Draft Dated November 18, 1996
FAIRFIELD COMMUNITIES, INC.
2,000,000 SHARES/*/
Common Stock
($.01 par value)
UNDERWRITING AGREEMENT
----------------------
____________, 1996
XXXXXXXX INC. AND XXXXXXXXX, LUFKIN
& XXXXXXXX SECURITIES CORPORATION
As Representatives of the several
Underwriters named in Schedule I hereto.
c/o Stephens Inc.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Gentlemen:
Fairfield Communities, Inc., a Delaware corporation (the "Company"), and
the Company's stockholders named on the signature page hereof (the
"Stockholder") confirm their agreement with the several underwriters (the
"Underwriters") for whom you are acting as representatives (the
"Representatives") for the Company and the Stockholder to issue and sell 900,000
shares and 1,100,000 shares, respectively, of the Company's common stock, par
value $.01 per share (the "Underwritten Shares") to the Underwriters. The
Company's common stock is more fully described in the Registration Statement and
the Prospectus hereinafter mentioned.
For the sole purpose of covering over-allotments in connection with the
sale of the Underwritten Shares, the Stockholder shall grant to the Underwriters
the option (the "Option") described in Section 2 hereof to purchase all or any
part of 300,000 shares of the Company's common stock (the "Option Shares" and,
together with the 1,100,000 of the Underwritten Shares to be sold by the
Stockholder, the "Stockholder Shares") owned by it. The Underwritten Shares and
the Option Shares purchased pursuant to this Underwriting Agreement (this
"Agreement") are herein called the "Shares" and the proposed offering of the
Shares by the Underwriters is hereinafter referred to as the "Public Offering."
The Company has filed with the Securities and Exchange Commission (the
"Commission"), pursuant to the Securities Act of 1933, as amended (the "Act"),
and published rules and regulations adopted by the Commission under the Act (the
"Rules"), a registration statement on Form S-3 ("Form S-3") (File No. 333-
14875), including a Preliminary Prospectus, relating to the Shares, and such
amendments to such registration statement as may have been filed with the
Commission to the date of this Agreement. The
_______________________
/*/Plus up to 300,000 additional shares of common stock to cover over-
allotments.
Company will also file with the Commission one of the following: (A) prior to
effectiveness of such registration statement, a further amendment to such
registration statement, including the form of final prospectus, and/or (B) after
effectiveness of such registration statement, a final prospectus in accordance
with Rules 430A and 424(b). The Company has furnished to the Representatives
copies of such registration statement, each amendment to it filed by the Company
with the Commission, and each Preliminary Prospectus filed by the Company with
the Commission. The registration statement as amended at the time it becomes or
became effective (the "Effective Date"), including financial statements and all
exhibits and any information deemed to be included by Rule 430A, is called the
"Registration Statement." The term "Preliminary Prospectus" means any
Preliminary Prospectus (as referred to in Rule 430 or Rule 430A of the Rules)
included at any time as a part of the registration statement and the term
"Prospectus" means the prospectus relating to the Shares that is first filed
pursuant to Rule 424(b) after the date hereof.
Any reference herein to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any
documents incorporated by reference therein on or before the Effective Date or
the date of such Preliminary Prospectus or the Prospectus, as the case may be.
As the Representatives, you have advised the Company and the Stockholder
that (a) you are authorized to enter into this Agreement on behalf of the
several Underwriters and (b) the Underwriters are willing, acting severally and
not jointly, to purchase the amounts of the Underwritten Shares set forth
opposite their respective name in Schedule I hereto, plus their pro rata portion
of the Option Shares if you elect to exercise the over-allotment Option in whole
or in part for the accounts of the several Underwriters.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the Company,
the Stockholder and the Underwriters hereby agree as follows:
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY AND THE
STOCKHOLDER
(a) The Company represents and warrants to, and agrees with, each
Underwriter as follows:
(i) The Company has been duly organized, is in compliance with its
Certificate of Incorporation, and is validly existing as a corporation in
good standing under the laws of the State of Delaware, with full power and
authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus. Each significant subsidiary (as
defined by the Act) of the Company (each a "Subsidiary" and collectively,
the "Subsidiaries") has been duly incorporated and is validly existing as a
corporation, in good standing under the laws of the jurisdiction of its
organization, with full power and authority (corporate and other) to own or
lease its properties, and conduct its business. The Company and the
Subsidiaries are duly qualified to transact business in all jurisdictions
in which the conduct of its business or the ownership or lease of its
properties requires such qualifications except where the failure to be so
qualified would not reasonably be expected to have a Material Adverse
Effect (as defined below). The Company owns all of the outstanding capital
stock of its Subsidiaries free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest other than the pledge of
the shares of stock of Fairfield River Ridge, Inc. and Fairfield St. Croix,
Inc.
(ii) The outstanding shares of common stock of the Company have been
duly and validly authorized and issued and are fully paid and non-
assessable; the Shares are duly and validly authorized, and, if not now
issued, when issued and paid for as contemplated herein, will be fully paid
and non-assessable. There are no preemptive or other similar rights to
subscribe for or to
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purchase, or any restriction upon the voting or transfer of the Shares
pursuant to the Company's Certificate of Incorporation, Bylaws, or other
governing documents or any agreement or other instrument to which the
Company or any of its Subsidiaries is a party or by which any of them may
be bound. Neither the filing of the Registration Statement nor the offering
of the Shares as contemplated by this Agreement gives rise to any rights,
other than those which have been waived or satisfied, for or relating to
the registration of any shares of any class of the Company's capital stock.
The Shares have been approved for listing on the New York Stock Exchange
(the "NYSE"), subject to official notice of issuance.
(iii) The Shares conform in all material respects with the statements
concerning them in the Prospectus. As of the Closing Date (as defined
below) and any Option Closing Date (as defined below), if applicable, the
Company will have the authorized capitalization set forth under the
captions "Capitalization" and "Description of Capital Stock" in the
Prospectus. No further corporate approval or authority on behalf of the
Company will be required for the issuance and sale of the Shares to be sold
by the Company as contemplated herein.
(iv) Any Preliminary Prospectus, the Prospectus and the Registration
Statement comply as to form with the requirements of the Act and the Rules,
including Form S-3. The Company meets the requirements of, and is entitled
to use, Form S-3 for the Public Offering. The Registration Statement has
been filed with the Commission pursuant to the Act.
(v) Neither the Commission nor any other agency, body, authority,
court or arbitrator of competent jurisdiction has, by order or otherwise,
prohibited or suspended the use of any Preliminary Prospectus or the
Prospectus relating to the proposed offering of the Shares or, to the
Company's knowledge, instituted proceedings for that purpose. The
Registration Statement, the Prospectus and any Preliminary Prospectus and
any amendments or supplements thereto at the time they became or become
effective or were filed or are filed with the Commission contained or will
contain all statements which are required to be stated therein by, and in
all material respects conformed or will conform to the requirements of, the
Act and the Rules. Neither the Registration Statement nor any Preliminary
Prospectus nor any amendment thereto, and neither the Prospectus nor any
supplement thereto, as of its date contained any 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; provided,
--------
however, that the Company does not make any representations or warranties
-------
as to information contained in or omitted from the Registration Statement
or any Preliminary Prospectus or the Prospectus, or any such amendment or
supplement, in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of any Underwriter through the
Representatives, expressly for use in the preparation thereof as
hereinafter set forth in Section 13, or by or on behalf of the Stockholder.
(vi) The consolidated financial statements of the Company and the
Subsidiaries, together with related notes and schedules as set forth in the
Registration Statement, present fairly the consolidated financial condition
and the results of operations of the Company and the Subsidiaries, at the
indicated dates and for the indicated periods. Such financial statements
have been prepared in accordance with generally accepted accounting
principles ("GAAP"), consistently applied throughout the periods involved,
and all adjustments necessary for a fair presentation of results for such
periods have been made. The summary financial information and the Selected
Financial Data included in the Prospectus present fairly in accordance with
GAAP the information shown therein and have been compiled on a basis
consistent with that of the audited and unaudited financial statements from
which they were derived. The Company and its Subsidiaries have maintained
and will maintain and keep
3
accurate books and records reflecting their assets and maintain internal
accounting controls which provide reasonable assurance that (A)
transactions are executed in accordance with management's authorization,
(B) transactions are recorded as necessary to permit the preparation of the
Company's consolidated financial statements and to maintain accountability
for the assets of the Company, (C) access to the assets of the Company and
the Subsidiaries is permitted only in accordance with management's
authorization, and (D) the recorded accounts of the assets of the Company
and the Subsidiaries are compared with existing assets at reasonable
intervals.
(vii) Except as is disclosed in the Prospectus, there is no action
or proceeding pending or, to the knowledge of the Company, threatened
against the Company, any of its Subsidiaries or any of their respective
officers or any of their properties, assets or rights before any court or
administrative or governmental agency or other body which reasonably would
be expected to (A) result in any material adverse change in the condition
(financial or otherwise), or in the earnings, business, affairs,
properties, business prospects or results of operations of the Company and
its Subsidiaries taken as a whole ("Material Adverse Change" or "Material
Adverse Effect," as the case may be), whether or not arising in the
ordinary course of business, (B) adversely affect the performance of this
Agreement or the consummation of the transactions herein contemplated,
except as disclosed in the Prospectus and for which the Company maintains a
reserve in an amount which it believes is adequate to cover potential
liabilities, or (C) be required to be disclosed in the Registration
Statement.
(viii) The Company and each of its Subsidiaries are not in violation
of any law, ordinance, governmental rule or regulation or court decree to
which they may be subject which violation reasonably would be expected to
have a Material Adverse Effect.
(ix) The Company and its Subsidiaries have good and marketable
title to all of the real properties and valid title to all other assets in
the consolidated financial statements hereinabove described or as described
in the Prospectus as being owned by them, subject to no lien, mortgage,
pledge, charge or encumbrance of any kind except those securing
indebtedness described in such financial statements or as described in the
Prospectus or which do not materially affect the present or proposed use of
such properties or assets or would not cause a Material Adverse Effect. The
Company and its Subsidiaries occupy their leased properties under valid,
subsisting and binding leases with only such exceptions as in the aggregate
are not material and do not interfere with the conduct of the business of
the Company and its Subsidiaries. There exists no default under the
provisions of any lease, contract or other obligation to which the Company
is a party which may result in a Material Adverse Change.
