The
Company agrees to indemnify and hold harmless Goldman, in its capacity as QIU,
and each person, if any, who controls the QIU within the meaning of Section 15
of the Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages, liabilities and judgments caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, 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.
(b) The provisions of Section 8(b) are incorporated by reference
into this Section 9(b) as if set forth herein, with references to "any
Underwriter," "such Underwriter" or "the Underwriter" being deemed to mean, for
purposes of this Section 9(b), "the QIU".
(c) If the indemnification provided for in this Section 9 is
unavailable to Goldman, in its capacity as QIU, in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying the QIU, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities and judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the QIU on the other hand from the offering of the Shares or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the QIU in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
QIU shall be deemed to be in the same proportion as the total net proceeds from
the offering (before deducting expenses) received by the Company, and the fee
payable to the QIU pursuant to Section 3 hereof, bear to the total
16
price to the public of the Shares, in each case, as set forth in the Prospectus
in the table on the cover page or the section captioned "Underwriting," as the
case may be. The relative fault of the Company and the QIU shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the Company or the QIU and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the QIU agree that it would not be just and
equitable if contribution pursuant to this Section 9(c) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments 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. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
10. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares under this Agreement
are subject to the satisfaction of each of the following conditions:
(a) All of the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the Closing
Date.
(b) The Registration Statement shall have become effective not
later than 5:00 P.M. (and, in the case of a Registration Statement filed
under Rule 462(b) of the Act, not later than 10:00 P.M.), New York City
time, on the date of this Agreement or at such later date and time as
you may approve in writing, and at the 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
commenced or shall be pending before or contemplated by the Commission.
(c) (i) Since the date of the latest balance sheet included in
the Registration Statement and the Prospectus, there shall not have been
any material adverse change, or any development involving a prospective
material adverse change, in the condition, financial or otherwise, or in
the earnings, affairs or business prospects, whether or not arising in
the ordinary course of business, of the Company or DLJdirect, (ii) since
the date of the latest balance sheet included in the Registration
Statement and the Prospectus there shall not
17
have been any change, or any development involving a prospective
material adverse change, in the capital stock or in the long-term debt
of the Company or DLJdirect from that set forth in the Registration
Statement and Prospectus, (iii) the Company and its subsidiaries and
DLJdirect shall have no liability or obligation, direct or contingent,
which is material to the Company and its subsidiaries, taken as a whole,
or to DLJdirect, other than those reflected in the Registration
Statement and the Prospectus and (iv) on the Closing Date you shall have
received a certificate dated the Closing Date, signed by Xxx X. Xxxx and
Xxxxxxx X. Xxxxxxx, in their capacities as the President and Chief
Executive Officer and the Executive Vice President and Chief Financial
Officer, respec tively, of the Company, confirming the matters set forth
in paragraphs (a), (b) and (c) of this Section 10.
(d) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the
Closing Date, of Xxxxx Xxxx & Xxxxxxxx, counsel for the Company, to the
effect that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and
authority required to carry on its business and to own its
properties as described in the Prospectus;
(ii) all of the outstanding shares of common stock of the
Company have been duly authorized and validly issued, are fully
paid, non-assessable and not subject to any preemptive or, to our
knowledge, similar rights;
(iii) the Shares have been duly authorized, and when
issued and delivered to the Underwriters against payment therefor
as provided by this Agreement, will be validly issued, fully paid
and non-assessable, and the issuance of such Shares is not
subject to any preemptive or, to our knowledge, similar rights;
(iv) this Agreement has been duly authorized, executed
and delivered by the Company;
(v) the authorized capital stock of the Company,
including the DLJ Common Stock and the DLJdirect Common Stock,
conforms as to legal matters to the description thereof contained
in the Prospectus;
(vi) we have been advised by the Staff of the Commission
that the Registration Statement has been declared effective under
the Act and, to the knowledge of such counsel, no stop order
suspending its effective-
18
ness has been issued and no proceedings for that purpose have
been instituted or are pending before the Commission;
(vii) we have considered the statements relating to legal
matters, documents and proceedings in the Prospectus under the
captions "Government Regulation; Net Capital Requirements - Net
Capital Requirements (first, second and third paragraphs),"
"Management of DLJdirect - DLJdirect 1999 Incentive Compensation
Plan," "Certain Relationships - Tax Sharing Agreements,"
"Description of Capital Stock," "Material U.S. Federal Tax
Considerations" and "Underwriting (second, third (second and
third sentences), fourth, fifth, sixth, seventh, eighth, tenth
(last sentence), twelfth, sixteenth and seventeenth paragraphs)".
