1
[400,000] PEPS Shares
PEPS TRUST-AJL
PREMIUM EXCHANGEABLE PREFERRED PEPS Shares
AGREEMENT BETWEEN U.S. AND INTERNATIONAL UNDERWRITERS
November __, 1995
2
November __, 1995
To each of the Underwriters named in
Schedules I and II to the Underwriting
Agreement referred to below.
Dear Sirs:
We understand that PEPS Trust-AJL, a trust created under the
laws of the State of New York (the "Trust"), has entered into an underwriting
agreement (the "Underwriting Agreement") with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated acting as representatives
(the "U.S. Representatives") of the U.S. underwriters named in Schedule I
thereto (the "U.S. Underwriters") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
and ▇▇▇▇▇▇▇ ▇▇▇▇▇ International Limited, as representatives (the "International
Representatives") of the international underwriters named in Schedule II thereto
(the "International Underwriters," and, together with the U.S. Underwriters, the
"Underwriters"), pursuant to which the several Underwriters have agreed to
purchase from the Trust an aggregate of [400,000] shares of Premium Exchangeable
Participating PEPS Shares of the Trust ("PEPS"). In addition, the Trust has
granted the U.S. Underwriters the option to purchase up to [60,000] additional
shares of PEPS (the "Additional PEPS Shares"). Each PEPS Share will be exchanged
for American Depository Shares ("ADSs") or, at the option of the holder thereof,
the equivalent in shares of Common Stock ("Common Stock") of Amway Japan
Limited, a Japanese corporation (the "Company"), on November __, 1998 to be
delivered pursuant to purchase contracts between the Trust and each of HDV GRIT
Holdings, Inc., a ________ corporation, and the ▇▇▇ ▇▇▇ ▇▇▇▇▇ Trust, a trust
created under the laws of the State of _________ (collectively, the "Sellers").
All shares of PEPS to be purchased by the U.S. Underwriters and the
International Underwriters under the Underwriting Agreement, including any
Additional PEPS Shares, are hereinafter called the "U.S. PEPS Shares" and the
"International PEPS Shares," respectively. The U.S. PEPS Shares and the
International PEPS Shares are collectively referred to herein as the "PEPS
Shares."
3
I.
The U.S. Underwriters, acting through the U.S. Representatives,
and the International Underwriters, acting through the International
Representatives, agree that, in order to provide an orderly marketing effort for
the offering, they will consult with each other as to the availability of the
PEPS Shares for sale to the public, from time to time until the earlier of (a)
notice from the U.S. Representatives to the U.S. Underwriters of the completion
of the distribution of the U.S. PEPS Shares and (b) notice from the
International Representatives to the International Underwriters of the
completion of the distribution of the International PEPS Shares. From time to
time as mutually agreed among the U.S. Underwriters and the International
Underwriters, acting through ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. International Limited, respectively, the Underwriters may purchase
and sell among each other such number of PEPS Shares to be purchased pursuant to
the Underwriting Agreement as may be so mutually agreed.
The price and currency of settlement of any PEPS Shares so
purchased or sold shall be the public offering price, in United States dollars,
less an amount not greater than the selling concession. Settlement with respect
to any PEPS Shares transferred hereunder prior to the Closing Date (as defined
in the Underwriting Agreement) shall be made on the Closing Date, and in the
case of purchases and sales made thereafter, as promptly as practicable but in
no event later than three business days (four business days in the case of any
purchase or sale made after 4:30 p.m. Eastern Time on the transfer date) after
the transfer date. Certificates representing the PEPS Shares so purchased shall
be delivered on the respective settlement dates. The liability of the
Underwriters under the Underwriting Agreement for payment of the purchase price
of the PEPS Shares purchased thereunder shall not be affected by the provisions
of this Agreement.
The obligations of each U.S. Underwriter in respect of any
purchase or sale of PEPS Shares under this Article I by the U.S. Underwriters
shall be pro rata in accordance with such U.S. Underwriter's proportion of the
total number of U.S. PEPS Shares. The obligations of each International
Underwriter in respect of any purchase or sale of PEPS Shares under this Article
I by the International Underwriters shall be pro rata in accordance with such
International Underwriter's proportion of the total number of International PEPS
Shares.
2
4
II.