(x) The Company and its Subsidiaries have filed all federal, state
and other tax returns and reports which have been required to be filed and
have paid all taxes indicated by said returns and all assessments received
by them to the extent that such taxes have become due and there is no tax
deficiency that has been or, to the Company's knowledge, might be asserted
against the Company or any of its Subsidiaries that might have a Material
Adverse Effect. All material tax liabilities are adequately provided for on
the books of the Company and its Subsidiaries.
(xi) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, as they may be amended or
supplemented, (A) there has not been any Material Adverse Change nor, to
the knowledge of the Company, is any such change threatened, (B) there has
not been any transaction entered into by the Company or its Subsidiaries
that is material to the earnings, business, affairs, properties, business
prospects or operations of the Company and its Subsidiaries taken as a
whole, other than transactions in the ordinary course of business and
changes
4
and transactions contemplated by the Registration Statement and the
Prospectus, as they may be amended or supplemented, (C) other than changes
in the amounts outstanding under the Company's and its Subsidiaries'
revolving credit facilities, there has not been any material change in the
capital stock, long term debt or material liabilities of the Company or its
Subsidiaries, and (D) there has not been any dividend or distribution of
any kind declared, paid or made on the capital stock of the Company or any
of its Subsidiaries. Neither the Company nor any Subsidiary has any
material contingent obligations or liabilities which are not disclosed in
the Registration Statement and the Prospectus.
(xii) The filing of the Registration Statement and related Prospectus
and the execution and delivery of this Agreement have been duly authorized
by the Board of Directors of the Company; this Agreement constitutes a
valid and legally binding obligation of the Company enforceable in
accordance with its terms except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other laws affecting creditors' rights generally and by general
principles of equity and federal and state securities laws. The Company is
not in breach or violation of or default under any indenture, mortgage,
deed of trust, lease, contract, note or other agreement or instrument to
which it is a party or by which it or any of its properties is bound and
which breach, violation or default would reasonably be expected to have a
Material Adverse Effect. The consummation of the transactions herein
contemplated and the fulfillment of the terms hereof will not result in a
breach or violation of any of the material terms and provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, lease,
contract, note or other agreement or instrument to which the Company or any
Subsidiary is a party, or of the Company's or any Subsidiary's Certificate
of Incorporation or bylaws or any law, decree, order, rule, writ,
injunction or regulation applicable to the Company or any Subsidiary of a
court or of any regulatory body or administrative agency or other
governmental body having jurisdiction over the Company and its Subsidiaries
except for such breaches, violations or defaults as would not reasonably be
expected to have a Material Adverse Effect.
(xiii) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and performance of its obligations
hereunder (except such additional steps as may be necessary to qualify the
Shares for public offering by the Underwriters under state securities or
Blue Sky laws, and filing the Prospectus under Rule 424(b)) has been
obtained or made and is in full force and effect.
(xiv) The Company and each Subsidiary hold all material licenses,
authorizations, charters, certificates and permits from governmental
authorities which are necessary to the conduct of their businesses and
neither the Company nor any Subsidiary has received notice of any
proceeding relating to the revocation or modification of any of such
licenses, authorizations, charters, certificates or permits. The Company
and its Subsidiaries own or otherwise possess rights to the patents, patent
rights, licenses, inventions, copyrights, trademarks, service marks and
trade names presently employed by them in connection with the businesses
now operated by them as described in the Prospectus, and neither the
Company nor any of its Subsidiaries has infringed or received any notice of
infringements of or conflict with asserted rights of others with respect to
any of the foregoing, except where such infringement or conflict would not
reasonably be expected to result in a Material Adverse Effect.
(xv) Ernst & Young LLP, independent auditors, who have certified
certain of the financial statements filed with the Commission and included
as part of the Registration Statement and
5
Prospectus, are independent public accountants within the meaning of the
Act, the Rules and Regulation S-X of the Commission and Rule 101 of the
Code of Professional Ethics of the American Institute of Certified Public
Accountants.
(xvi) There are no agreements, contracts or other documents of a
character required to be described in the Registration Statement or the
Prospectus or required by Form S-3 to be filed as exhibits to the
Registration Statement or incorporated by reference in the Registration
Statement which are not described, filed or incorporated as required.
(xvii) No labor dispute is pending or, to the knowledge of the
Company, threatened by the Company's or any Subsidiary's employees which
could result in a Material Adverse Effect. No collective bargaining
agreement exists with any of the Company's employees and, to the Company's
knowledge, no agreement is imminent.
(xviii) Except as contemplated by Section 2 hereof and as disclosed
in the Prospectus and permitted by the Rules, the Company has not (itself
or through any person) taken and will not take, directly or indirectly, any
action designed to or which might reasonably be expected to, cause or
result in a violation of Section 5 of the Act or Rule 10b-6 under the
Exchange Act ("Rule 10b-6") or in stabilization or manipulation of the
price of the Company's common stock.
(xix) Without limiting the generality of any of the foregoing
representations and warranties and except to the extent no Material Adverse
Effect would reasonably be expected to occur, (a) none of the operations of
the Company or its Subsidiaries is in violation of any environmental law,
regulation or any permit; (b) neither the Company nor any of its
Subsidiaries has been notified that it is under investigation or under
review by any governmental agency with respect to compliance therewith or
with respect to the generation, use, treatment, storage or release of
hazardous material; (c) neither the Company nor any of its Subsidiaries
have any liability or contingent or potential liability in connection with
the past generation, use, treatment, storage, disposal or release of any
hazardous material; (d) there is no hazardous material that may reasonably
be expected to pose any material risk to safety, health, or the
environment, on, under or about any property owned, leased or operated by
the Company or any of its Subsidiaries or, to the knowledge of the Company,
any property adjacent to any such property; and (e) there has heretofore
been no release of any hazardous material on, under or about such property,
or, to the knowledge of the Company, any such adjacent property. None of
the present or, to the knowledge of the Company, past property of the
Company or any of its Subsidiaries is listed or proposed for listing on the
National Priorities List pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA") or
on the Comprehensive Environmental Response Compensation Liability
Information System List ("CERCLIS") or any similar state list of sites
requiring remedial action. Neither the Company nor any of its Subsidiaries
is subject to any Environmental Property Transfer Act, or to the extent
that any such statute is applicable to any property, the Company and its
Subsidiaries have fully complied with their obligations under such
statute(s), and neither has any outstanding obligations or liabilities
under any Environmental Property Transfer Act.
(xx) The Company and its Subsidiaries maintain insurance of the types
and in the amounts customary for their businesses, including, but not
limited to, insurance covering liability and real and personal property
owned or leased by the Company against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect.
6
(xxi) Neither the Company nor any Subsidiary has at any time during
the last five years (a) made any unlawful contribution to any candidate for
foreign office, or failed to disclose fully any contribution in violation
of law, or (b) made any payment to any federal or state governmental
officer or official, or other person charged with similar public or quasi-
public duties, other than payments required or permitted by the laws of the
United States or any jurisdiction thereof.
(xxii) Each executive officer and director of the Company has
executed a lock-up agreement, a form of which is attached hereto as Exhibit
"A" (the "Lock-Up Agreement").
(b) Any certificate signed by any officer of the Company or by the
Stockholder, as the case may be, and delivered to you or counsel for the
Underwriters shall be deemed a representation and warranty by the Company or the
Stockholder, as the case may be, to the Underwriters as to the matters covered
thereby.
(c) The Stockholder represents and warrants to, and agrees with, each
Underwriter as follows:
(i) As of the Effective Date, the Stockholder shall be the lawful
owner of the number of Shares to be sold by it, and has or at such time or
times, as required, will have good and marketable title to all such Shares,
free of all restrictions on transfer (other than those imposed by the Act,
the Company's Certificate of Incorporation and Bylaws and the securities or
Blue Sky laws of certain jurisdictions) liens, encumbrances, security
interests and claims whatsoever, except for claims created hereunder, the
Power of Attorney (as defined below) or Custody Agreement (as defined
below).
(ii) The Stockholder has full legal right, power and authority, and
any approvals required by law and any agreement or instrument to which the
Stockholder is a party, to enter into this Agreement, and this Agreement
has been fully executed and delivered by the Stockholder.
(iii) Upon delivery of payment for the Shares to be sold by the
Stockholder pursuant to this Agreement, good and marketable title to such
Shares will pass, free of all restrictions on transfer (other than those
imposed by the Act, the Company's Certificate of Incorporation and the
securities or Blue Sky laws of certain jurisdictions) liens, encumbrances,
security interests and claims whatsoever, to each Underwriter.
(iv) The Stockholder has duly authorized (if applicable), executed
and delivered a power of attorney, a form of which is attached hereto as
Exhibit "B" and included herein (the "Power of Attorney"), appointing
________________________ and ____________________ as attorneys-in-fact
(collectively the "Attorneys" and individually the "Attorney"), and a
custody agreement, a form of which is attached hereto as Exhibit "C" and
included herein (the "Custody Agreement"), with _______________ as
custodian (the "Custodian"). Each of the Power of Attorney and the Custody
Agreement constitutes a valid and binding agreement of the Stockholder,
enforceable in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or
by general equitable principles; and the Stockholder's Attorney, acting
alone, is authorized to execute and deliver this Agreement and the
certificate referred to in Section 6(l) hereof, on behalf of the
Stockholder to determine the purchase price to be paid by the several
Underwriters to the Stockholder as provided in Section 2 hereof, to
authorize the delivery of the Stockholder Shares under this Agreement and
to duly endorse (in blank or otherwise) the certificate or certificates
representing such Shares or a stock power or powers with respect thereto,
to accept payment therefor, and otherwise to act on behalf of the
Stockholder in connection with this Agreement.
7
(v) All authorizations, approvals, consents and orders necessary for
the execution and delivery by the Stockholder of the Power of Attorney and
the Custody Agreement, the execution and delivery by or on behalf of the
Stockholder of this Agreement and the sale and delivery of the Stockholder
Shares under this Agreement (other than, at the time of the execution
hereof (if the Registration Statement has not yet been declared effective
by the Commission), the issuance of the order of the Commission declaring
the Registration Statement effective and such authorizations, approvals or
consents as may be necessary under state or other securities or Blue Sky
laws) have been obtained and are in full force and effect; the Stockholder
has been duly organized and is validly existing and in good standing under
the laws of the jurisdiction of its organization as the type of entity that
it purports to be; and the Stockholder has full right, power and authority
to enter into and perform its obligations under this Agreement and such
Power of Attorney and Custody Agreement, and to sell, assign, transfer and
deliver the Shares to be sold by the Stockholder under this Agreement.