In our opinion such statements fairly summarize in all material
respects such legal matters, documents and proceedings;
(viii) DLJdirect Inc. is registered as a broker-dealer
with the Commission and is a member of, and subject to
regulation by, the NASD;
(ix) the execution, delivery and performance by the
Company of this Agreement and compliance by the Company with all
the provisions hereof will not (A) require any United States
federal or New York state consent, approval, authorization or
other order of any court, regulatory body, administrative agency
or other governmental body (except as such may be required under
the Act or state securities or Blue Sky laws or by the NASD),
except where the failure to obtain such consents, approvals,
authorizations or other orders would not have a material adverse
effect on the Company and its Subsidiaries, taken as a whole, (B)
conflict with or constitute a breach of any of the terms or
provisions of the charter or by-laws of the Company, or (C)
violate or conflict with any United States federal or New York
state laws or administrative regulations that in our experience
is normally applicable to general business corporations in
relation to transactions of the type contemplated by the
Underwriting Agreement or, to the best of our knowledge, rulings
or court decrees applicable to the Company or any of its
Subsidiaries or their respective properties, except for such
violations or conflicts that would not have a material adverse
effect on the Company and its Subsidiaries, taken as a whole;
(x) to the best of our knowledge, after due inquiry of
responsible officers of the Company, there are no legal or
governmental proceeding pending or threatened to which the
Company or any of its subsidiaries is a party or to which any of
their respective property is subject which is required to be
described in the Registration Statement or the Prospectus
19
and is not so described, or of any contract or other document
which is required to be described in the Registration Statement
or the Prospectus or is required to be filed as an exhibit to the
Registration Statement which is not described or filed as
required;
(xi) the Company is not an "investment company" and after
giving effect to the offering and sale of the Shares and the
application of the proceeds thereof as described in the
Prospectus, will not be required to register as an "investment
company" as defined under the Investment Company Act;
(xii) to the best of our knowledge, after due inquiry, no
holder of any security of the Company has any right to require
registration of shares of common stock under the Registration
Statement, except as described in the Prospectus; and
(xiii) nothing has come to our attention that causes us
to believe that (1) the Registration Statement (including any
Registration Statement filed under Rule 462(b) of the Act) and
the Prospectus and any supple ment or amendment thereto (except
for financial statements and financial schedules and other
financial and statistical data included therein or omitted
therefrom as to which no opinion need be expressed) do not comply
as to form in all material respects with the Act, or (2) (i)
(except as aforesaid) the Registration Statement and the
prospectus included therein at the time the Registration
Statement became effective, contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or (ii) that the Prospectus (except as aforesaid) as
of its date and as of the date hereof contained or contains an
untrue statement of a material fact or omitted 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.
In giving such opinion with respect to the matters covered by
clause (xiii) such counsel may state that their opinion and belief are based
upon their participation in the preparation of the Registration Statement (other
than the Incorporated Documents) and 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.
(e) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of Xxxxxxx X. Xxxx, General Counsel of the Company, to the effect that:
20
(i) each of the Subsidiaries has been duly incorporated,
is an existing corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and
authority required to carry on its business and to own its
properties as described in the Prospectus;
(ii) the Company and each of its Subsidiaries is duly
qualified and is in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the Company
and its Subsidiaries, taken as a whole, or on DLJdirect;
(iii) all of the outstanding shares of common stock of,
or other ownership interests in, each of the Subsidiaries have
been duly and validly authorized and issued, are fully paid and
non-assessable and are owned by the Company, free and clear of
any security interest, claim, lien, encumbrance or adverse
interest of any nature;
(iv) neither the Company nor any of its Subsidiaries is
in violation of its respective charter or by-laws, except for
such violations that would not have a material adverse effect on
the Company and its Subsidiaries, taken as a whole, or on
DLJdirect, and neither the Company nor any of its Subsidiaries is
in default in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other
agreement, indenture or instrument material to the condition of
the business of the Company and its Subsidiaries, taken as a
whole, or on DLJdirect, to which the Company or any of its
Subsidiar ies is a party or by which the Company or any of its
Subsidiaries or any of their respective properties are bound;
(v) the execution, delivery and performance by the
Company of this Agreement, compliance by the Company with all the
provisions hereof and the consummation of the transactions
contemplated hereby will not conflict with or constitute a breach
of any of the terms or provisions of, or a default under, any
agreement, indenture or other instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries or any of their respective properties are
