$_____________
KENT ELECTRONICS CORPORATION
____% Convertible Subordinated Notes due 2004
UNDERWRITING AGREEMENT
----------------------
September __, 1997
XXXXX XXXXXX INC.
BT ALEX. BROWN INCORPORATED
XXXXXXXXX, XXXXXX & XXXXXXXX SECURITIES
CORPORATION
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
c/o XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Kent Electronics Corporation, a Texas corporation (the "Company"),
proposes, upon the terms and subject to the conditions set forth herein, to
issue and sell $___________ aggregate principal amount of its ___% Convertible
Subordinated Notes due 2004 (the "Firm Notes"), to the several Underwriters
named in Schedule I hereto (the "Underwriters"). The Company also proposes,
upon the terms and subject to the conditions set forth herein, to sell to the
several Underwriters up to an additional $__________ aggregate principal amount
of its ___% Convertible Subordinated Notes due 2004 (the "Additional Notes").
The Firm Notes and the Additional Notes are hereinafter sometimes collectively
referred to as the "Notes." The Notes will be issued pursuant to the provisions
of an Indenture to be dated as of September __, 1997 (the "Indenture"), between
the Company and Texas Commerce Bank National Association, as Trustee (the
"Trustee"). The Company's common stock, without par value, is hereinafter
referred to as the "Common Stock."
The Company wishes to confirm as follows its agreement with you in
connection with the several purchases of the Notes by the Underwriters.
1. Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions
of the Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Act"), a registration statement on
Form S-3 (Registration No. 333-34045) under the Act (the "registration
statement"), including a prospectus subject to completion relating to the Notes
and the shares of Common Stock issuable on conversion of the Notes. The term
"Registration Statement" as used in this Agreement means the registration
statement (including all financial schedules and exhibits), as amended at the
time it becomes effective, or, if the registration statement became effective
prior to the execution of this Agreement, as supplemented or amended prior to
the execution of this Agreement. If it is contemplated, at the time this
Agreement is executed, that a post-effective amendment to the registration
statement will be filed and must be declared effective before the offering of
the Notes may commence, the term "Registration Statement" as used in this
Agreement means the registration statement as amended by said post-effective
amendment. If it is contemplated, at the time this Agreement is executed, that a
registration statement will be filed pursuant to Rule 462(b) under the Act
before the offering of the Notes may commence, the term "Registration Statement"
as used in this Agreement includes such registration statement. The term
"Prospectus" as used in this Agreement means the prospectus in the form included
in the Registration Statement, or, if the prospectus included in the
Registration Statement omits information in reliance on Rule 430A under the Act
and such information is included in a prospectus filed with the Commission
pursuant to Rule 424(b) under the Act, the term "Prospectus" as used in this
Agreement means the prospectus in the form included in the Registration
Statement as supplemented by the addition of the Rule 430A information contained
in the prospectus filed with the Commission pursuant to Rule 424(b). The term
"Prepricing Prospectus" as used in this Agreement means the prospectus subject
to completion in the form included in the registration statement at the time of
the initial filing of the registration statement with the Commission, and as
such prospectus shall have been amended from time to time prior to the date of
the Prospectus. Any reference in this Agreement to the registration statement,
the Registration Statement, any Prepricing Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Act, as of the date of the
registration statement, the Registration Statement, such Prepricing Prospectus
or the Prospectus, as the case may be, and any reference to any amendment or
supplement to the registration statement, the Registration Statement, any
Prepricing Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after such date under the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Exchange Act"), which, upon filing, are incorporated by
reference therein, as required by paragraph (b) of Item 12 of Form S-3. As used
herein, the term "Incorporated Documents" means the documents which at the time
are incorporated by reference in the registration statement, the Registration
Statement, any Prepricing Prospectus, the Prospectus, or any amendment or
supplement thereto.
2. Agreements to Sell and Purchase. The Company hereby agrees, upon the
terms and subject to all the conditions set forth herein, to issue and sell to
each Underwriter and, upon the basis of the representations, warranties and
agreements of the Company herein contained and upon the terms and subject to all
the conditions set forth herein, each Underwriter agrees,
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severally and not jointly, to purchase from the Company, at a purchase price of
___% of the principal amount thereof, the principal amount of the Firm Notes set
forth opposite the name of such Underwriter in Schedule I hereto (or such
principal amount of Firm Notes increased as set forth in Section 10 hereof).
The Company also hereby agrees, upon the terms and subject to all the
conditions set forth herein, to sell to the Underwriters, and, upon the basis of
the representations, warranties and agreements of the Company herein contained
and subject to all the terms and conditions set forth herein, the Underwriters
shall have the right to purchase from the Company, pursuant to an option (the
"over-allotment option") which may be exercised at any time and from time to
time prior to 9:00 P.M., New York City time, on the 30th day after the date of
the Prospectus (or, if such 30th day shall be a Saturday or Sunday or a holiday,
on the next business day thereafter when the New York Stock Exchange is open for
trading), up to $__________ aggregate principal amount of Additional Notes. The
purchase price of any Additional Notes which the Underwriters may elect to
purchase shall be the same as the purchase price of the Firm Notes, plus accrued
interest, if any, from the date of issuance of the Firm Notes to the date of
delivery of and payment for the Additional Notes. Additional Notes may be
purchased only for the purpose of covering over-allotments made in connection
with the offering of the Firm Notes. Upon any exercise of the over-allotment
option, each Underwriter, severally and not jointly, agrees to purchase from the
Company the principal amount of Additional Notes which bears the same proportion
to the aggregate principal amount of Additional Notes to be purchased by the
Underwriters as the principal amount of Firm Notes set forth opposite the name
of such Underwriter in Schedule I hereto (or such principal amount of Firm Notes
increased as set forth in Section 10 hereof) bears to the aggregate principal
amount of the Firm Notes.
3. Terms of Public Offering. The Company has been advised by you that
the Underwriters propose to make a public offering of their respective portions
of the Notes as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable and initially to offer the
Notes upon the terms set forth in the Prospectus.
4. Delivery of the Notes and Payment Therefor. The Notes to be purchased
hereunder will be represented by one or more definitive global Notes in book-
entry form which will be deposited by or on behalf of the Company with The
Depository Trust Company ("DTC") or its designated custodian.