(vi) The Stockholder will not for a period of 120 days after the
effective dated of the Registration Statement, offer to sell, contract to
sell or otherwise sell or dispose of any shares of common stock, any
options or warrants to purchase any shares of common stock, or any
securities convertible into or exchangeable for shares of common stock,
owned directly by the Stockholder or with respect to which the Stockholder
has the power of disposition, otherwise than hereunder or with the prior
written consent of Xxxxxxxx Inc. The Stockholder agrees and consents to the
entry of stop transfer instructions with the Company's transfer agent
against the transfer of shares of common stock held by the Stockholder
except in compliance with the foregoing restrictions.
(vii) Certificates in negotiable form for all Shares to be sold by
the Stockholder under this Agreement, together with a stock power or powers
duly endorsed in blank by the Stockholder, have been placed in custody with
the Custodian for the purpose of effecting delivery hereunder.
(viii) This Agreement has been duly authorized by the Stockholder and
has been duly executed and delivered by or on behalf of the Stockholder and
is a valid and binding agreement of the Stockholder, enforceable in
accordance with its terms, except as the indemnification and contribution
provisions hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles; and the
performance of this Agreement and the consummation of the transactions
herein contemplated will not result in a breach of or default under any
material bond, debenture, note or other evidence of indebtedness, or any
material contract, indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which the Stockholder is a party
or by which the Stockholder or any Stockholder Shares hereunder may be
bound or, to the best of the Stockholder's knowledge, result in any
violation of any law, order, rule, regulation, writ, injunction or decree
of any court or governmental agency or body or result in any violation of
any provisions of the charter, bylaws or other organizational documents of
the Stockholder.
(ix) The Stockholder has not distributed and will not distribute any
prospectus or other offering material in connection with the offering and
sale of the Shares.
(x) All information furnished by or on behalf of the Stockholder
relating to the Stockholder and the Stockholder Shares that is contained in
the representations and warranties of the Stockholder in such Stockholder's
Power of Attorney or set forth in the Registration Statement and any
Preliminary Prospectus or the Prospectus and any amendments or supplements
thereto is, and on
8
the Closing Date and on any later date on which Option Shares are to be
purchased as the case may be, will be, true, correct and complete, and does
not, and on the Closing Date and on any later date on which Option Shares
are to be purchased, as the case may be, 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 such statements not misleading.
(xi) The Stockholder will review the Prospectus and will comply with
all agreements and satisfy all conditions on its part to be complied with
or satisfied pursuant to this Agreement on or prior to the Closing Date, or
any later date on which Option Shares are to be purchased, as the case may
be, and will advise one of its Attorneys prior to the Closing Date or such
later date on which Option Shares are to be purchased, as the case may be,
if any statement to be made on behalf of the Stockholder in the certificate
contemplated by Section 6(l) would be inaccurate if made as of the Closing
Date or such later date on which Option Shares are to be purchased, as the
case may be.
(xii) The Stockholder does not have, or has waived prior to the date
hereof, any preemptive right, co-sale right or right of first refusal or
other similar right to purchase any of the Shares that are to be sold by
the Company to the Underwriters pursuant to this Agreement; and the
Stockholder does not own any warrants, options or similar rights to
acquire, and does not have any right or arrangement to acquire, any capital
stock, rights, warrants, options or other securities from the Company,
other than those described in the Registration Statement and any
Preliminary Prospectus or the Prospectus and any amendments or supplements
thereto.
(xiii) The Stockholder is not aware that any representations and
warranties of the Company set forth in Section 2 above is untrue or
inaccurate.
(xiv) The Stockholder has not taken, nor will it take, directly or
indirectly, any action designed to, or which might reasonably be expected
to, cause or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares
owned by it pursuant to the distribution contemplated by this Agreement.
(xv) The Stockholder will pay or cause to be paid all transfer taxes,
if any, with respect to the Shares to be sold by it.
2. PURCHASE, SALE AND DELIVERY OF THE UNDERWRITTEN SHARES. On the basis
of the representations, warranties and covenants herein contained, and subject
to the terms and conditions herein set forth, the Company and the Stockholder
agree to sell each Underwriter, severally and not jointly, and each
Underwriter agrees, severally and not jointly, to purchase, at a price of
$____ per share, the number of the Underwritten Shares set forth on Schedule I
attached hereto, subject to adjustment in accordance with Section 10 hereof.
Payment for the Underwritten Shares shall be made by wire transfer of
[immediately available] [next day] U.S. Funds to designated accounts of the
Company and the Stockholder, to the order of the Company or the Stockholder, as
applicable, against delivery of certificates for the Shares to the
Representatives for the accounts of the several Underwriters. Delivery of
certificates shall be to the Representatives c/o Stephens Inc. ("Xxxxxxxx"), 000
Xxxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000, or at such other address as Stephens
may designate in writing. Payment will be made at the offices of Xxxxxxxx, or at
such other place as shall be agreed upon by Xxxxxxxx and the Company, at
approximately 9:00 a.m., central time, on _______________, 1996, such time and
date being herein referred to as the "Closing Date." The certificates for the
Underwritten Shares will be delivered in such denominations and in such
registrations as Xxxxxxxx requests in writing and
9
will be made available for inspection at such locations as Xxxxxxxx may
reasonably request at least one full business day prior to the Closing Date.
The certificates in negotiable form for the Stockholder Shares have been
placed in custody (for delivery under this Agreement) under the Custody
Agreement. The Stockholder agrees that the certificates for the Stockholder
Shares so held in custody are subject to the interests of the Underwriters
hereunder, that the arrangements made by the Stockholder for such custody,
including the Power of Attorney, is to that extent irrevocable and that the
obligations of the Stockholder hereunder shall not be terminated by the act of
the Stockholder or by operation of law, or the occurrence of any other event,
except as specifically provided herein or in the Custody Agreement. If any such
event should occur before the delivery of the certificates for the Stockholder
Shares hereunder, the Stockholder Shares to be sold by the Stockholder shall,
except as specifically provided herein or in the Custody Agreement, be delivered
by the Custodian in accordance with the terms and conditions of this Agreement
as if such event had not occurred, regardless of whether the Custodian shall
have received notice of such event.
In addition, on the basis of the representations, warranties, agreements
and covenants herein contained and subject to the terms and conditions herein
set forth, the Stockholder hereby grants the Option to the several Underwriters
to purchase the Option Shares at the price per share as set forth in the first
paragraph of this Section 2. The Option may be exercised in whole or in part
[(from time to time), at any time] [on one occasion] upon written notice (or
oral notice, subsequently confirmed in writing) given not more than thirty (30)
days following the date of this Agreement, by Xxxxxxxx, on behalf of the
Representatives of the several Underwriters, to the Company and the Stockholder
setting forth the number of Option Shares as to which the several Underwriters
are exercising the Option and the names and denominations in which the Option
Shares are to be registered. Closing on the purchase of the Option Shares (the
"Option Closing Date"), if any, shall occur no later than three (3) business
days following the date upon which notice of exercise of the Option is given to
the Company and the Stockholder, and shall take place at the offices of
Xxxxxxxx, or at such other place as shall be agreed upon by Xxxxxxxx and the
Stockholder. Subject to Section 10, the number of Option Shares to be purchased
by each Underwriter shall be in the same proportion to the total number of
shares of the common stock being purchased by such Underwriter bears to
2,000,000 shares, adjusted by you in such manner as to avoid fractional shares.
The Option may be exercised only to cover over-allotments in the sale of the
Underwritten Shares by the Underwriters. Xxxxxxxx, on behalf of the
Representatives of the several Underwriters, may cancel such option at any time
prior to its expiration by giving written notice (or oral notice, subsequently
confirmed in writing) of such cancellation to the Stockholder. To the extent, if
any, that the Option is exercised, payment for the Option Shares shall be made
by wire transfer of [immediately available] [next day] U.S. Funds to a
designated account of the Stockholder, to the order of the Stockholder.
Certificates for the Option Shares shall be delivered in the same manner and
upon the same terms as the Underwritten Shares.
3. OFFERING BY THE UNDERWRITERS. It is understood that the Public
Offering of the Underwritten Shares is to be made as soon as the Representatives
deem it advisable to do so after the Registration Statement has become
effective. The Underwritten Shares are to be initially offered to the public at
the public offering price set forth in the Prospectus. The Representatives may
from time to time thereafter change the public offering price and other selling
terms. To the extent, if at all, that any Option Shares are purchased pursuant
to Section 2 hereof, the Underwriters will offer them to the public on the
foregoing terms.
It is further understood that you will act as the Representatives for the
Underwriters in the offering and sale of the Shares, in accordance with an
Agreement Among Underwriters which has been entered into by you and the several
other Underwriters.
10
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with each
of the several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective and will not, either before or after
effectiveness, file any amendment thereto or supplement to the Prospectus
(including a prospectus filed pursuant to Rule 424(b) which differs from
the Prospectus on file at the time the Registration Statement becomes
effective) or file any documents under the Exchange Act before the earlier
to occur of (A) the 35th day following the Effective Date or (B) the
closing date of the Underwriters' purchase of the Option Shares if such
document would be deemed to be incorporated by reference into the
Registration Statement, the Preliminary Prospectus or the Prospectus of
which the Representatives shall not previously have been advised and
furnished with a copy or to which the Representatives shall have reasonably
objected in writing or which is not in compliance with the Act or Rules[;
provided, however, the Company may make any such filing under the Exchange
Act related to its equity-based compensation plan or arrangement of which
the Underwriters have been advised prior to this date].
(b) The Company will advise the Representatives promptly of any
request of the Commission or other securities regulatory agency ("Other
Securities Regulator") for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, or of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the use of the Prospectus or of the
institution of any proceedings for that purpose, or comparable action taken
or initiated by any Other Securities Regulator, and the Company will use
its reasonable efforts to prevent the issuance of any such stop order
preventing or suspending the use of the Prospectus and to obtain as soon as
possible the lifting thereof, if issued.