Each of the Underwriters represents that it is a member in good
standing of the U.S. National Association of Securities Dealers, Inc. (the
"NASD") or that it is a foreign bank or dealer not eligible for membership in
the NASD. In making sales of PEPS Shares, if it is such a member, such
Underwriter agrees to comply with all applicable rules of the NASD, including,
without limitation, the NASD's Interpretation with Respect to Free-Riding and
Withholding and Section 24 of Article III of the NASD's Rule's of Fair Practice,
or, if it is such a foreign bank or dealer, such Underwriter agrees to comply
with such Interpretation and Sections 8, 24 and 36 of such Article as though it
were such a member and Section 25 of such Article as it applies to a nonmember
broker or dealer in a foreign country.
III.
Each U.S. Underwriter represents and agrees that, except for
(x) sales between the U.S. Underwriters and the International Underwriters
pursuant to Article I of this Agreement and (y) stabilization transactions,
contemplated in Article IV of this Agreement, conducted through the U.S.
Representatives as part of the distribution of the PEPS Shares, (a) it is not
purchasing any of the U.S. PEPS Shares for the account of anyone other than a
United States or Canadian Person and (b) it has not offered or sold, and will
not offer or sell, directly or indirectly, any of the U.S. PEPS Shares or
distribute any prospectus relating to the U.S. PEPS Shares outside the United
States or Canada or to anyone other than a United States or Canadian Person, and
any dealer to whom it may sell any of the U.S. PEPS Shares will represent that
it is not purchasing any of the U.S. PEPS Shares for the account of anyone other
than a United States or Canadian Person and will agree that it will not offer or
resell such U.S. PEPS Shares directly or indirectly outside the United States or
Canada or to anyone other than a United States or Canadian Person or to any
other dealer who does not so represent and agree.
Each International Underwriter represents and agrees that,
except for (x) sales between the U.S. Underwriters and the International
Underwriters pursuant to Article I of this Agreement and (y) stabilization
transactions, contemplated in Article IV of this Agreement,
3
5
conducted through the U.S. Representatives as part of the distribution of the
PEPS Shares, (a) it is not purchasing any of the International PEPS Shares for
the account of any United States or Canadian Person and (b) it has not offered
or sold, and will not offer or sell, directly or indirectly, any of the
International PEPS Shares or distribute any prospectus relating to the
International PEPS Shares in the United States or Canada or to any United States
or Canadian Person, and any dealer to whom it may sell any of the International
PEPS Shares will represent that it is not purchasing any of the International
PEPS Shares for the account of any United States or Canadian Person and will
agree that it will not offer or resell such International PEPS Shares directly
or indirectly in the United States or Canada or to any United States or Canadian
Person or to any other dealer who does not so represent and agree.
With respect to any Underwriter that is a U.S. Underwriter and
an International Underwriter, the foregoing representations and agreements (i)
made by it in its capacity as a U.S. Underwriter shall apply only to PEPS Shares
purchased by it in its capacity as a U.S. Underwriter, (ii) made by it in its
capacity as an International Underwriter shall apply only to PEPS Shares
purchased by it in its capacity as an International Underwriter and (iii) shall
not restrict its ability to distribute any prospectus relating to the PEPS
Shares to any person. "United States or Canadian Person" shall mean any national
or resident of the United States or Canada, or any corporation, pension,
profit-sharing or other trust or other entity organized under the laws of the
United States or Canada or of any political subdivision thereof (other than a
branch located outside of the United States and Canada of any United States or
Canadian Person), and shall include any United States or Canadian branch of a
person who is otherwise not a United States or Canadian Person. "United States"
shall mean the United States of America, its territories, its possessions and
all areas subject to its jurisdiction.
The agreements of the Underwriters set forth in the first and
second paragraphs of this Article III shall terminate upon the earlier of (a)
the mutual agreement of the U.S. Representatives and the International
Representatives and (b) 30 days after the date hereof, unless the U.S.
Representatives or the International Representatives shall have given notice to
the other to the effect that the distribution of the PEPS Shares by the U.S.
Underwriters or the International Underwriters, as the case may be, has not yet
been completed. If such notice is given, the agreements set forth in such
preceding paragraphs
4
6
shall survive until the earlier of (x) the mutual agreement referred to in the
preceding sentence and (y) 30 days after the date of any such notice.