Delivery to the Underwriters of the Firm Notes, against payment of the
purchase price therefor in Federal (same day) funds, shall be made by causing
DTC to credit the Firm Notes to the account or accounts designated by Xxxxx
Xxxxxx on behalf of the Underwriters at DTC. The time and date of such delivery
shall be 10:00 A.M., New York City time, on September __, 1997 (the "Closing
Date"). The other documents to be delivered at the Closing Date by or on behalf
of the parties hereto shall be delivered at such time and date at the offices
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of Xxxxx & Xxxxx, L.L.P., 000 Xxxxxxxxx, Xxxxxxx, Xxxxx 00000. The place of
closing for the Firm Notes and the Closing Date may be varied by agreement
between you and the Company.
Delivery to the Underwriters of the Additional Notes to be purchased
by the Underwriters, against payment of the purchase price therefor in Federal
(same day) funds, shall be made by causing DTC to credit the Additional Notes to
the account or accounts designated by Xxxxx Xxxxxx on behalf of the Underwriters
at DTC at such time on such date (the "Option Closing Date"), which may be the
same as the Closing Date but shall in no event be earlier than the Closing Date
nor earlier than two nor later than ten business days after the giving of the
notice hereinafter referred to, as shall be specified in a written notice from
you on behalf of the Underwriters to the Company of the Underwriters'
determination to purchase a principal amount, specified in such notice, of
Additional Notes. The other documents to be delivered at the Option Closing
Date by or on behalf of the parties hereto shall be delivered at such time and
date at the offices of Xxxxx & Xxxxx, L.L.P., 000 Xxxxxxxxx, Xxxxxxx, Xxxxx
00000. The place of closing for any Additional Notes and the Option Closing
Date for such Notes may be varied by agreement between you and the Company.
The global certificates representing the Notes to be delivered to the
Underwriters shall be made available to you at the office of DTC or its
custodian for inspection not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be.
5. Agreements of the Company. The Company agrees with the several
Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Notes may commence, the
Company will endeavor to cause the Registration Statement or such post-effective
amendment to become effective as soon as possible and will advise you promptly
and, if requested by you, will confirm such advice in writing, when the
Registration Statement or such post-effective amendment has become effective.
(b) The Company will advise you promptly and, if requested by you,
will confirm such advice in writing: (i) of any request by the Commission for
amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectus or for additional information; (ii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Notes for
offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) within the period of time referred to in paragraph (f)
below, of any change in the Company's condition (financial or other), business,
prospects, properties, net worth or results of operations, or of the happening
of any event, which makes any statement of a material fact made in the
Registration Statement or the Prospectus (as then amended or supplemented)
untrue or which
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requires the making of any additions to or changes in the Registration Statement
or the Prospectus (as then amended or supplemented) in order to state a material
fact required by the Act to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or supplement
the Prospectus (as then amended or supplemented) to comply with the Act or any
other law. If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible time.
(c) The Company will furnish to you, without charge (i) five XXXXX
versions of the registration statement as originally filed with the Commission
and of each amendment thereto, including financial statements and all exhibits
to the registration statement, (ii) five manually signed copies of the
registration statement corresponding to the XXXXX version filed with the
Commission and of each amendment thereto, including financial statements and all
exhibits to the registration statement, (iii) such number of conformed copies of
the registration statement as originally filed and of each amendment thereto,
but without exhibits, as you may request, (iv) such number of copies of the
Indenture and of the Incorporated Documents, without exhibits, as you may
reasonably request, and (v) five copies of the exhibits to the Incorporated
Documents.
(d) The Company will not file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus or, prior to the
end of the period of time referred to in the first sentence in paragraph (f)
below, file any document which, upon filing becomes an Incorporated Document, of
which you shall not previously have been advised or to which, after you shall
have received a copy of the document proposed to be filed, you shall reasonably
object.
(e) Prior to the execution and delivery of this Agreement, the
Company has delivered to you, without charge, in such quantities as you have
requested, copies of each form of the Prepricing Prospectus. The Company
consents to the use, in accordance with the provisions of the Act and with the
securities or Blue Sky laws of the jurisdictions in which the Notes are offered
by the several Underwriters and by dealers, prior to the date of the Prospectus,
of each Prepricing Prospectus so furnished by the Company.
(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion of
counsel for the Underwriters a prospectus is required by the Act to be delivered
in connection with sales by any Underwriter or dealer, the Company will
expeditiously deliver to each Underwriter and each dealer, without charge, as
many copies of the Prospectus (and of any amendment or supplement thereto) as
you may request. The Company consents to the use of the Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of the Act
and with the securities or Blue Sky laws of the jurisdictions in which the Notes
are offered by the several Underwriters and by all dealers to whom Notes may be
sold, both in connection with the offering and sale of the Notes
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and for such period of time thereafter as the Prospectus is required by the Act
to be delivered in connection with sales by any Underwriter or dealer. If during
such period of time any event shall occur that in the judgment of the Company or
in the opinion of counsel for the Underwriters is required to be set forth in
the Prospectus (as then amended or supplemented) or should be set forth therein
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Prospectus (or to file under the Exchange Act any document which, upon
filing, becomes an Incorporated Document) in order to comply with the Act or any
other law, the Company will forthwith prepare and, subject to the provisions of
paragraph (d) above, file with the Commission an appropriate supplement or
amendment thereto (or to such document), and will expeditiously furnish to the
Underwriters and dealers a reasonable number of copies thereof. In the event
that the Company and you agree that the Prospectus should be amended or
supplemented, the Company, if requested by you, will promptly issue a press
release announcing or disclosing the matters to be covered by the proposed
amendment or supplement. Each Underwriter agrees that upon the receipt of any
supplement or amendment to a Prospectus, it will not deliver a Prospectus other
than as supplemented or amended.
(g) The Company will cooperate with you and with counsel for the
Underwriters in connection with the registration or qualification of the Notes
and the shares of Common Stock issuable upon conversion of the Notes for
offering and sale by the several Underwriters and by dealers under the
securities or Blue Sky laws of such jurisdictions as you may designate and will
file such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification; provided that
in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to service of process in suits, other than those arising out of the
offering or sale of the Notes, in any jurisdiction where it is not now so
subject.
(h) The Company will make generally available to its security holders
a consolidated earnings statement (in form complying with the provisions of Rule
158 under the Act), which need not be audited, covering a twelve-month period
commencing after the effective date of the Registration Statement and ending not
later than 15 months thereafter, as soon as practicable after the end of such
period, which consolidated earnings statement shall satisfy the provisions of
Section 11(a) of the Act.
(i) So long as any of the Notes are outstanding, the Company will
furnish to you (i) as soon as available, a copy of each report of the Company
mailed to stockholders or filed with the Commission, and (ii) from time to time
such other information concerning the Company as you may reasonably request.