bound;
(vi) the Company and each of its Subsidiaries has such
permits, licenses, franchises and authorizations (collectively,
"permits") of and from, and has made such declarations and
filings with, governmental or
21
regulatory authorities, including, without limitation, SROs, as
are necessary to own, lease and operate its respective properties
and to conduct its business in the manner described in the
Prospectus, except where the failure to obtain such permits or
make such declarations and filings would not have a material
adverse effect on the Company and its Subsidiaries, taken as a
whole, or on DLJdirect; the Company and each of its Subsidiaries
has fulfilled and performed all of its material obligations with
respect to such permits and no event has occurred which allows,
or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment
of the rights of the holder of any such permit, subject, in each
case, to such qualification as may be set forth in the
Prospectus; and, except as described in the Prospectus, such
permits contain no restrictions that are materially burdensome to
the Company or any of its Subsidiaries;
(vii) all leases to which the Company or any of its
Subsidiaries is a party are valid and binding and no default has
occurred or is continuing thereunder which might result in any
material adverse change in the business, prospects, financial
condition or results of operation of the Company and its
Subsidiaries, taken as a whole, or on DLJdirect, and the Company
and its Subsidiaries enjoy peaceful and undisturbed possession
under all such leases to which any of them is a party as lessee
with such exceptions as do not materially interfere with the use
made by the Company or such Subsidiary;
(viii) the statements in the Prospectus under the caption
"Business of DLJdirect -- Government Regulation; Net Capital
Requirements (first paragraph)" and "Business of DLJdirect -
Legal and Administrative Proceedings (second and third
paragraphs)," insofar as such statements constitute a summary of
legal matters referred to therein, fairly present the information
called for with respect to such legal matters; and
(ix) nothing has come to our attention that causes us to
believe that (1) the Registration Statement (including any
Registration Statement filed under Rule 462(b) of the Act) and
the Prospectus and any supple ment or amendment thereto (except
for financial statements and financial schedules and other
financial and statistical data included therein or omitted
therefrom as to which no opinion need be expressed) do not comply
as to form in all material respects with the Act, or (2) (i)
(except as aforesaid) the Registration Statement and the
prospectus included therein at the time the Registration
Statement became effective, contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the
22
statements therein not misleading, or (ii) that the Prospectus
(except as aforesaid) as of its date and as of the date hereof
contained or contains an untrue statement of a material fact or
omitted 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.
In giving such opinion with respect to the matters covered by
clause (ix) such counsel may state that his opinion and belief are based upon
his participation in the preparation of the Registration Statement and
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.
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of Xxxxxx X. Xxxxxxxx, General Counsel of the Pershing Division of Xxxxxxxxx,
Xxxxxx & Xxxxxxxx Securities Corporation, to the effect that the statements in
the Prospectus under the caption "Certain Relations - Clearing and License
Arrangements," insofar as such statements constitute a summary of legal matters
referred to therein, fairly present the information called for with respect to
such legal matters.
(g) You shall have received on the Closing Date an opinion, dated
the Closing Date, of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for the
Underwriters, as to the matters referred to in clauses (iii), (iv), (vi) and
(vii)(but only with respect to the statements under the captions "Description of
Capital Stock" and "Underwriting") and (xiii) of paragraph (d). In giving such
opinion with respect to the matters covered by clause (xiii) such counsel may
state that their opinion and belief are based upon their participation in the
preparation of the Registration Statement and 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.
(h) You shall have received a letter on and as of the Closing
Date, in form and substance satisfactory to you, from KPMG LLP, independent
public accountants, with respect to the financial statements and certain
financial information contained in the Registration Statement and the Prospectus
and substantially in the form and substance of the letter delivered to you by
KPMG LLP on the date of this Agreement.
(i) The Shares shall have been duly listed, subject to notice of
issuance, on the New York Stock Exchange.
(j) The Company shall not have failed at or prior to the Closing
Date to perform or comply with any of the agreements herein contained and
required to be performed or complied with by the Company at or prior to the
Closing Date.
23
The several obligations of the Underwriters to purchase any Additional Shares
hereunder are subject to the delivery to the Representatives on the applicable
Option Closing Date of such documents as you may reasonably request with respect
to the good standing of the Company, the due authorization and issuance of such
Additional Shares and other matters related to the issuance of such Additional
Shares.
11. Effective Date of Agreement and Termination. This Agreement
shall become effective upon the later of (i) execution of this Agreement and
(ii) when notification of the effectiveness of the Registration Statement has
been released by the Commission.