(c) The Company will use its reasonable efforts with the
Representatives in endeavoring to qualify the Shares for sale under the
securities laws of such jurisdictions (including foreign jurisdictions) as
the Representatives may reasonably designate, and will make such
applications, file such documents, and furnish such information as may be
reasonably required for that purpose; provided however, the Company shall
-------- --------
not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not so
qualified or required to file such a consent. The Company will, from time
to time, prepare and file such statements, reports, and other documents, as
are or may be required to continue such qualifications in effect for so
long a period as the Representatives may reasonably request for
distribution of the Shares.
(d) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary
Prospectus or the Prospectus as the Representatives may reasonably request.
The Company will deliver to, or upon the order of, the Representatives, on
the Trade Date and thereafter from time to time during the period necessary
to effect the distribution of the Shares as many copies of the Prospectus
in final form, or as thereafter amended or supplemented, as the
Representatives may reasonably request. The Company will deliver to the
Representatives at or before the Closing Date, three (3) manually signed
copies of the Registration Statement and all amendments thereto including
all exhibits filed therewith (including any document filed under the
Exchange Act and deemed to be incorporated by reference into the
Registration Statement, the Preliminary Prospectus or the Prospectus) and
will deliver to the Representatives such number of copies of the
Registration Statement, but without exhibits, and of all amendments
thereto, as the Representatives may reasonably request.
11
(e) During the time necessary to effect the distribution of the
Shares, the Company shall comply with all requirements imposed upon it by
the Act, as now and hereafter amended, and by the Rules, as from time to
time in force, so far as is necessary to permit the continuance of sales of
or dealings in the Shares as contemplated by the provisions hereof and the
Prospectus. If, during the period necessary to effect the distribution of
the Shares, any event shall occur as a result of which, in the judgment of
the Company or 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 existing at the time
the Prospectus is delivered to a purchaser, not misleading, or, if it is
necessary at any time to amend or supplement the Prospectus to comply with
any law or to file under the Exchange Act any document which would be
deemed to be incorporated by reference in the Prospectus in order to comply
with the Act or the Exchange Act, the Company promptly will notify the
Representatives and, subject to the Representatives' prior review, prepare
and file with the Commission and any appropriate Other Securities Regulator
an appropriate amendment or supplement to the Prospectus (at the expense of
the Company) so that the Prospectus as so amended or supplemented will not,
in light of the circumstances when it is so delivered, be misleading, or so
that the Prospectus will comply with the law.
(f) The Company will make generally available to its security holders
in the manner contemplated by Rule 158(b) under the Act, as soon as it is
practicable to do so, but in any event not later than the forty-fifth day
after the fiscal quarter first occurring one year after the Effective Date,
an earnings statement in reasonable detail, covering a period of at least
twelve consecutive months beginning after the Effective Date, which
earnings statement shall satisfy the requirements of Section 11(a) of the
Act and will advise you in writing when such statement has been so made
available.
(g) For so long as the Company is subject to the reporting
requirements of the Exchange Act, the Company will furnish to its
stockholders, as soon as practicable after the end of each respective
period, annual reports (including financial statements audited by
independent public accountants) and unaudited quarterly reports of
earnings, and will furnish to the Representatives (a) concurrently with
furnishing of such reports to its stockholders, statements of income of the
Company for each quarter in the form furnished to the Company's
stockholders and certified by the Company's principal financial or
accounting officer; (b) concurrently with furnishing to its stockholders, a
balance sheet of the Company as at the end of such fiscal year, together
with statements of earnings, stockholders' equity and cash flow of the
Company for such fiscal year, all in reasonable detail and accompanied by a
copy of the certificate or report thereon of independent public
accountants; (c) as soon as they are available, copies of all reports
(financial or other) mailed to stockholders; (d) as soon as they are
available, copies of all reports and financial statements furnished to or
filed with the Commission, the National Association of Securities Dealers,
Inc. ("NASD"), the NYSE or any securities exchange; (e) every press release
and every material news item or article in respect of the Company or its
affairs which was released or prepared by the Company; and (f) any
additional information of a public nature concerning the Company or its
business which you may reasonably request. During such period, if the
Company shall have active subsidiaries the foregoing financial statements
shall be on a consolidated basis to the extent that the accounts of the
Company and its subsidiaries are consolidated, and shall be accompanied by
similar financial statements for any significant subsidiary (as defined by
the Act) which is not so consolidated.
(h) Promptly after the Company is advised thereof, it will advise the
Representatives, and confirm in writing, that the Registration Statement
and any amendments shall have become effective.
12
(i) The Company will use the net proceeds from the sale of the Shares
substantially in the manner set forth in the Prospectus under the caption
"Use of Proceeds."
(j) Other than as permitted by the Act and the Rules, the Company will
not distribute any prospectus or offering materials in connection with the
offering and sale of the Shares and prior to the Closing Date or the Option
Closing Date will not issue any press releases or other communications
directly or indirectly and will hold no press conferences with respect to
the Company, the financial condition, results of operations, business,
properties, assets or liabilities of the Company, or the offering of the
Shares, without the prior written consent of Xxxxxxxx.
(k) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar for its
common stock and will, use its best efforts to maintain the listing of the
Shares on the NYSE.
(l) Except as contemplated hereby or by the Prospectus, the Company
will not, for a period of one hundred twenty (120) days after the Effective
Date of the Registration Statement, offer to sell, contract to sell, sell
or otherwise dispose of any shares of the Company's common stock or
securities convertible into shares of the Company's common stock without
the prior written consent of Xxxxxxxx, which consent will not be
unreasonably withheld[; provided, however, the Company may sell, transfer
or issue shares of Common Stock under (i) the Company's plan of
reorganization, (ii) the First Amended and Restated 1992 Warrant Plan,
(iii) the restricted stock agreement between the Company and Xxxx X.
XxXxxxxxx, (iv) the employee stock purchase plan contemplated by the
Company, and (v) the 10% Senior Subordinated Notes ("FCI Notes")].
(m) If at any time during the 90-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in the Underwriters'
opinion the market price of the common stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company
will, after written notice from the Underwriters advising the Company to
the effect set forth above, forthwith prepare, consult with Xxxxxxxx
concerning the substance of, and disseminate a press release or other
public statement, reasonably satisfactory to the Underwriters, responding
to or commenting on such rumor, publication or event.
The foregoing covenants and agreements shall apply to any successor of the
Company, including without limitation, any entity into which the Company might
consolidate or merge.
5. COSTS AND EXPENSES. Whether or not the Registration Statement becomes
effective, the Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Company under this Agreement, including,
without limiting the generality of the foregoing, the following: accounting fees
of the Company; the fees and disbursements of counsel for the Company; the cost
of printing and delivering to Underwriters copies of the Registration Statement,
any Preliminary Prospectus, the Prospectus, this Agreement, the Agreement Among
Underwriters, the Selected Dealer Agreement, Underwriters' Questionnaire and
Power of Attorney, and the Blue Sky Survey and any supplements thereto; the
filing fees of the Commission; the filing fees incident to securing any required
review by the NASD of the terms of the sale of the Shares; the cost of printing
certificates representing the Shares; the cost and charges of any transfer agent
or registrar; and the expenses, including the reasonable fees and disbursements
of counsel for the Underwriters, incurred in connection with [the qualification
of the Shares under State securities or Blue Sky laws and the laws of any
foreign jurisdiction; provided, however, the Stockholder will pay all fees and
13
disbursements of its counsel and its pro rata portion of the Commission filing
fee, Blue Sky fees, NASD fee, plus $15,000 of other expenses and will promptly
reimburse the Company for any amounts advanced by the Company on behalf of the
Stockholder]. Any transfer taxes imposed on the sale of the Shares to the
Underwriters will be paid by the Company or the Stockholder as the case may be.
The Company shall not, however, be required to pay for any of Underwriters'
expenses (other than those related to qualification under State securities or
Blue Sky laws) except that, if the Public Offering shall not be consummated
because the conditions in Section 7 hereof are not satisfied, or because this
Agreement is terminated by the Representatives pursuant to Section 6 hereof, or
by reason of any failure, refusal or inability on the part of the Company to
perform any undertaking or satisfy any condition of this Agreement or to comply
with any of the terms hereof on their part to be performed, unless such failure
to satisfy said condition or to comply with said terms is due to the default or
omission of any Underwriter, then the Company shall reimburse the several
Underwriters for all costs and expenses, including attorney fees and out-of-
pocket expenses, reasonably incurred in connection with investigating, marketing
and proposing to market the Shares or in contemplation of performing their
obligations hereunder but the Company shall not in any event be liable to any of
the several Underwriters for damages on account of loss of anticipated profits
from the sale by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS. The obligations of the
several Underwriters to purchase and pay for the Shares as provided herein, are
subject to the accuracy, as of the Closing Date and as of the Option Closing
Date, of the representations and warranties and agreements of the Company and
the Stockholder contained herein, to the performance by the Company and the
Stockholder of their obligations hereunder and to the following additional
conditions:
(a) The Registration Statement shall have become effective not later
than 11:00 a.m., central time, on the date of this Agreement, unless a
later time and date is agreed to by the Representatives, and no stop order
or other order suspending the effectiveness thereof or the qualification of
the Shares under the State securities or Blue Sky laws of any jurisdiction
shall have been issued and no proceeding for that purpose shall have been
taken or, to the knowledge of the Company, shall be contemplated or
threatened by the Commission or any Other Securities Regulator. If the
Company has elected to rely upon Rule 430A of the Rules, the price of the
Shares and any price-related information previously omitted from the
effective Registration Statement pursuant to such Rule 430A shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) of the Act
within the prescribed time period, and prior to the Closing Date the
Company shall have provided evidence satisfactory to the Representatives of
such timely filing, or a post-effective amendment providing such
information shall have been promptly filed and declared effective in
accordance with the requirements of Rule 430A under the Act. All requests
for additional information on the part of the Commission or any other
government or regulatory authority with jurisdiction (to be included in the
Registration Statement or Prospectus or otherwise) shall be complied with
to the satisfaction of the Commission or such authorities.