(j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provision hereof (otherwise than pursuant to the
second paragraph of Section 10 hereof or by notice given by you terminating this
Agreement pursuant to Section 10 or Section
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11 hereof) or if this Agreement shall be terminated by the Underwriters because
of any failure or refusal on the part of the Company to comply with the terms or
fulfill any condition of this Agreement, the Company agrees to reimburse you for
all out-of-pocket expenses (including fees and expenses of counsel for the
Underwriters) reasonably incurred by you in connection herewith.
(k) The Company will apply the net proceeds from the sale of the
Notes substantially in accordance with the description set forth in the
Prospectus.
(l) If Rule 430A of the Act is employed, the Company will timely file
the Prospectus pursuant to Rule 424(b) under the Act and will advise you of the
time and manner of such filing.
(m) Except as provided in this Agreement, the Company will not (i)
offer, sell, contract to sell or otherwise dispose of any shares of Common Stock
or any securities convertible into or exercisable or exchangeable for Common
Stock, except pursuant to outstanding options to purchase Common Stock under the
Amended and Restated 1987 Kent Electronics Corporation Stock Option Plan, the
Kent Electronics Corporation 1996 Employee Incentive Plan or the Stock Option
Plan and Agreement dated as of February 14, 1996 by and between the Company and
Xx. Xxxxxxx Xxxxxxxxx, (ii) file or effect a registration statement under the
Act (other than in connection with the registration of securities pursuant to an
employee stock option, stock purchase, dividend reinvestment plan or similar
plan or pursuant to a merger, exchange offer or a transaction of the type
specified in Rule 145(a) under the Act) registering shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock,
or (iii) grant any options or warrants to purchase Common Stock, except for the
grant of options to purchase Common Stock under the Amended and Restated 1987
Kent Electronics Corporation Stock Option Plan or the Kent Electronics
Corporation 1996 Employee Incentive Plan, for a period of 90 days after the date
of the Prospectus, without the prior written consent of Xxxxx Xxxxxx Inc.
(n) The Company has furnished to you agreements signed by each of its
current executive officers and directors, whereby each executive officer and
director has agreed that he or she will not sell, offer to sell, solicit an
offer to buy, contract to sell, grant any option to purchase, or otherwise
transfer or dispose of, any shares of Common Stock, or any securities
convertible into or exercisable or exchangeable for Common Stock, for a period
of 90 days after the date of the Prospectus, without the prior written consent
of Xxxxx Xxxxxx Inc.
(o) Except as stated in this Agreement and in the Prepricing
Prospectus and the Prospectus, the Company has not taken, nor will it take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Common Stock or Notes to facilitate the sale or resale of the Notes.
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(p) The Company will use its best efforts: (i) to have the Notes
listed on the New York Stock Exchange concurrently with the effectiveness of the
Registration Statement; and (ii) to have the shares of Common Stock issuable
upon conversion of the Notes listed, subject to notice of issuance, on the New
York Stock Exchange prior to the Closing Date.
6. Representations and Warranties of the Company. The Company represents
and warrants to each Underwriter that:
(a) Each Prepricing Prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement thereto,
or filed pursuant to Rule 424 under the Act, complied when so filed in all
material respects with the provisions of the Act and did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The Commission has
not issued any order preventing or suspending the use of any Prepricing
Prospectus.
(b) The Company and the offering of the Notes contemplated by this
Agreement meet the requirements for using Form S-3 under the Act. The
registration statement in the form in which it became or becomes effective and
also in such form as it may be when any post-effective amendment thereto shall
become effective and the Prospectus and any supplement or amendment thereto,
when filed with the Commission under Rule 424(b) under the Act, complied or will
comply in all material respects with the provisions of the Act and did not or
will not at any such times 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 this representation and
warranty does not apply to statements in or omissions from the Registration
Statement or the Prospectus made in reliance upon and in conformity with (i)
information relating to any Underwriter furnished to the Company in writing by
or on behalf of any Underwriter through you expressly for use therein, or (ii)
the Trustee's Statement of Eligibility and Qualification (Form T-1) under the
Trust Indenture Act of 1939, as amended (the "1939 Act").
(c) The Incorporated Documents heretofore filed, when they were filed
(or, if any amendment with respect to any such document was filed, when such
amendment was filed), conformed in all material respects with the requirements
of the Exchange Act, any further Incorporated Documents so filed will, when they
are filed, conform in all material respects with the requirements of the
Exchange Act; no such document when it was filed (or, if an amendment with
respect to any such document was filed, when such amendment was filed),
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading; and no such further document, when it is filed, will
contain an untrue statement of a material fact or will omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading.
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(d) The Indenture has been duly and validly authorized and, upon its
execution and delivery by the Company and assuming due execution and delivery by
the Trustee, will be a valid and binding agreement of the Company, enforceable
in accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally and general principles of equity, and has been (or will have been)
duly qualified under the 1939 Act and conforms to the description thereof in the
Registration Statement and the Prospectus.
(e) The Notes have been duly authorized and, when executed by the
Company and authenticated by the Trustee in accordance with the Indenture and
delivered to you against payment therefor in accordance with the terms hereof,
will have been validly issued and delivered, and will constitute valid and
binding obligations of the Company entitled to the benefits of the Indenture and
enforceable in accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and general principles of equity, and
the Notes will conform to the description thereof in the Registration Statement
and the Prospectus.
(f) All the outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable and are free of
any preemptive or similar rights; the shares of Common Stock issuable upon
conversion of the Notes have been duly authorized and reserved for issuance and,
when delivered upon conversion of the Notes in accordance with the terms of the
Indenture, will have been validly issued and fully paid and will be
nonassessable and free of any preemptive or similar rights; and the capital
stock of the Company conforms to the description thereof in the Registration
Statement and the Prospectus.
(g) The Company is a corporation duly organized and validly existing
in good standing under the laws of the State of Texas with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus, and is
duly registered and qualified to conduct its business and is in good standing in
each jurisdiction or place where the nature of its properties or the conduct of
its business requires such registration or qualification, except where the
failure so to register or qualify does not have a material adverse effect on the
condition (financial or other), business, properties, net worth or results of
operations of the Company and the Subsidiaries (as hereinafter defined) taken as
a whole (a "Material Adverse Effect").
(h) All of the Company's subsidiaries that are "significant
subsidiaries" (as defined in Regulation S-X) (collectively, the "Subsidiaries")
are listed in an exhibit to the Company's Annual Report on Form 10-K, as
amended, which is incorporated by reference into the Registration Statement.