This Agreement may be terminated at any time prior to the Closing
Date by you by written notice to the Company if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any adverse change or development
involving a prospective adverse change in the condition, financial or otherwise,
of the Company or any of its subsidiaries or the earnings, affairs, or business
prospects of the Company or any of its subsidiaries, whether or not arising in
the ordinary course of business, which would, in your judgment, make it
impracticable or inadvisable to market the Shares on the terms and in the manner
contemplated in the Prospectus, (ii) any outbreak or escalation of hostilities
or other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in your judgment, is material and adverse and would, in your judgment, make it
impracticable or inadvisable to market the Shares on the terms and in the manner
contemplated in the Prospectus, (iii) the suspension or material limitation of
trading in securities on the New York Stock Exchange, the American Stock
Exchange, Inc. or the National Association of Securities Dealers Automated
Quotation System National Market System or limitation on prices for securities
on any such exchange or National Market System, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in your opinion
materially and adversely affects, or will materially and adversely affect, the
business or operations of the Company or any Subsidiary, (v) the declaration of
a banking moratorium by either federal or New York State authorities or (vi) the
taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs which in your opinion has a material
adverse effect on the financial markets in the United States.
If on the Closing Date or on an Option Closing Date, as the case
may be, any one or more of the Underwriters shall fail or refuse to purchase the
Firm Shares or Additional Shares, as the case may be, which it or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused to
purchase is not more than one-tenth of the total number of Shares to be
purchased on such date by all Underwriters, each non-defaulting
24
Underwriter shall be obligated severally, in the proportion which the number of
Firm Shares set forth opposite its name in Schedule I bears to the total number
of Firm Shares which all the non-defaulting Underwriters, as the case may be,
have agreed to purchase, or in such other proportion as you may specify, to
purchase the Firm Shares or Additional Shares, as the case may be, which such
defaulting Underwriter or Underwriters, as the case may be, agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Firm Shares or Additional Shares, as the case may be, which any Underwriter has
agreed to purchase pursuant to Section 2 hereof be increased pursuant to this
Section 11 by an amount in excess of one-ninth of such number of Firm Shares or
Additional Shares, as the case may be, without the written consent of such
Underwriter. If on the Closing Date or on an Option Closing Date, as the case
may be, any Underwriter or Underwriters shall fail or refuse to purchase Firm
Shares or Additional Shares, as the case may be, and the aggregate number of
Firm Shares or Additional Shares, as the case may be, with respect to which such
default occurs is more than one-tenth of the aggregate number of Shares to be
purchased on such date by all Underwriters and arrangements satisfactory to you
and the applicable Company for purchase of such Shares are not made within 48
hours after such default, this Agreement will terminate without liability on the
part of any non-defaulting Underwriter and the applicable Company. In any such
case which does not result in termination of this Agreement, either you or the
Company shall have the right to postpone the Closing Date or the applicable
Option Closing Date, as the case may be, but in no event for longer than seven
days, in order that the required changes, if any, in the Registration Statement
and the Prospectus or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any default of any such Underwriter under this
Agreement.
12. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (a) if to the Company, to
Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: General Counsel, and (b) if to any Underwriter or to you, to you c/x
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Syndicate Department, or in any case to such other
address as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company, each of its
officers and directors and of the several Underwriters set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect,
and will survive delivery of and payment for the Shares, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
any Underwriter or by or on behalf of the Company, the officers or directors of
the Company or any controlling person of the Company, (ii) acceptance of the
Shares and payment for them hereunder and (iii) termination of this Agreement.
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If this Agreement shall be terminated by the Underwriters because
of any failure or refusal on the part of the Company to comply with the terms or
to fulfill any of the conditions of this Agreement, the Company agrees to
reimburse the several Underwriters for all out-of-pocket expenses (including the
fees and disbursements of counsel) reasonably incurred by it.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
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Please confirm that the foregoing correctly sets forth the
agreement between the Company and the several Underwriters.
Very truly yours,
XXXXXXXXX, LUFKIN & XXXXXXXX, INC.
By:
Title:
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
By XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES
By:
Title:
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SCHEDULE I
Number of Firm Shares
Underwriters to be Purchased
-------------------------------------------------------------------------------
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation
DLJdirect Inc.
BT Alex. Xxxxx Incorporated
Xxxxxxx, Sachs & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Xxxxx Barney Inc.
Total 15,000,000
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SCHEDULE 2
Number of Firm Shares
Underwriters to be Purchased
-------------------------------------------------------------------------------
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation
DLJdirect Inc.
BT Alex. Xxxxx Incorporated
Xxxxxxx, Sachs & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Xxxxx Barney Inc.
Total
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