(b) The Representatives shall have received on the Closing Date and
on the Option Closing Date the opinions of Xxxxx, Day, Xxxxxx & Xxxxx,
counsel for the Company, and _________, counsel for the Stockholder, with
respect to matters set forth below in subparagraphs (i) through (x) and
subparagraphs (xi) through (xiv), respectively, each dated the Closing Date
and the Option Closing Date, as the case may be, addressed to the
Underwriters in form and substance satisfactory to Xxxxxx, Xxxxxxx &
Xxxxxxxx, counsel to the Underwriters, to the effect that:
(i) The Company and its Subsidiaries have been duly organized and
are validly existing as corporations in good standing under the laws
of the state(s) of their organization with full corporate power and
authority to own their properties and conduct their business
14
as described in the Registration Statement and Prospectus; the Company
and its Subsidiaries are duly qualified to transact business in all
jurisdictions in which the conduct of their businesses or the
ownership or lease of the properties requires such qualification; and
all of the outstanding shares of capital stock of the Company have
been validly authorized and issued, are fully paid and non-assessable,
and except as set forth in the Prospectus and the Registration
Statement and except for directors' qualifying shares, if any, no
options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into
any shares of capital stock of the Company are outstanding other than
shares of Common Stock to be issued or sold pursuant to (i) the
Company's plan of reorganization, (ii) the First Amended and Restated
1992 Warrant Plan, (iii) the restricted stock agreement between the
Company and Xxxx X. XxXxxxxxx, (iv) the employee stock purchase plan
contemplated by the Company, and (v) the FCI Notes.
(ii) The Company has authorized and, to the knowledge of such
counsel, outstanding the capital stock set forth under the captions
"Capitalization" and "Description of Capital Stock" in the
Registration Statement and Prospectus, except for issuances subsequent
to the date of the Prospectus, if any, pursuant to reservations,
commitments, employee benefit plans or other existing agreements; the
outstanding shares of its capital stock have been duly and validly
authorized and issued and are fully paid and non-assessable; all of
the Shares conform to the description thereof contained in the
Prospectus; the certificates for the Shares are in due and proper
form, the Underwritten Shares to be sold pursuant to this Agreement
have been duly authorized and will be validly issued, fully paid and
non-assessable when issued and paid for as contemplated by this
Agreement; there are no preemptive or other restrictive rights to
subscribe for or to purchase or any restriction upon the voting or
transfer of the Shares pursuant to the Company's Certificate of
Incorporation, Bylaws, other governing documents or, to such counsel's
knowledge, any material agreement or other instrument to which the
Company is a party or by which it is bound; and, to such counsel's
knowledge, neither the filing of the Registration Statement nor the
offering or sale of the Shares as contemplated by this Agreement gives
rise to any rights, other than those which have been waived or
satisfied, for or relating to the registration of any class of the
Company's capital stock.
(iii) The Registration Statement has become effective under the
Act and to the knowledge of such counsel no stop order proceedings
with respect thereto have been instituted or are pending or threatened
under the Act and any and all filings required by Rule 424 and Rule
430A of the Rules have been made.
(iv) The Registration Statement, all Preliminary Prospectuses,
the Prospectus and each amendment or supplement thereto, as of their
respective effective or issue dates, complied as to form in all
material respects with the requirements of the Act and the Rules,
except that such counsel need express no opinion as to the financial
statements, schedules and other financial or statistical information
included therein.
(v) The Company meets the requirements of, and is entitled to
use, Form S-3 for the Public Offering, and the information required to
be set forth in the Registration Statement in answer to Form S-3 is
adequately set forth therein in all respects.
(vi) Except as set forth in the Registration Statement and the
Prospectus, there are no contracts, agreements or understandings known
to such counsel between the Company
15
and any person granting such person the right to require the Company
to file a registration statement under the Act with respect to any
securities of the Company owned or to be owned by such person or to
require the company to include such securities in the securities being
registered pursuant to a registration statement filed by the Company
under the Act, except for any rights under employee stock compensation
plans, which registration rights are not exercisable with respect to
the transactions contemplated by this Agreement.
(vii) To such counsel's knowledge, there are no legal,
regulatory or administrative proceedings pending or threatened against
the Company or any of its Subsidiaries which are material to the
earnings, business, affairs, properties, business prospects or
operations of the Company or any Subsidiaries, except as set forth in
the Prospectus.
(viii) Neither the Company nor any of its Subsidiaries is, nor
with the giving of notice or lapse of time or both would be, in
violation of or in default under, nor will the execution or delivery
hereof or consummation of the sale of the Shares by the Company as
contemplated hereby result in a violation of, or constitute a default
under, the Certificate of Incorporation, Bylaws or other governing
documents of the Company or any of its Subsidiaries, or any material
agreement, indenture or other instrument known to such counsel, to
which the Company or any of its Subsidiaries is a party or by which
any of them is bound, or to which their properties are subject, nor
will the performance by the Company of its obligations hereunder
violate any U.S. Federal statute or the Delaware General Corporation
Law, any rule, administrative regulation or decree known by such
counsel issued pursuant to U.S. Federal statute or Delaware General
Corporation Law by any court or any governmental agency or body having
jurisdiction over the Company or any of its Subsidiaries or their
properties, or to such counsel's knowledge result in the creation or
imposition of any lien, charge, claim or encumbrance upon any property
or asset of the Company or any of its Subsidiaries, except where any
such violation, lien, charge, claim or encumbrance would not have a
Material Adverse Effect.
(ix) This Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms,
except as rights to indemnity which may be limited by Federal or state
securities laws and except as to all applicable bankruptcy,
insolvency, fraudulent conveyance, moratorium, receivership and other
laws relating to or affecting the rights of creditors generally and
subject to the discretion of a court of equity in administering any
such rights or remedies.
(x) No approval, consent, order, authorization, designation,
declaration or filing by or with any U.S. Federal governmental
regulatory, administrative or other governmental body or any State of
Delaware court or governmental agency or body under the Delaware
General Corporation Law is necessary in connection with the execution
and delivery of this Agreement and the consummation of the sale of the
Shares by the Company herein contemplated (other than required by NASD
regulation or state securities and Blue Sky laws, as to which such
counsel need express no opinion) except such as have been obtained or
made, specifying the same.
(xi) The Stockholder has full right, power and authority to enter
into and to perform its obligations under the Power of Attorney and
Custody Agreement to be executed
16
and delivered by it in connection with the transactions contemplated
herein; the Power of Attorney and Custody Agreement of the Stockholder
have been duly authorized by the Stockholder; the Power of Attorney
and the Custody Agreement of the Stockholder have been duly executed
and delivered by or on behalf of the Stockholder; and the Power of
Attorney and the Custody Agreement of the Stockholder constitute valid
and binding agreements of the Stockholder, enforceable in accordance
with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by
general equitable principles.
(xii) The Stockholder has full right, power and authority to
enter into and to perform its obligations under this Agreement and to
sell, transfer, assign and deliver the Shares to be sold by the
Stockholder hereunder.
(xiii) This Agreement has been duly authorized by the
Stockholder and has been duly executed and delivered by or on behalf
of the Stockholder and, assuming due authorization, execution and
delivery by the Underwriters, is a valid and binding agreement of the
Stockholder, enforceable in accordance with its terms, except as
rights to indemnity which may be limited by Federal or state
securities laws and except as to all applicable bankruptcy,
insolvency, fraudulent conveyance, moratorium, receivership and other
laws relating to or affecting the rights of creditors generally and
subject to the discretion of a court of equity in administering any
such rights or remedies.
(xiv) Upon the delivery and payment for the Shares as
contemplated in this Agreement, each of the Underwriters will receive
valid title to the Shares purchased by it from the Stockholder, free
and clear of any pledge, lien, security interest, encumbrance, claim
or equitable interest. In rendering such opinion, such counsel may
assume that the Underwriters are without notice of any defect in the
title of any of the Stockholder Shares being purchased from the
Stockholder.
In addition to the matters set forth above, such counsel shall also include
a statement to the effect that such counsel has participated in the
preparation of the Registration Statement and the Prospectus and, based on
such participation, no facts have come to the attention of such counsel
which cause such counsel to believe that any part of the Registration
Statement or any amendment thereto (other than the financial statements and
other financial data contained therein, as to which such counsel may
express no belief), as of its effective date, contained any 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 or any amendment or supplement thereto
(other than the financial statements and other financial data contained
therein, as to which such counsel may express no belief), contains any
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. However, such
counsel has not independently verified, and assumes no responsibility for
the accuracy, completeness or fairness of the Registration Statement or the
Prospectus, including any document incorporated or deemed to be
incorporated therein by reference. The descriptions in the Registration
Statement and Prospectus of statutes, regulations, legal and governmental
proceedings, matters of law and contracts and other documents are accurate
in all material respects and fairly present the information required to be
shown. Such counsel does not know of any legal or governmental proceedings
required to be described in the Registration Statement or the Prospectus
which are not described as required or of any contracts or documents of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration
17
Statement which are not described and filed as required; it being
understood that such counsel need express no opinion as to the financial
statements or other financial data contained in the Registration Statement
or the Prospectus. Such counsel may state that its opinion is limited to
the applicable law of the United States of America and the Delaware General
Corporation Law and that such counsel renders no opinion with respect to
the law of any other jurisdiction. Such opinion may state further that
whenever such opinion is based on factual matters to such counsel's
knowledge or known to such counsel, such counsel has relied exclusively on
certificates of officers (after discussion of the contents thereof with
such officers) of the Company or certificates of others as to the existence
or nonexistence of factual matters on which such opinion is predicated but
has no reason to believe that any such certificate is untrue or inaccurate
in any material respect.
Such opinion shall contain only those qualifications as Xxxxxx,
Xxxxxxx & Xxxxxxxx, counsel to the Underwriters, may reasonably request or
allow .
(c) The Representatives shall have received from Xxxxxx, Xxxxxxx &
Xxxxxxxx, counsel to the Underwriters, an opinion dated the Closing Date,
substantially to the effects specified in subparagraph (iii) and (iv) of
paragraph (b) of this Section 6, and that the Company is a validly
organized and existing corporation under the laws of the State of Delaware.