Each Subsidiary is a corporation duly organized, validly existing and in good
standing in the jurisdiction of its incorporation, with full corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Registration
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Statement and the Prospectus, and is duly registered and qualified to conduct
its business and is in good standing in each jurisdiction or place where the
nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not have a Material Adverse Effect; all the outstanding shares of
capital stock of each of the Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable, and are owned by the Company directly,
or indirectly through one of the other Subsidiaries, free and clear of any lien,
adverse claim, security interest, equity or other encumbrance.
(i) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened, against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or to which
any of their respective properties is subject, that are required to be described
in the Registration Statement or the Prospectus but are not described as
required, and there are no agreements, contracts, indentures, leases or other
instruments that are required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration Statement or any
Incorporated Document that are not described or filed as required by the Act or
the Exchange Act.
(j) Neither the Company nor any of the Subsidiaries is in violation
of its certificate or articles of incorporation or by-laws, or other
organizational documents, or of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of the
Subsidiaries or of any decree of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries, or in default in any
material respect in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
in any material agreement, indenture, lease or other instrument to which the
Company or any of the Subsidiaries is a party or by which any of them or any of
their respective properties may be bound, which violation or default would,
singly or in the aggregate, have a Material Adverse Effect.
(k) Neither the issuance and sale of the Notes, the issuance of the
Common Stock upon conversion of the Notes, the execution, delivery or
performance of this Agreement and the Indenture by the Company nor the
consummation by the Company of the transactions contemplated hereby and thereby
(i) requires any consent, approval, authorization or other order of or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency or official (except such as may be required
for the registration of the Notes under the Act and the Exchange Act,
registration under the Act of the shares of Common Stock issuable upon
conversion of the Notes, qualification of the Indenture under the 1939 Act, and
compliance with the securities or Blue Sky laws of various jurisdictions, all of
which have been or will be effected in accordance with this Agreement and except
for consents, approvals, authorizations, orders, registrations or filings
outside the United States which are required under the securities laws of any
such foreign jurisdiction) or conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, the certificate or articles of
incorporation or by-laws, or other organizational documents, of the Company or
any of the Subsidiaries (ii) conflicts
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or will conflict with or constitutes or will constitute a breach of, or a
default under, any agreement, indenture, lease or other instrument to which the
Company or any of the Subsidiaries is a party or by which any of them or any of
their respective properties may be bound, which conflict, breach or default
would, singly or in the aggregate, have a Material Adverse Effect, (iii)
violates or will violate any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Company or any of the Subsidiaries
or any of their respective properties, which violation would, singly or in the
aggregate, have a Material Adverse Effect, or (iv) will result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of the Subsidiaries pursuant to the terms of any agreement or
instrument to which any of them is a party or by which any of them may be bound
or to which any of the property or assets of any of them is subject, which lien,
charge or encumbrance would, singly or in the aggregate, have a Material Adverse
Effect.
(l) The accountants, Xxxxx Xxxxxxxx LLP, who have certified or shall
certify the financial statements included or incorporated by reference in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto), are independent public accountants as required by the Act.
(m) The financial statements, together with related schedules and
notes, included or incorporated by reference in the Registration Statement and
the Prospectus (and any amendment or supplement thereto), present fairly the
consolidated financial position, results of operations and changes in financial
position of the Company and the Subsidiaries on the basis stated in the
Registration Statement at the respective dates or for the respective periods to
which they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data included
or incorporated by reference in the Registration Statement and the Prospectus
(and any amendment or supplement thereto) are accurately presented and prepared
on a basis consistent with such financial statements and the books and records
of the Company and the Subsidiaries.
(n) The execution and delivery of, and the performance by the Company
of its obligations under, this Agreement have been duly and validly authorized
by the Company, and this Agreement has been duly executed and delivered by the
Company and constitutes the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as (i)
rights to indemnity and contribution hereunder may be limited by federal or
state securities laws and (ii) enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally and general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
(o) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such
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information is given in the Registration Statement and the Prospectus (or any
amendment or supplement thereto), neither the Company nor any of the
Subsidiaries has incurred any liability or obligation, direct or contingent, or
entered into any transaction, not in the ordinary course of business, that is
material to the Company and the Subsidiaries taken as a whole, and there has not
been any change in the capital stock (other than any change in capital stock
relating to the exercise of outstanding options), or material increase in the
short-term debt or long-term debt, of the Company or any of the Subsidiaries, or
any Material Adverse Effect, or any development involving or which may
reasonably be expected to involve, a prospective Material Adverse Effect.
(p) Each of the Company and the Subsidiaries has good and marketable
title to all property (real and personal) described in the Prospectus as being
owned by it, free and clear of all liens, claims, security interests or other
encumbrances except such as are described in the Registration Statement and the
Prospectus or in a document filed as an exhibit to the Registration Statement
and all the property described in the Prospectus as being held under lease by
each of the Company and the Subsidiaries is held by it under valid, subsisting
and enforceable leases.
(q) The Company has not distributed and, prior to the later to occur
of (i) the Closing Date and (ii) completion of the distribution of the Notes,
will not distribute any offering material in connection with the offering and
sale of the Notes other than the Registration Statement, any Prepricing
Prospectus, the Prospectus or other materials, if any, permitted by the Act.
(r) The Company and each of the Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own its respective properties and to
conduct its business in the manner described in the Prospectus, subject to such
qualifications as may be set forth in the Prospectus; the Company and each of
the Subsidiaries has fulfilled and performed all its material obligations with
respect to such permits and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the holder of any such permit,
subject in each case to such qualification as may be set forth in the
Prospectus; and, except as described in the Prospectus, none of such permits
contains any restriction that is materially burdensome to the Company or any of
the Subsidiaries.
(s) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
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(t) To the Company's knowledge, neither the Company nor any of its
Subsidiaries nor any employee or agent of the Company or any Subsidiary has made
any payment of funds of the Company or any Subsidiary or received or retained
any funds in violation of any law, rule or regulation, which payment, receipt or
retention of funds is of a character required to be disclosed in the Prospectus.
(u) The Company and each of the Subsidiaries have filed all tax
returns required to be filed, which returns, to the Company's knowledge, are
complete and correct, and neither the Company nor any Subsidiary is in default
in the payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto.
(v) No holder of any security of the Company has any right to require
registration of shares of Common Stock or any other security of the Company
because of the filing of the registration statement or consummation of the
transactions contemplated by this Agreement.