Each U.S. Underwriter represents that it has not offered or
sold, and agrees not to offer or sell, any PEPS Shares, directly or indirectly,
in Canada in contravention of the securities laws of Canada or any province or
territory thereof and, without limiting the generality of the foregoing,
represents that any offer of PEPS Shares in Canada will be made only pursuant to
an exemption from the requirement to file a prospectus in the province or
territory of Canada in which such offer is made. Each U.S. Underwriter further
agrees to send to any dealer who purchases from it any of the PEPS Shares a
notice stating in substance that, by purchasing such PEPS Shares, such dealer
represents and agrees that it has not offered or sold, and will not offer or
sell, directly or indirectly, any of such PEPS Shares in Canada or to, or for
the benefit of, any resident of Canada in contravention of the securities laws
of Canada or any province or territory thereof and that any offer of PEPS Shares
in Canada will be made only pursuant to an exemption from the requirement to
file a prospectus in the province of Canada in which such offer is made, and
that such dealer will deliver to any other dealer to whom it sells any of such
PEPS Shares a notice containing substantially the same statement as is contained
in this sentence.
The Underwriters understand that no action has been or will be
taken in any jurisdiction by the Underwriters, the Trust, the Company or the
Sellers that would permit a public offering of the PEPS Shares, or possession or
distribution of the Prospectuses (as defined in the Underwriting Agreement), in
preliminary or final form, in any jurisdiction where, or in any circumstances in
which, action for that purpose is required, other than the United States.
Each International Underwriter agrees that it will comply with
all applicable laws and regulations, and make or obtain all necessary filings,
consents or approvals, in each jurisdiction in which it purchases, offers, sells
or delivers PEPS Shares (including, without limitation, any applicable
requirements relating to the delivery of the Prospectuses, in preliminary or
final form), in each case at its own expense. In connection with sales of and
offers to sell PEPS Shares made by it, such International Underwriter will
either furnish to each person to whom any such sale or offer is made a copy of
the then-current Prospectuses (in preliminary or final form and as then amended
or
5
7
supplemented if the Trust or the Company shall have furnished any amendments or
supplements thereto), or inform such person that such Prospectuses, in
preliminary or final form, will be made available upon request.
Each International Underwriter further represents that it has
not offered or sold, and agrees not to offer or sell, directly or indirectly, in
Japan or to or for the account of any resident thereof, any of the PEPS Shares
acquired in connection with the distribution contemplated hereby, except for
offers or sales to Japanese International Underwriters or dealers and except
pursuant to any exemption from the registration requirements of the Securities
and Exchange Law of Japan. Each International Underwriter further agrees to send
to any dealer who purchases from it any of the PEPS Shares a notice stating in
substance that, by purchasing such PEPS Shares, such dealer represents and
agrees that it has not offered or sold, and will not offer or sell, any of such
PEPS Shares, directly or indirectly, in Japan or to or for the account of any
resident thereof except pursuant to any exemption from the registration
requirements of the Securities and Exchange Law of Japan, and that such dealer
will send to any other dealer to whom it sells any of such PEPS Shares a notice
containing substantially the same statement as is contained in this sentence.
Each International Underwriter further represents and agrees
that (i) it has not offered or sold and will not offer or sell any PEPS Shares
to persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purpose of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995 (the "Regulations"); (ii) it has complied and will
comply with all applicable provisions of the Financial Services ▇▇▇ ▇▇▇▇ and the
Regulations with respect to anything done by it in relation to the PEPS Shares
in, from or otherwise involving the United Kingdom; and (iii) it has only issued
or passed on and will only issue or pass on to any person in the United Kingdom
any document received by it in connection with the issue of the PEPS Shares if
such person is of a kind described in Article 11(3) of the Financial Services
▇▇▇ ▇▇▇▇ (Investment Advertisements) (Exemptions) Order 1995 or is a person to
whom such document may otherwise lawfully be issued or passed on.
6
8
Each International Underwriter agrees to indemnify and hold
harmless the Trust, the Company, the Sellers, each Underwriter and each person
controlling the Trust, the Company, the Sellers or any Underwriter from and
against any and all losses, claims, damages and liabilities (including fees and
disbursements of counsel) arising from any breach by it of any of the provisions
of paragraphs six, seven, eight and nine of this Article III.
IV.
The overall direction and planning of the stabilization
transactions contemplated herein shall be the responsibility of the U.S.
Representatives and the International Representatives, which will consult with
one another on a continuous basis so that such stabilization transactions, which
may be effected in PEPS, ADSs or both, shall be conducted in accordance with
such direction and planning as is mutually agreed upon.
All stabilization transactions shall be conducted only by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and shall be conducted in compliance with any
applicable laws and regulations. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated agrees to
notify the International Representatives of the date of termination of
stabilization.
The International Primary Market Association (IPMA) limits will
not be complied with in connection with stabilization losses and expenses. All
stabilization transactions shall be for the respective accounts of the several
Underwriters and shall be allocated between the U.S. Underwriters and the
International Underwriters in the respective proportions that the number of U.S.