In rendering such opinion, Xxxxxx, Xxxxxxx & Xxxxxxxx may rely as to all
matters governed other than by Federal law on the opinions of counsel
referred to in paragraphs (b) and (c) of this Section 6. In addition to the
matters set forth above, such opinion shall also include a statement to the
effect that nothing has come to the attention of such counsel which leads
them to believe that the Registration Statement or any amendment thereto at
the time the Registration Statement or amendment became effective or the
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto as of their respective dates contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, not misleading (except
that such counsel need express no view as to financial statements,
schedules and other financial or statistical information included therein).
(d) The Representatives shall have received at or prior to the Closing
Date from Xxxxxx, Xxxxxxx & Xxxxxxxx a memorandum or summary, in form and
substance satisfactory to the Representatives, with respect to the
qualification or exemption therefrom for offering and sale by the
Underwriters of the Shares under the State securities or Blue Sky laws of
such jurisdictions as the Representatives may reasonably have designated.
(e) The Representatives shall have received on the Closing Date and on
the Option Closing Date, as the case may be, signed letters from Ernst &
Young LLP, addressed to the Underwriters dated as of the Effective Date and
again dated as of the Closing Date and as of the Option Closing Date, as
the case may be, with respect to the financial statements and certain
financial and statistical information contained in the Registration
Statement and the Prospectus. All such letters shall be in form and
substance satisfactory to the Representatives and Xxxxxx, Xxxxxxx &
Xxxxxxxx, counsel to the Underwriters.
(f) The Representatives shall have received a signed letter from Ernst
& Young LLP, independent auditors, stating that their review of the
Company's system of internal accounting controls, to the extent they deemed
necessary in establishing the scope of their examination of the Company's
financial statements, did not disclose any weakness in internal controls
that they considered to be a material weakness.
18
(g) The Representatives shall have received on the Closing Date and on
the Option Closing Date, as the case may be, a certificate or certificates
of the President & Chief Executive Officer and Senior Vice President and
Chief Financial Officer of the Company to the effect that, on and as of the
Closing Date and on and as of the Option Closing Date, as the case may be,
each of them severally represents as follows:
(i) (A) the representations and warranties of the Company in this
Agreement are true and correct on and as of the Closing Date and on
and as of the Option Closing Date, as the case may be, and (B) the
Company has complied with all of its agreements and covenants and has
satisfied all of the conditions on its part to be performed or
satisfied at or prior to the Closing Date and at or prior to the
Option Closing Date, as the case may be.
(ii) (A) The Registration Statement has become effective under
the Act; (B) no stop order suspending the effectiveness of the
Registration Statement or the use or effectiveness of the Prospectus
has been issued; (C) no proceedings for such purpose have been taken
or, to his knowledge, are contemplated by the Commission or any Other
Securities Regulator; and (D) all requests for additional information
on the part of the Commission or any Other Securities Regulator have
been complied with.
(iii) No litigation has been instituted or threatened against
the Company or any of its Subsidiaries of a character required to be
disclosed in the Registration Statement which is not so disclosed; and
there is no material contract required to be filed as an exhibit to
the Registration Statement which is not so filed.
(iv) They have carefully examined the Registration Statement and
the Prospectus and, in their opinion, since the Effective Date, (A)
the statements contained in the Registration Statement and the
Prospectus remain true and correct, (B) such Registration Statement
and Prospectus did not omit to state a material fact required to be
stated therein or necessary in order to make the statements therein
not misleading and (C) since the Effective Date, no event has occurred
which should have been set forth in a supplement to or an amendment of
the Prospectus which has not been so set forth in such supplement or
amendment.
(h) The Company and the Stockholder shall have furnished to the
Representatives such additional information and further certificates and
documents confirming the representations and warranties contained herein
and related matters as the Representatives may reasonably have requested.
(i) Since the respective dates as of which information is given in the
Prospectus, there shall not have been any Material Adverse Change.
(j) The Shares shall have been approved for listing on the NYSE,
subject to official notice of issuance.
(k) The Representatives shall have received from the Stockholder a
certificate or certificates, dated as of the Closing Date, or the Option
Closing Date, as the case may be, to the effect that as of such date, it
represents as follows:
(i) The representations and warranties of the Stockholder in this
Agreement are true and correct as of the Closing Date.
19
(ii) The Stockholder has in all material respects complied with
all the agreements and has satisfied all of the conditions on its part
to be performed or satisfied at or prior to the Closing Date.
(iii) The Stockholder has carefully examined the Registration
Statement and the Prospectus, and as of the date of the Prospectus and
as of the Closing, neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto include an untrue
statement of a material fact required to be stated therein or
necessary in order to make the statements therein not misleading and,
since the date of the Prospectus, no event has occurred which should
have been set forth in an amendment or supplement to the Registration
Statement or Prospectus, which has not been set forth, and since the
respective date as of which such information is given in the
Registration Statement and Prospectus there has not been any Material
Adverse Change.
The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in all material
respects satisfactory to the Representatives and Xxxxxx, Xxxxxxx & Xxxxxxxx,
counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Representatives by notifying the Company of such termination in writing or by
confirmed telefax at or prior to the Closing Date. In such event, the Company
and the Underwriters shall not be under any obligation to each other (except to
the extent provided in Sections 5 and 8 hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company and the Stockholder to sell and deliver the Shares are subject to the
conditions that (a) at or before 11:00 a.m., central time, on the date of this
Agreement, or such later time and date as the Company and the Representatives
may from time to time consent to in writing or by confirmed telefax, the
Registration Statement shall have become effective, and (b) at the Closing Date
no stop order suspending the effectiveness of the Registration Statement shall
have been issued or proceedings therefor initiated or threatened. If either of
the conditions hereinabove provided for in this Section 7 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, this Agreement
may be terminated by the Company or the Stockholder by notifying the
Representatives of such termination in writing or by confirmed telefax at or
prior to the Closing Date.
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 the Act,
the Rules and the Exchange Act from and against any and all losses, claims,
damages, liabilities, joint or several, and all expenses (including costs of
investigation and legal expenses) to which such Underwriter or such controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions or proceedings in respect
thereof) arise out of or are based upon any breach of any representation,
warranty, agreement, or covenant of the Company, or any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment 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 the Company will
reimburse each Underwriter and each such controlling person for legal and other
expenses reasonably incurred in connection with investigating or defending any
such loss, claim, damage, liability, action or proceeding; provided, however,
--------
that the Company will not be liable in any such case to the extent
20
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement, or alleged untrue statement, or omission or alleged omission
made in the Registration Statement, any Preliminary Prospectus, the Prospectus,
or such amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in Section 13 below, or furnished to the Company
by the Stockholder specifically for use in the preparation thereof; and provided
--------
further, that with respect to any untrue statement or alleged untrue statement
-------
in or omission or alleged omission from any Preliminary Prospectus, the
indemnity agreement contained in this Section 8(a) shall not inure to the
benefit of any Underwriter from whom the person asserting any such losses,
claims, damages or liabilities purchased the Shares concerned, to the extent
that a prospectus relating to such Shares was required to be delivered by such
Underwriter under the Act in connection with such purchase and any such loss,
claim, damage or liability of such Underwriter, results from the fact that there
was not sent or given to such person, at or prior to the written conformation of
the sale of such Shares to such person, a copy of the Prospectus as then amended
or supplemented (excluding any documents incorporated by reference therein) if
the Company had previously furnished copies thereof to such Underwriter. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) The Stockholder severally and not jointly agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of the Act, the Rules and the Exchange Act from and against
any and all losses, claims, damages, liabilities, joint or several, and all
expenses (including costs of investigation and legal expenses) to which such
Underwriter or such controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions or proceedings in respect thereof) arise out of or are based upon any
breach of any representation, warranty, agreement, or covenant of the
Stockholder, or any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment 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 the Stockholder will reimburse each Underwriter and each such controlling
person for legal and other expenses incurred in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding;
[provided, however, that the Stockholder will be liable in any such case only to
--------
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement, or alleged untrue statement, or omission or
alleged omission made in the Registration Statement, any Preliminary Prospectus,
the Prospectus, or such amendment or supplement, in reliance upon and in
conformity with information furnished to the Company by the Stockholder
specifically for use in the preparation thereof]. This indemnity agreement will
be in addition to any liability which the Stockholder may otherwise have.
Notwithstanding anything herein to the contrary, any amounts payable by the
Stockholder pursuant to the indemnification and contribution provisions set
forth in this Section 8 shall be limited to an amount not exceeding net proceeds
received by the Stockholder from the sale of Shares hereunder.
(c) Each Underwriter severally, but not jointly, will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, the Stockholder, and each person, if any, who
controls the Company, within the meaning of the Act, the Rules and the Exchange
Act from and against any losses, claims, damages or liabilities or expenses to
which the Company, the Stockholder or any such director, officer, or controlling
person may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained
21
in the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment 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 in light of
the circumstances under which they were made; and will reimburse any legal or
other expenses reasonably incurred by the Company, the Stockholder or any such
director, officer, or controlling person in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding;
provided, however, that each Underwriter will be liable in such case only to the
--------
extent that such untrue statement, or alleged untrue statement or omission or
alleged omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or such amendment or supplement, in reliance upon
and in conformity with information furnished to the Company by or through the
Representatives expressly for use in the preparation thereof, which information
is described in Section 13. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(d) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action or proceeding, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 8, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 8, except to the extent that the indemnifying party is
substantially prejudiced by the omission of such notification. In case any such
action or proceeding is brought against any party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. 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. Any indemnified party 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 indemnified party unless (i) the employment of such counsel has
been specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party has failed to assume the defense and employ counsel, or (iii)
the named parties to any such action (including any impleaded parties) include
such indemnified party and the indemnifying party, as the case may be, and such
indemnified party shall have been advised in writing 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 indemnifying party, in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, that (A) the
indemnifying party 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 indemnified parties, which firm shall be designated in
writing by the indemnified parties, and that (B) all such fees and expenses
shall be reimbursed as they are incurred. Subject to the foregoing provisions
of this Section 8(d), the indemnifying party shall not be liable for the costs
and expenses of any settlement of any action without the consent of the
indemnifying party.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 8 is for
any reason held to be unavailable to an indemnified party
22
under subsection (a), (b) or (c) above in respect to any losses, claims,
damages, liabilities or expenses referred to therein, then each applicable
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 expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Stockholder 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 parties 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 Stockholder on the one hand and the Underwriters on the
other hand shall be deemed to be in the same proportion as the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company bears to the underwriting discounts
and commissions received by the Underwriters. The relative fault of a party
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by each party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any such action or claim.