(w) The Company and the Subsidiaries own or possess all patents,
trademarks, trademark registrations, service marks, service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Prospectus as being owned by them or any of them or necessary
for the conduct of their respective businesses, and the Company is not aware of
any claim to the contrary or any challenge by any other person to the rights of
the Company and the Subsidiaries with respect to the foregoing.
(x) None of the transactions by the Company or its Subsidiaries
contemplated by this Agreement (including, without limitation, the use of
proceeds from the sale of the Notes) will violate or result in a violation of
Section 7 of the Exchange Act, or any regulation promulgated thereunder,
including, without limitation, Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System.
(y) The Company is not and, as a result of placing the proceeds from
the sale of the Notes contemplated hereby in the short-term investments
contemplated under the caption "Use of Proceeds" in the Prospectus, will not be,
an "investment company" as that term is defined in the Investment Company Act of
1940, as amended (the "Investment Company Act"), or subject to regulation under
the Investment Company Act.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each of you and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prepricing Prospectus or in
the Registration Statement or the Prospectus or in any amendment or supplement
thereto, or
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arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with the information
relating to such Underwriter furnished in writing to the Company by or on behalf
of any Underwriter through you expressly for use in connection therewith;
provided, however, that the indemnification contained in this paragraph (a) with
respect to any Prepricing Prospectus shall not inure to the benefit of any
Underwriter (or to the benefit of any person controlling such Underwriter) on
account of any such loss, claim, damage, liability or expense arising from the
sale of the Notes by such Underwriter to any person if a copy of the Prospectus
shall not have been delivered or sent to such person within the time required by
the Act, and the untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in such Prepricing Prospectus was
corrected in the Prospectus, provided that the Company has delivered the
Prospectus to the several Underwriters in requisite quantity on a timely basis
to permit such delivery or sending. The foregoing indemnity agreement shall be
in addition to any liability which the Company may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the Company and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all reasonable fees and expenses. Such Underwriter or any such controlling
person shall have the right to employ separate counsel in any such action, suit
or proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless (i) the Company has agreed in writing to pay such fees
and expenses, (ii) the Company has failed to assume the defense and employ
counsel, or (iii) the named parties to any such action, suit or proceeding
(including any impleaded parties) include both such Underwriter or such
controlling person and the Company and such Underwriter or such controlling
person shall have been advised by its counsel that representation of such
indemnified party and the Company by the same counsel would be inappropriate
under applicable standards of professional conduct (whether or not such
representation by the same counsel has been proposed) due to actual or potential
differing interests between them (in which case the Company shall not have the
right to assume the defense of such action, suit or proceeding on behalf of such
Underwriter or such controlling person). It is understood, however, that the
Company shall, in connection with any one such action, suit or proceeding or
separate but substantially similar or related actions, suits or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Underwriters and controlling persons not having actual or potential
differing interests with you or among themselves, which firm shall be designated
in writing by Xxxxx Xxxxxx Inc., and that all such reasonable fees and expenses
shall be reimbursed as they are incurred. The Company
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shall not be liable for any settlement of any such action, suit or proceeding
effected without its written consent, but if settled with such written consent,
or if there be a final judgment for the plaintiff in any such action, suit or
proceeding, the Company agrees to indemnify and hold harmless any Underwriter
and any such controlling person from and against any loss, claim, damage,
liability or expense by reason of such settlement or judgment, to the extent
provided in paragraph (a) above.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the same
extent as the foregoing indemnity from the Company to each Underwriter, but only
with respect to information relating to such Underwriter furnished in writing by
or on behalf of such Underwriter through you expressly for use in the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Company, any of its directors, any such officer, or any such
controlling person based on the Registration Statement, the Prospectus or any
Prepricing Prospectus, or any amendment or supplement thereto, and in respect of
which indemnity may be sought against any Underwriter pursuant to this paragraph
(c), such Underwriter shall have the rights and duties given to the Company by
paragraph (b) above (except that if the Company shall have assumed the defense
thereof such Underwriter shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof, but the fees and
expenses of such counsel shall be at such Underwriter's expense), and the
Company, its directors, any such officer, and any such controlling person shall
have the rights and duties given to the Underwriters by paragraph (b) above.
The foregoing indemnity agreement shall be in addition to any liability which
the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an 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 or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Notes, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other hand shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus; provided
-15-
that, in the event that the Underwriters shall have purchased any Additional
Notes hereunder, any determination of the relative benefits received by the
Company or the Underwriters from the offering of the Notes shall include the net
proceeds (before deducting expenses) received by the Company and the
underwriting discounts and commissions received by the Underwriters, from the
sale of such Additional Notes, in each case computed on the basis of the
respective amounts set forth in the notes to the table on the cover page of the
Prospectus. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or by the Underwriters on the other hand
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by a
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities and expenses referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating any claim or defending any such action, suit or proceeding.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price of the Notes underwritten by it and distributed to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 7 are several in proportion
to the respective principal amounts of Firm Notes set forth opposite their names
in Schedule I hereto (or such principal amounts of Firm Notes increased as set
forth in Section 10 hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or 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 action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or
-16-
expenses are incurred. The indemnity and contribution agreements contained in
this Section 7 and the representations and warranties of the Company set forth
in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Company, its directors or officers,
or any person controlling the Company, (ii) acceptance of any Notes and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor to
any Underwriter or any person controlling any Underwriter, or to the Company,
its directors or officers, or any person controlling the Company, shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 7.
8. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters to purchase the Firm Notes hereunder are subject to the
following conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment thereto
to be declared effective before the offering of the Notes may commence, the
registration statement or such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the registration
statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or any Underwriter,
threatened by the Commission, and any request of the Commission for additional
information (to be included in the registration statement or the prospectus or
otherwise) shall have been complied with to your satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change, or any development involving a prospective
change, in or affecting the condition (financial or other), business,
properties, net worth, or results of operations of the Company or the
Subsidiaries not disclosed in the Prospectus, which in your opinion, would
materially and adversely affect the market for the Notes, or (ii) any event or
development relating to or involving the Company or any officer or director of
the Company which makes any statement made in the Prospectus untrue or which, in
the opinion of the Company and its counsel or the Underwriters and their
counsel, requires the making of any addition to or change in the Prospectus in
order to state a material fact required by the Act or any other law to be stated
therein or necessary in order to make the statements therein not misleading, if
amending or supplementing the Prospectus to reflect such event or development
would, in your opinion, materially and adversely affect the market for the
Notes.