PEPS Shares and International PEPS Shares purchased pursuant to the Underwriting
Agreement bear to the total number of PEPS Shares purchased. In no event shall
the net commitment of any Underwriter, for either long or short account,
resulting from such stabilization transactions and from the over-allotments
referred to in Article V, exceed 15% of the aggregate dollar amount of the
original purchase obligation of such Underwriter under the Underwriting
Agreement; provided that, in determining the net commitment of any
Underwriter for short account, there shall be subtracted (x) in the case of any
U.S. Underwriter, any PEPS Shares that the U.S. Representatives have agreed to
purchase for the account of such U.S. Underwriter pursuant to Article I of this
Agreement and the maximum number of Additional PEPS Shares that such Underwriter
is entitled to purchase under
7
9
the Underwriting Agreement and (y) in the case of any International Underwriter,
any PEPS Shares that the International Representatives have agreed to purchase
for the account of such International Underwriter pursuant to Article I of this
Agreement.
Each U.S. Underwriter agrees that it will not offer or sell,
directly or indirectly, PEPS Shares to any person at less than the public
offering price, other than to (i) the International Underwriters pursuant to
Article I hereof or (ii) other U.S. Underwriters or to dealers who have entered
into the Master Dealer Agreement with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and who
have received a pricing wire from the U.S. Representatives with respect to this
offering that, among other things, sets forth such dealer's agreement that it is
not purchasing PEPS Shares for the account of any persons other than United
States or Canadian Persons and that it will not offer or resell PEPS Shares
outside the United States and Canada. Such sales to U.S. dealers and other U.S.
Underwriters shall be made at a price that is not below the public offering
price less the maximum permissible reallowance to be specified in the Trust
Prospectus (as defined in the Underwriting Agreement). Each U.S. Underwriter
agrees that prior to offering PEPS Shares to any dealer at the public offering
price less the reallowance, it will either ascertain that such dealer has
entered into such Master Dealer Agreement and received such a pricing wire or
make arrangements to ensure that such dealer will enter into such Master Dealer
Agreement and receive such a pricing wire.
Each International Underwriter represents that it has not
offered or sold, and agrees that it will not offer or sell, directly or
indirectly, PEPS Shares to any person at less than the offering price, other
than to (i) U.S. Underwriters pursuant to Article I hereof or (ii) other
International Underwriters or to dealers who have entered into International
Dealer Agreements (the "International Dealers") with the International
Representatives in the form of Exhibit C to the Agreement Among International
Underwriters. Such sales to International Dealers and other International
Underwriters shall be made in conformity with the provisions of Article II and
at a price that is not below the public offering price less the maximum
permissible reallowance to be specified in the Trust Prospectus. Each
International Underwriter agrees that prior to offering PEPS Shares to any
dealer at the public offering price less the reallowance, it will either
ascertain that such dealer has entered into such an International Dealer
Agreement or make arrangements to assure that such dealer will enter into an
International Dealer Agreement.
8
10
The agreements of the Underwriters set forth in the foregoing
two paragraphs shall terminate upon the earlier of (a) the mutual agreement of
the U.S. Representatives and the International Representatives and (b) 30 days
after the date hereof, unless the U.S. Representatives or the International
Representatives shall have given notice to the other to the effect that the
distribution of the PEPS Shares by the U.S. Underwriters or the International
Underwriters, as the case may be, has not yet been completed. If such notice is
given, the agreements set forth in such preceding paragraphs shall survive until
the earlier of (x) the mutual agreement referred to in the preceding sentence
and (y) 30 days after the date of any such notice.
Each Underwriter agrees that it will not, without the advance
approval of the U.S. Representatives and the International Representatives,
respectively, buy, sell, deal or trade in (i) any PEPS, ADSs or Common Stock,
(ii) any security convertible into PEPS, ADSs or Common Stock or (iii) any right
or option to acquire or sell PEPS, ADSs or Common Stock or any security
convertible into PEPS, ADSs or Common Stock, for its own account or for the
account of a customer, except (a) as provided in the Agreement Among
International Underwriters, the Master Agreement Among Underwriters, this
Agreement or in the Underwriting Agreement, (b) that it may convert any security
convertible into PEPS, ADSs or Common Stock owned by it and sell PEPs, ADSs or
Common Stock acquired upon such conversion and that it may deliver PEPS, ADSs or
Common Stock owned by it upon the exercise of any option written by it as
permitted by the provisions set forth herein, (c) in brokerage transactions on
unsolicited orders which have not resulted from activities on its part in
connection with the solicitation of purchases and which are executed by it in
the ordinary course of its brokerage business and (d) that on or after the date
of the initial public offering of the PEPS Shares, it may execute covered
writing transactions in options to acquire PEPS, ADSs or Common Stock, when such
transactions are covered by PEPS Shares, for the accounts of customers.