The Company, the Stockholder and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 8 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 considerations referred to in the immediately preceding
paragraph. 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 that such
Underwriters have 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 in this subsection
(d) to contribute shall be several in proportion to their respective
underwriting obligations and not joint.
(f) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements of the Company, the Stockholder and
the officers of the Company herein or in certificates delivered pursuant hereto,
and the indemnity and contribution agreements contained in Section 8 hereof,
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriters or any controlling
person, or by or on behalf of the Company or any of its officers, directors or
controlling persons, and shall survive delivery of the Underwritten Shares and,
if appropriate, the Option Shares to the Representatives or termination of this
Agreement.
23
10. DEFAULT BY UNDERWRITERS. If any Underwriter shall fail to purchase
and pay for the Shares which such Underwriter has agreed to purchase and pay for
hereunder (otherwise than by reason of any default on the part of the Company or
the Stockholder), you, as the Representatives of the Underwriters, shall use
your best efforts to procure within twenty-four hours thereafter one or more of
the other Underwriters, or any others, to purchase from the Company and the
Stockholder such amounts as may be agreed upon and upon the terms set forth
herein, the Shares which the defaulting Underwriter or Underwriters failed to
purchase. If during such twenty-four hours you, as such Representatives, shall
not have procured such other Underwriters, or any others, to purchase the Shares
agreed to be purchased by the defaulting Underwriter or Underwriters, then (a)
if the aggregate number of Shares with respect to which such default shall occur
does not exceed 10% of the Shares which the Underwriters are obligated to
purchase hereby, the other Underwriters shall be obligated, severally, in
proportion to the respective number of Shares which they are obligated to
purchase hereunder, to purchase the Shares which such defaulting Underwriter or
Underwriters failed to purchase, or (b) if the aggregate number of Shares with
respect to which such default shall occur exceeds 10% of the Company's common
stock covered hereby, the Company or you, as the Representatives of the
Underwriters will have the right, by written notice given within the next
twenty-four hour period to the parties to this Agreement, to terminate this
Agreement without liability on the part of the non-defaulting Underwriters, the
Company or the Stockholder except to the extent provided in Section 8 hereof.
In the event of a default by any Underwriter or Underwriters, as set forth in
this Section 10, the time of closing may be postponed for such period, not to
exceed seven days, as you, as the Representatives, may determine in order that
the required changes in the Registration Statement, the Prospectus or in any
other documents or arrangements may be effected. The term "Underwriters"
includes any person substituted for a defaulting Underwriter. Any action taken
under Section 10 shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
11. NOTICES. All communications hereunder shall be in writing and, except
as otherwise provided in, will be mailed, delivered or telefaxed and confirmed
as follows: if to the Underwriters, c/o the Representatives as follows: to
Xxxxxxxx Inc., 000 Xxxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000, Attention: Xxxxxx
Xxxxxx, with a copy to C. Xxxxxxx Xxxxxx, Xx., Xxxxxx, Xxxxxxx & Xxxxxxxx, 000
Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx Xxxx, Xxxxxxxx 00000; if to the Company,
to Fairfield Communities, Inc., 0000 Xxxxxxxx Xxxx, Xxxxxx Xxxx, Xxxxxxxx 00000,
Attention: Xxxxxx X. Xxxxxx through December 1, 1996 and thereafter 0000
Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxx Xxxx, Xxxxxxxx 722__, Attention: Xxxxxx X.
Xxxxxx, with a copy to Xxxx X. Minton, Jones, Day, Xxxxxx & Xxxxx, 2300
Xxxxxxxx Xxxx Center, 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000; and if the
Stockholder, to Physicians Insurance Company of Ohio, 00000 Xxxxxxxx Xxxxx, XX,
Xxxxxxxxxxxx, Xxxx 00000, Attention: Xxxxx Xxxxxx.
12. TERMINATION. This Agreement may be terminated by notice to the
Company as follows:
(a) at any time prior to the earlier of (i) the time the Shares are
released by you for sale by notice to the Underwriters, or (ii) twenty-four
(24) hours following the time at which the Registration Statement becomes
effective;
(b) at any time prior to the Closing Date 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 Material Adverse
Change which would, in your reasonable judgment, materially impair the
investment quality of the Shares, (ii) any outbreak of hostilities or other
national or international calamity or crisis or change in economic or
political conditions if the effect of such outbreak, calamity, crisis or
change on the financial markets of the United States would, in your
reasonable judgment, make the offering or delivery of the Shares
impracticable, (iii) suspension of trading or general trading halts in
securities on the New York Stock Exchange, the American Stock Exchange,
24
The Nasdaq National Market or the over-the-counter market or limitation on
prices (other than limitations on hours or numbers of days or trading) for
securities on either such Exchange, The Nasdaq National Market or the over-
the-counter market, (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 reasonable opinion
materially and adversely affects or will materially or adversely affect the
business or operations of the Company, (v) declaration of a banking
moratorium by either federal or 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 reasonable opinion has a
material adverse effect on the securities markets in the United States; or
(c) as provided in Sections 6 and 10 of this Agreement.
13. INFORMATION FURNISHED BY UNDERWRITERS. The information set forth in
the Prospectus: (a) in the last paragraph on the cover page, (b) on page 2
regarding stabilization, and (c) (i) in the table under the caption
"Underwriting" on page 39, listing the Underwriters and the number of shares
each has agreed to purchase, and (ii) in the first paragraph below said table on
page 39, relating to the concession to dealers and the reallowance to certain
other dealers under the caption "Underwriting" in the Prospectus, constitute the
written information furnished by or on behalf of any Underwriters referred to in
paragraph (a) (v) of Section 1 hereof and in paragraphs (a) and (c) of Section 8
hereof.
14. SUCCESSORS. This Agreement has been and is made solely for the
benefit of the Underwriters, the Company, the Stockholder and their respective
successors, executors, administrators, heirs, and assigns, and the officers,
directors and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. The term "successors" shall not include
any purchaser of the Shares merely because of such purchase.
15. MISCELLANEOUS. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants of the Company and the Stockholder in this Agreement shall remain in
full force and effect regardless of (a) any termination of this Agreement, (b)
any investigation made by or on behalf of the Underwriters or controlling person
or (c) delivery of any payment for the Shares under this Agreement.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Arkansas, without giving effect to the choice of law or
conflict of law principles thereof.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
25
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company and the several Underwriters in
accordance with its terms.
Very truly yours,
FAIRFIELD COMMUNITIES, INC.
By:___________________________________
Name:
Title:
STOCKHOLDER:
PHYSICIANS INSURANCE COMPANY OF OHIO
By:___________________________________
Name:
Title:
[PICO subsidiary]
By:___________________________________
Name:
Title:
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.
XXXXXXXX INC. AND XXXXXXXXX, XXXXXX
& XXXXXXXX SECURITIES CORPORATION
By:_________________________________
Xxxxxxxx Inc., Senior Manager
Name:_______________________________
Title:______________________________
As Representatives of the several Underwriters
named in Schedule I hereto
26
SCHEDULE I
Name No. of Underwritten Shares
---- --------------------------
Xxxxxxxx Inc.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Total _________________
-----
2,000,000
=========
EXHIBIT A
November 1, 1996
Xxxxxxxx Inc. and Xxxxxxxxx, Xxxxxx & Xxxxxxxx
As Representatives of the Several Underwriters
c/o Stephens Inc.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Re: Agreement Not to Sell Fairfield Communities, Inc. Stock
__________________________________________________________
Ladies and Gentlemen:
This letter is provided, at the request of Fairfield Communities, Inc. (the
"Company"), for the benefit of the Company and the Underwriters in connection
with the proposed public offering of 2,000,000 shares of Fairfield Communities,
Inc. Common Stock (plus an additional 300,000 shares if the Underwriters choose
to exercise their over-allotment option) pursuant to a Registration Statement on
Form S-3 (File No. 333-14875). As an inducement to the Underwriters to (a)
enter into an Underwriting Agreement with the Company and its selling
stockholder, Physicians Insurance Company of Ohio and one or more of its
subsidiaries, and (b) consummate the transactions contemplated in such
Underwriting Agreement, the undersigned hereby represents and agrees as follows:
1. The undersigned beneficially owns the number of shares of the Company's
Common Stock set forth below opposite the signature of the undersigned (the
"Shares"), and no others.
2. The undersigned agrees that, for a period of 120 days from the
effective date of the Registration Statement, except for bona fide gifts to
persons who agree with you in writing to be bound by this letter, the
undersigned will not offer, sell or otherwise dispose of any of the Shares,
directly or indirectly, without your written consent as Representatives of the
Underwriters, which consent will not be unreasonably withheld; except that (a)
such Shares may be pledged as collateral against loans of the undersigned
without such written consent, and (b) if loans secured by Shares are called, the
undersigned and any applicable pledgee will have the right to sell the shares
pledged on such loans to the extent necessary to satisfy such loans.
Shares of Common Stock: Very truly yours,
_______________________ _____________________________
K:blw3485.059
EXHIBIT B
CUSTODY AGREEMENT
FAIRFIELD COMMUNITIES, INC.
(A Delaware Corporation)
[CUSTODIAN]
[CUSTODIAN ADDRESS]
Gentlemen:
WHEREAS, Physicians Insurance Company of Ohio (the "Undersigned" or the
"Selling Shareholder") is the owner of duly authorized, issued and outstanding
shares of Common Stock, $.01 par value (the "Common Stock"), of Fairfield
Communities, Inc., a Delaware corporation (the "Company"); and
WHEREAS, concurrently with the execution of this Custody Agreement, the
Undersigned is executing and delivering a Power of Attorney (the "Power of
Attorney"), naming _______________ as attorney-in-fact (the "Attorney-in-Fact")
of the Undersigned, to arrange, among other things, for the sale by the
Undersigned of up to 1,100,000 (1,400,000 if the over-allotment option granted
by the Selling Shareholder is exercised in full) shares of Common Stock (the
"Shares") to Xxxxxxxx Inc., Xxxxxxxxx Xxxxxx & Xxxxxxxx Securities Corporation
and certain other underwriters (collectively, the "Underwriters") named in the
underwriting agreement to be executed by and among the Company, the Selling
Shareholder, other selling shareholders (if any) and the Underwriters in
connection with such sale (the "Underwriting Agreement"), and to execute and
deliver the Underwriting Agreement;
NOW, THEREFORE, for the purpose of carrying out the sale of the Shares
pursuant to the Underwriting Agreement, a custodial relationship is hereby
established with you, as custodian (the "Custodian"), and as Custodian, you are
hereby instructed to act in accordance with this Agreement and any amendments or
supplements hereto given to you in writing and signed by the Attorney-in-Fact
acting on behalf of the Undersigned.