(c) You shall have received on the Closing Date, an opinion of
Xxxxxxx, Xxxx, Zivley, Hill & XxXxxx, L.L.P., counsel for the Company, dated the
Closing Date and addressed to you, to the effect that:
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(i) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Texas with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement thereto), and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify does not have a Material Adverse Effect;
(ii) Each of the Subsidiaries is a corporation duly organized and
validly existing in good standing under the laws of the jurisdiction of its
organization, with full corporate power and authority to own, lease, and operate
its properties and to conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement thereto); and all
the outstanding shares of capital stock of each of the Subsidiaries have been
duly authorized and validly issued, are fully paid and nonassessable, and are
owned by the Company directly, or indirectly through one of the other
Subsidiaries, free and clear of any perfected security interest, or, to the best
knowledge of such counsel after reasonable inquiry, any other security interest,
lien, adverse claim, equity or other encumbrance;
(iii) The authorized and outstanding capital stock of the Company is
as set forth under the caption "Capitalization" in the Prospectus; and the
authorized capital stock of the Company conforms in all material respects as to
legal matters to the description thereof contained in the Prospectus under the
caption "Description of Capital Stock";
(iv) All the shares of capital stock of the Company outstanding
prior to the issuance of the Notes have been duly authorized and validly issued,
and, to the best knowledge of such counsel, are fully paid and nonassessable;
(v) To the best knowledge of such counsel after reasonable
inquiry, except as set forth in the Registration Statement or the Incorporated
Documents, there are no outstanding options, warrants or other rights calling
for the issuance of, nor any commitment, plan or arrangement to issue, any
shares of capital stock of the Company or any security convertible into or
exchangeable or exercisable for capital stock of the Company;
(vi) To the best knowledge of such counsel after reasonable
inquiry, except as described in the Prospectus, there is no holder of any
security of the Company or any other person who has the right, contractual or
otherwise, to cause the Company to sell or otherwise issue to them, or to permit
them to underwrite the sale of, the Notes or the shares of Common Stock issuable
upon conversion of the Notes or the right to have any Common Stock or other
securities of the Company included in the registration statement or the right,
as a result of the filing of the registration statement, to require registration
under the Act of any shares of Common Stock or other securities of the Company.
-18-
(vii) The Registration Statement and all post-effective amendments,
if any, have become effective under the Act and, to the best knowledge of such
counsel after reasonable inquiry, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that purpose
are pending before or contemplated by the Commission; and any required filing of
the Prospectus pursuant to Rule 424(b) has been made in accordance with Rule
424(b);
(viii) The Company has corporate power and authority to enter into
this Agreement and to issue, sell and deliver the Notes to the Underwriters as
provided herein, and this Agreement has been duly authorized, executed and
delivered by the Company and, assuming due execution and delivery by the
Underwriters, is a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as enforcement of
rights to indemnity and contribution hereunder may be limited by Federal or
state securities laws or principles of public policy and subject to the
qualification that the enforceability of the Company's obligations hereunder may
be limited by bankruptcy, insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors' rights generally, and by general equitable
principles;
(ix) The Indenture has been duly authorized, executed and delivered
by the Company and, assuming due execution and delivery by the Trustee, is a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally and by general equitable principles,
and has been duly qualified under the 1939 Act;
(x) The Notes have been duly authorized and executed by the
Company and, assuming due authentication of the Notes by the Trustee, upon
delivery to the Underwriters against payment therefor in accordance with the
terms hereof and the Indenture, will have been validly issued and delivered, and
will constitute valid and binding obligations of the Company entitled to the
benefits of, and subject to the restrictions in, the Indenture;
(xi) The shares of Common Stock issuable upon conversion of the
Notes have been duly authorized and reserved for issuance and, when delivered
upon conversion of the Notes in accordance with the terms of the Indenture, will
have been validly issued and fully paid and will be non-assessable and free of
preemptive, or to the best knowledge of such counsel after reasonable inquiry,
similar rights that entitle or will entitle any person to acquire any shares of
Common Stock upon the issuance thereof by the Company;
(xii) Neither the Company nor any of the Subsidiaries is in
violation of its respective certificate or articles of incorporation or by-laws,
or other organizational documents, or to the best knowledge of such counsel
after reasonable inquiry, is in default in the performance
-19-
of any material obligation, agreement or condition contained in any bond,
debenture, note or other evidence of indebtedness, except as may be disclosed in
the Prospectus;
(xiii) Neither the offer, sale or delivery of the Notes, the issuance
of Common Stock upon conversion of the Notes, the execution, delivery or
performance of this Agreement and the Indenture, compliance by the Company with
the provisions hereof and thereof nor consummation by the Company of the
transactions contemplated hereby or thereby (a) conflicts or will conflict with
or constitutes or will constitute a breach of, or a default under, the
certificate or articles of incorporation or by-laws, or other organizational
documents, of the Company or any of the Subsidiaries or any agreement,
indenture, lease or other instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their respective
properties is bound that is an exhibit to the Registration Statement or to any
Incorporated Document, or is known to such counsel after reasonable inquiry, or
(b) will result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of the Subsidiaries, which
lien, charge or encumbrance would, singly or in the aggregate, have a Material
Adverse Effect, nor will any such action result in any violation of any existing
law, regulation, ruling (assuming compliance with all applicable state and
foreign securities and Blue Sky laws), judgment, injunction, order or decree
known to such counsel after reasonable inquiry, applicable to the Company, the
Subsidiaries or any of their respective properties, which violation would,
singly or in the aggregate, have a Material Adverse Effect;
(xiv) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency, or official is required on the part of the
Company (except as have been obtained under the Act, the Exchange Act, the 1939
Act, and such as may be required under state and foreign securities or Blue Sky
laws governing the purchase and distribution of the Notes and the shares of
Common Stock issuable upon conversion of the Notes) for the valid issuance and
sale of the Notes to the Underwriters as contemplated by this Agreement;
(xv) The Registration Statement and the Prospectus and any
supplements or amendments thereto (except for the financial statements and the
notes thereto and the schedules and other financial and statistical data
included therein, as to which such counsel need not express any opinion) comply
as to form in all material respects with the requirements of the Act; and each
of the Incorporated Documents (except for the financial statements and the notes
thereto and the schedules and other financial and statistical data included
therein, as to which counsel need not express any opinion) complies as to form
in all material respects with the Exchange Act and the rules and regulations of
the Commission thereunder;
(xvi) To the best knowledge of such counsel after reasonable
inquiry, (A) other than as described or contemplated in the Prospectus (or any
supplement thereto), there are no legal or governmental proceedings pending or
threatened against the Company or any of the Subsidiaries, or to which the
Company or any of the Subsidiaries, or any of their property, is
-20-
subject, which are required to be described in the Registration Statement or
Prospectus (or any amendment or supplement thereto) and (B) there are no
agreements, contracts, indentures, leases or other instruments, that are
required to be described in the Registration Statement or the Prospectus (or any
amendment or supplement thereto) or to be filed as an exhibit to the
Registration Statement or any Incorporated Document that are not described or
filed as required, as the case may be;
(xvii) To the best knowledge of such counsel after reasonable
inquiry, neither the Company nor any of the Subsidiaries is in violation of any
law, ordinance, administrative or governmental rule or regulation applicable to
the Company or any of the Subsidiaries or of any decree of any court or
governmental agency or body having jurisdiction over the Company or any of the
Subsidiaries;
(xviii) The statements in the Registration Statement and Prospectus,
insofar as they are descriptions of contracts, agreements or other legal
documents, or refer to statements of law or legal conclusions, are accurate and
present fairly the information required to be shown;
(xix) The Company is not and, as a result of placing the proceeds
from the sale of the Notes contemplated hereby in the short-term investments
contemplated under the caption "Use of Proceeds" in the Prospectus, will not be,
an "investment company" as such term is defined in the Investment Company Act;
(xx) None of the transactions by the Company or its Subsidiaries
contemplated by this Agreement (including, without limitation, the use of
proceeds from the sale of the Notes) will violate Section 7 of the Exchange Act,
or any regulation promulgated thereunder, including, without limitation,
Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System;
(xxi) A Texas state court, or a federal court applying Texas choice
of law principles, would give effect to the provisions of this Agreement and the
Indenture selecting the law of the State of New York as the governing law for
those documents.