An opening uncovered writing transaction in options to acquire
PEPS, ADSs or Common Stock for an Underwriter's account or for the account of a
customer shall be deemed, for purposes of this Article IV, to be a sale of PEPS,
ADSs or Common Stock, as the case may be, which is not unsolicited. The term
"opening uncovered writing transaction in options to acquire" as used above
means a transaction in which the seller intends to become a writer of an option
to purchase PEPS, ADSs or Common Stock which he does not own. An opening
uncovered purchase transaction in
9
11
options to sell PEPS, ADSs or Common Stock for an Underwriter's account or for
the account of a customer shall be deemed, for purposes of this paragraph, to be
a sale of PEPS, ADSs or Common Stock, as the case may be, which is not
unsolicited. The term "opening uncovered purchase transaction in options to
sell" as used above means a transaction where the purchaser intends to become an
owner of an option to sell PEPS, ADSs or Common Stock which he does not own.
Each Underwriter represents that it has not participated, since
it was invited to participate in the offering of the PEPS Shares, in any
transaction prohibited by this Article IV and that it has at all times complied
and agrees that it will at all times comply with the provisions of Rule 10b-6 of
the U.S. Securities Exchange Act of 1934, as amended, applicable to this
offering.
V.
The overall direction and planning of any over-allotments to be
made by the Underwriters in arranging for sales of PEPS Shares, and the related
transactions required to cover such over-allotments, shall be the responsibility
of the U.S. Representatives. All profits and losses arising from such
over-allotments (excluding the excess, if any, of (i) the public selling price
of any Additional PEPS Shares and any PEPS Shares purchased pursuant to Article
I of this Agreement over (ii) the cost of such Additional PEPS Shares and such
other PEPS Shares to the Underwriters making such sales) shall be for the
respective accounts of the several Underwriters and shall be allocated between
the U.S. Underwriters and the International Underwriters in the respective
proportions that the number of U.S. PEPS Shares and International PEPS Shares
purchased pursuant to the Underwriting Agreement bears to the total number of
PEPS Shares purchased.
VI.
Each of the Underwriters agrees that the expenses incurred in
connection with or attributable to the purchase, carrying or sale of the PEPS
Shares, including the fees and disbursements of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ (U.S.
counsel to the Underwriters), shall be for the respective accounts of the
several Underwriters and shall be allocated between the U.S. Underwriters and
the International Underwriters in the
10
12
respective proportions that the number of U.S. PEPS Shares and International
PEPS Shares, respectively, bears to the total number of PEPS Shares purchased.
VII.
Changes in the offering price and in the concessions and
reallowances to dealers will be made only upon the mutual agreement of the
Underwriters during the period referred to in the first sentence of Article I
hereof.
VIII.
The Underwriters will keep one another fully informed of the
progress of the offering of the PEPS Shares.
The agreements of the Underwriters contained in Article II, the
fifth through tenth paragraphs of Article III, the last paragraph of Article IV
and Article V and Article VI shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any termination of the
Underwriting Agreement, (iii) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter or by or on behalf of the
Trust, the Company, the Sellers, their officers or directors or any other person
controlling the Trust, the Company or the Sellers and (iv) acceptance of and
payment for any PEPS Shares.
IX.
This Agreement may be signed in counterparts, which together
shall constitute one and the same instrument.
This Agreement shall be governed and construed in all respects
in accordance with the laws of the State of New York and United States federal
law.
11
13
IN WITNESS WHEREOF, this Agreement has been executed as of the
date and year first above written by the undersigned for themselves and for the
Underwriters as set forth above.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ &
▇▇▇▇▇ INCORPORATED
Acting severally on behalf
of themselves and the
several U.S. Underwriters
named in Schedule I to the
Underwriting Agreement referred
to herein.
By ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO.
INCORPORATED
By ________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INTERNATIONAL
LIMITED
▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL LIMITED
Acting severally on behalf of
themselves and the several
International Underwriters named in
Schedule II to the Underwriting
Agreement referred to herein.
By ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO.
INTERNATIONAL LIMITED
By ________________________
12