1. The Undersigned hereby delivers to you as Custodian a certificate or
certificates (the "Certificates") representing not less than the number of the
shares of the Undersigned to be sold pursuant to the Underwriting Agreement,
which Certificates have been endorsed in blank or are accompanied by stock
powers duly executed in blank. The Certificates are to be held by the Custodian
for the account of the Undersigned and are to be disposed of by the Custodian in
accordance with this Custody Agreement. The Custodian agrees that it waives any
liens, claims or security interests that it may have with respect to the Shares
deposited herewith. The Undersigned agrees that the Shares represented by the
Certificates deposited herewith are subject to the interests of the Underwriters
under the Underwriting Agreement.
2. You, as Custodian, are authorized and directed to hold the Certificates
in your custody and (i) on or immediately prior to the Closing Date referred to
in the Underwriting Agreement (the "Closing Date") or, as applicable, the Option
Closing Date referred to in the Underwriting Agreement (the "Option Closing
Date"), to cause the number of Shares which are to be sold by the Undersigned
pursuant to the Underwriting Agreement to be transferred on the books of the
Company into such name or names as the Underwriters shall have instructed you,
as Custodian; to cause to be issued, against surrender of the certificate or
certificates representing such Shares a new certificate or certificates for such
Shares registered in such name
or names; to deliver such new certificate or certificates representing such
Shares to the Underwriters on the Closing Date or the Option Closing Date, as
applicable, for the accounts of the Underwriters under the Underwriting
Agreement, against payment therefor in accordance with the Underwriting
Agreement; and to give receipt for such payment and to deposit the same to your
account, as Custodian; and (ii) as soon as practicable, to draw upon such
account to pay (or reimburse yourself for) such expenses (including, without
limitation, your fees and expenses as Custodian and any stock transfer taxes and
other expenses allocable to the Undersigned in connection with the sale of the
Shares) as you may be instructed to pay by the Attorney-in-Fact acting on behalf
of the Undersigned, and to remit to the Undersigned the balance, after deducting
such expenses, of the amount received by you as payment for the Shares. As soon
as practicable after the Option Closing Date, you shall return to the
Undersigned a new certificate representing the number of Shares, if any,
deposited herewith which are not sold by the Undersigned pursuant to the
Underwriting Agreement. Delivery of new certificates shall be made to the
Undersigned at the address listed below.
3. If you receive written notice from the Attorney-in-Fact that the
Underwriting Agreement shall not be entered into on behalf of the Undersigned,
or if it shall not become effective pursuant to its terms, or if it shall be
terminated pursuant to its terms, then, subject to the provisions of the Power
of Attorney, you are to return to the Undersigned the Certificates deposited
herewith, together with any stock powers, and you shall have no further
responsibility hereunder.
4. This Custody Agreement is for the express benefit of the Company, the
Underwriters and the Undersigned and is irrevocable, subject to the provisions
of paragraph 3 hereof. The obligations and authorizations of the Undersigned
hereunder shall not be terminated by operation of law or the occurrence of any
event whatsoever; and, if any such event should occur before the delivery
hereunder to the representatives for the accounts of the Underwriters of the
Shares, said Shares shall be delivered to the Underwriters in accordance with
the terms and conditions of this Custody Agreement and the Underwriting
Agreement as if such event had not occurred, regardless of whether the Custodian
shall have received notice of such event.
5. Until payment of the purchase price for the Shares being sold by the
Undersigned pursuant to the Underwriting Agreement has been made to you by or
for the account of the Underwriters, the Undersigned shall remain the owner of
the Shares deposited herewith and shall have the right to vote such Shares and
to receive all dividends and distributions thereon. However until such payment
in full has been made or until the Underwriting Agreement has been terminated,
the Undersigned agrees that the Undersigned will not give, sell, pledge,
hypothecate, grant any lien on, transfer, deal with or contract with respect to
the Shares to be sold by the Undersigned pursuant to the Underwriting Agreement
or any interest therein, except in accordance with the Underwriting Agreement.
6. You shall assume no responsibility or liability to any person other
than to deal with the Certificates and the proceeds from the sale of the Shares
in accordance with the provisions hereof, and the Undersigned hereby agrees to
indemnify and hold you harmless against any and all expenses, losses, claims,
damages or liabilities to which you may become subject insofar as such expenses,
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any act taken or omitted to be taken by you pursuant hereto
or pursuant to instructions given to you by the Attorney-in-Fact, except if such
expenses, losses, claims, damages or liabilities shall result from gross
negligence or willful malfeasance on your part. The Undersigned further agrees
that you may consult with counsel of your choice (who may be counsel for the
Company), and you shall have full and complete authorization and protection for
any action taken or suffered by you hereunder in good faith and in accordance
with the opinion of such counsel.
7. The Undersigned represents and warrants that the Undersigned has, and
at the time of delivery of the Shares to the Underwriters pursuant to the
Underwriting Agreement will have, full legal right,
2
power and capacity and all authorizations and approvals required by law or
otherwise to enter into this Custody Agreement, the Power of Attorney and the
Underwriting Agreement, to carry out the terms and provisions hereof and of the
Underwriting Agreement and to make all of the representations, warranties and
agreements contained herein and therein. This Custody Agreement and the Power
of Attorney are, and the Underwriting Agreement, when executed by the Attorney-
in-Fact, will be, valid and binding obligations of the Undersigned, enforceable
in accordance with their respective terms. The Undersigned further represents
and warrants that the execution and delivery of this Custody Agreement, the
Power of Attorney and the Underwriting Agreement and the consummation of the
transactions contemplated hereby and thereby and the fulfillment of the terms
hereof and thereof will not conflict with or result in the breach of any of the
terms, provisions or conditions of, or constitute a default under, any note,
indenture, mortgage, deed or declaration of trust, agreement, will or other
instrument, if any, to which the Undersigned is a party or by which the
Undersigned is bound, or, to the best of the Undersigned's knowledge,
information and belief, any existing law, order, rule, regulation, writ,
injunction, judgment or decree of any government, governmental instrumentality,
agency or body, arbitration tribunal, or court, domestic or foreign, having
jurisdiction over the Undersigned or the Undersigned's property.
8. Your acceptance of this Custody Agreement by the execution hereof shall
constitute an acknowledgment by you of receipt of the Certificates, and the
acceptance by you of the authorization herein conferred and shall evidence your
agreement to carry out and perform this Custody Agreement in accordance with its
terms.
9. This Custody Agreement may be executed in any number of counterparts,
which together shall constitute one and the same instrument. Execution by you
of one counterpart hereof and its delivery thereof to the Attorney-in-Fact for
the account of the Undersigned shall constitute the valid execution and delivery
of this Custody Agreement by you.
10. This Custody Agreement shall be binding upon each of the Undersigned
and the Undersigned's successors and assigns.
11. This Custody Agreement for all purposes shall be governed by and
construed in accordance with the laws of the State of Arkansas.
12. You shall be entitled to act and rely upon any statement, request or
notice with respect to this Custody Agreement given to you on behalf of the
Undersigned if the same shall be made or given to you by the Attorney-in-Fact
acting on behalf of the Undersigned.
Please acknowledge your acceptance of this Custody Agreement as Custodian
and receipt of the Certificates deposited herewith by executing and returning
one of the enclosed copies of this Custody Agreement to the Undersigned at the
address set forth below.
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IN WITNESS WHEREOF, the Undersigned has executed this Custody Agreement
this _____ day of __________, 1996.
Very truly yours,
PHYSICIANS INSURANCE COMPANY OF OHIO
By:___________________________________
Name:
Title:
ADDRESS:______________________________
______________________________
ACKNOWLEDGMENT
--------------
STATE OF ________________
COUNTY OF _______________
On this the _____ day of ____________, 1996, before me, a Notary Public,
personally appeared _________________________, who acknowledged himself to be
the _________________________ of Physicians Insurance Company of Ohio, a
corporation, and that he, as such officer, being authorized so to do, executed
the foregoing instrument for the purposes therein contained, by signing the name
of the corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
_________________________________________________________
Notary Public
My Commission Expires:
___________________________
4
ACKNOWLEDGMENT AND RECEIPT
[CUSTODIAN] acknowledges acceptance of the duties of Custodian under the
foregoing Custody Agreement and receipt of the Certificates for Common Stock
referred to therein and stock powers relating thereto.
[CUSTODIAN]
Dated:______________________ By:_______________________________
Name
__________________________________
Title
K:blw3506.059
5
EXHIBIT C
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints ____________ and ____________, and each of them acting alone, its true
and lawful attorneys-in-fact and agents, each with full power of substitution
and resubstitution, for it and in its name, place and stead, in any and all
capacities, to sign the Underwriting Agreement relating to the sale by the
undersigned of shares of the common stock of Fairfield Communities, Inc. and any
amendments thereto, and to act on behalf of the undersigned pursuant to a
Custody Agreement given in connection with such shares, granting unto said
attorneys-in-fact and agents, or either of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully for all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do and cause to be done by virtue hereof.
PHYSICIANS INSURANCE COMPANY OF OHIO
By:__________________________________
Name:
Title:
Date: November__, 1996
ACKNOWLEDGEMENT
---------------
STATE OF ______________
COUNTY OF _____________
On this the ____ day of ____________, 1996, before me, a Notary Public,
personally appeared _______________________, who acknowledged himself to be the
_________________________ of Physicians Insurance Company of Ohio, a
corporation, and that he, as such officer, being authorized so to do, executed
the foregoing instrument for the purposes therein contained, by signing the name
of the corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
_____________________________________
Notary Public
My Commission Expires:
___________________________