(xxii) Although counsel has not undertaken, except as otherwise
indicated in their opinion, to determine independently, and does not assume any
responsibility for, the accuracy or completeness of the statements in the
Registration Statement, such counsel has participated in the preparation of the
Registration Statement and the Prospectus, including review and discussion of
the contents thereof (including review and discussion of the contents of all
Incorporated Documents), and nothing has come to the attention of such counsel
that has caused them to believe that the Registration Statement (including the
Incorporated Documents) at the time the Registration Statement became effective,
or the Prospectus, as of its date and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements
-21-
therein not misleading or that any amendment or supplement to the Prospectus, as
of its respective date, and as of the Closing Date or the Option Closing Date,
as the case may be, contained any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading (it
being understood that such counsel need express no opinion with respect to the
financial statements and the notes thereto and the schedules and other financial
and statistical data included in the Registration Statement or the Prospectus or
any Incorporated Document).
In rendering their opinion as aforesaid, counsel may rely upon an
opinion or opinions, each dated the Closing Date, of other counsel retained by
them or the Company as to laws of any jurisdiction other than the United States
or the State of Texas, provided that (1) each such local counsel is acceptable
to you, (2) such reliance is expressly authorized by each opinion so relied upon
and a copy of each such opinion is delivered to you and is in form and substance
satisfactory to you and your counsel, and (3) counsel shall state in their
opinion that they believe that they and the Underwriters are justified in
relying thereon.
(d) You shall have received on the Closing Date an opinion of Xxxxx &
Xxxxx, L.L.P., counsel for the Underwriters, dated the Closing Date and
addressed to you with respect to the matters referred to in clauses (vii), (ix),
(x), (xi), (xv), and (xxii) of the foregoing paragraph (c) and such other
related matters as you may request.
(e) You shall have received letters addressed to you, and dated the
date hereof and the Closing Date from Xxxxx Xxxxxxxx LLP, independent certified
public accountants, substantially in the forms heretofore approved by you.
(f) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there shall
not have been any change in the capital stock of the Company nor any material
increase in the short-term or long-term debt of the Company (other than in the
ordinary course of business) from that set forth or contemplated in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto); (iii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement and the Prospectus (or
any amendment or supplement thereto), except as may otherwise be stated in the
Registration Statement and Prospectus (or any amendment or supplement thereto),
any material adverse change in the condition (financial or other), business,
prospects, properties, net worth or results of operations of the Company and the
Subsidiaries taken as a whole; (iv) the Company and the Subsidiaries shall not
have any liabilities or obligations, direct or contingent (whether or not in the
ordinary course of business), that are material to the Company and the
Subsidiaries, taken as a whole, other than those reflected in the Registration
Statement or the Prospectus (or any amendment or supplement thereto); and (v)
all the representations and warranties of the Company contained in this
Agreement shall be true and correct on and as of the date hereof and on and as
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of the Closing Date as if made on and as of the Closing Date, and you shall have
received a certificate, dated the Closing Date and signed by the chief executive
officer and the chief financial officer of the Company (or such other officers
as are acceptable to you), to the effect set forth in this Section 8(f) and in
Section 8(g) hereof.
(g) The Company shall not have failed at or prior to the Closing Date
to have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it hereunder at or prior to the
Closing Date.
(h) There shall not have been any announcement by any "nationally
recognized statistical rating organization," as defined for purposes of Rule
436(g) under the Act, that (i) it is downgrading its rating assigned to the
Notes, or (ii) it is reviewing its rating assigned to the Notes with a view to
possible downgrading, or with negative implications, or direction not
determined.
(i) The Notes shall have been listed, subject to notice of issuance,
on the New York Stock Exchange and the shares of Common Stock issuable upon
conversion of the Notes shall have been listed, subject to notice of issuance,
on the New York Stock Exchange.
(j) The Notes shall have been registered under the Exchange Act.
(k) The Company shall have furnished or caused to be furnished to you
such further certificates and documents as you shall have reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to you and your counsel.
Any certificate or document signed by any officer of the Company and
delivered to you or to counsel for the Underwriters, shall be deemed a
representation and warranty by the Company to each Underwriter as to the
statements made therein.
The several obligations of the Underwriters to purchase Additional
Notes hereunder are subject to the satisfaction on and as of any Option Closing
Date of the conditions set forth in this Section 8, except that, if any Option
Closing Date is other than the Closing Date, the certificates, opinions and
letters referred to in paragraphs (c) through (f) shall be dated the Option
Closing Date in question and the opinions called for by paragraphs (c) and (d)
shall be revised to reflect the sale of Additional Notes.
9. Expenses. The Company agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by it of its
obligations hereunder: (i) the preparation, printing or reproduction, and filing
with the Commission of the registration statement
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(including financial statements and exhibits thereto), each Prepricing
Prospectus, the Prospectus, and each amendment or supplement to any of them, and
the Statement of Eligibility and Qualification of the Trustee; (ii) the printing
(or reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the registration
statement, each Prepricing Prospectus, the Prospectus, the Incorporated
Documents, and all amendments or supplements to any of them, as may be
reasonably requested for use in connection with the offering and sale of the
Notes; (iii) the preparation, printing, authentication, issuance and delivery of
the Notes, including any stamp taxes in connection with the original issuance
and sale of the Notes; (iv) the printing (or reproduction) and delivery of this
Agreement, the Indenture and all other agreements or documents printed (or
reproduced) and delivered in connection with the offering of the Notes; (v) the
registration of the Notes under the Exchange Act and the listing of the Notes
and the shares of Common Stock issuable upon conversion of the Notes on the New
York Stock Exchange; (vi) the registration or qualification of the Notes and the
shares of Common Stock issuable upon conversion of the Notes for offer and sale
under the securities or Blue Sky laws of the several states as provided in
Section 5(g) hereof (including the reasonable fees, expenses and disbursements
of counsel for the Underwriters relating to such registration and
qualification); (vii) the filing fees and the fees and expenses of counsel for
the Underwriters in connection with any filings required to be made with the
National Association of Securities Dealers, Inc.; (viii) the fees and expenses
of the Trustee; (ix) the fees and expenses associated with obtaining ratings for
the Notes from nationally recognized statistical rating organizations; (x) the
transportation and other expenses incurred by or on behalf of Company
representatives in connection with presentations to prospective purchasers of
the Notes; and (xi) the fees and expenses of the Company's accountants and the
fees and expenses of counsel (including local and special counsel) for the
Company.
10. Effective Date of Agreement. This Agreement shall become effective:
(i) upon the execution and delivery hereof by the parties hereto; or (ii) if, at
the time this Agreement is executed and delivered, it is necessary for the
registration statement or a post-effective amendment thereto to be declared
effective before the offering of the Notes may commence, when notification of
the effectiveness of the registration statement or such post-effective amendment
has been given by the Commission. Until such time as this Agreement shall have
become effective, it may be terminated by the Company, by notifying you, or by
you, by notifying the Company.
If any one or more of the Underwriters shall fail or refuse to
purchase Notes which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate principal amount of Notes which such defaulting
Underwriter or Underwriters are obligated but fail or refuse to purchase is not
more than one-tenth of the aggregate principal amount of Notes which the
Underwriters are obligated to purchase on the Closing Date, each non-defaulting
Underwriter shall be obligated, severally, in the proportion which the principal
amount of Firm Notes set forth opposite its name in Schedule I hereto bears to
the aggregate principal amount of Firm Notes set forth opposite the names of all
non-defaulting Underwriters or in such other proportion as you may specify in
accordance with Section 20 of the Master Agreement Among Underwriters of
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Xxxxx Xxxxxx Inc., to purchase the Notes which such defaulting Underwriter or
Underwriters are obligated, but fail or refuse, to purchase. If any one or more
of the Underwriters shall fail or refuse to purchase Notes which it or they are
obligated to purchase on the Closing Date and the aggregate principal amount of
Notes with respect to which such default occurs is more than one-tenth of the
aggregate principal amount of Notes which the Underwriters are obligated to
purchase on the Closing Date and arrangements satisfactory to you and the
Company for the purchase of such Notes by one or more non-defaulting
Underwriters or other party or parties approved by you and the Company are not
made within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Company. In any
such case which does not result in termination of this Agreement, either you or
the Company shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or arrangements
may be effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any such default of any such
Underwriter under this Agreement. The term "Underwriter" as used in this
Agreement includes, for all purposes of this Agreement, any party not listed in
Schedule I hereto who, with your approval and the approval of the Company,
purchases Notes which a defaulting Underwriter is obligated, but fails or
refuses, to purchase.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. Termination of Agreement. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company by notice to the Company, if prior to the Closing
Date or any Option Closing Date (if different from the Closing Date and then
only as to the Additional Notes), as the case may be, (i) trading in the Common
Stock shall be suspended or subject to any restriction or limitation not in
effect on the date of this Agreement; (ii) trading in securities generally on
the New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market shall have been suspended or materially limited; (iii) a general
moratorium on commercial banking activities in New York or Texas shall have been
declared by either federal or state authorities; or (iv) there shall have
occurred any outbreak or escalation of hostilities or other international or
domestic calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States is
such as to make it, in your judgment, impracticable or inadvisable to commence
or continue the offering of the Notes on the terms set forth on the cover page
of the Prospectus or to enforce contracts for the resale of the Notes by the
Underwriters. Notice of such termination may be given to the Company by
telegram, telecopy or telephone and shall be subsequently confirmed by letter.
12. Information Furnished by the Underwriters. The statements set forth
in the last paragraph on the cover page, the stabilization legend on the inside
front cover, and the statements in the first, third and sixth paragraphs under
the caption "Underwriting" in any Prepricing
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Prospectus and in the Prospectus, constitute the only information furnished by
or on behalf of the Underwriters through you as such information is referred to
in Sections 6(b) and 7 hereof.
13. Miscellaneous. Except as otherwise provided in Sections 5, 10 and 11
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company at 0000 Xxxxxxxxxx Xxxx, Xxxxx Xxxx, Xxxxx 00000, Attention: Xx. Xxxxxx
X. Xxxxxxxx, Chairman of the Board, Chief Executive Officer and President; or
(ii) if to you, care of Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors and officers, and the other
controlling persons referred to in Section 7 hereof and their respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the
term "successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from any Underwriter of any of the Notes in his status
as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
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Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
KENT ELECTRONICS CORPORATION
By: ____________________________
Xxxxxx X. Xxxxxxxx
Chairman of the Board, Chief Executive
Officer and President
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Underwriters named in Schedule I
hereto.
XXXXX XXXXXX INC.
BT ALEX. BROWN INCORPORATED
XXXXXXXXX, XXXXXX & XXXXXXXX SECURITIES
CORPORATION
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By: XXXXX XXXXXX INC.
By: _________________________________
Name:
Title:
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SCHEDULE I
KENT ELECTRONICS CORPORATION
Principal Amount
Underwriter of Firm Notes
----------- -------------
Xxxxx Xxxxxx Inc. .............................................. $
BT Alex. Brown Incorporated ...................................
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation ...........
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx Incorporated ............
____________
Total... $
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