Exhibit 1(b)
$110,000,000
CNF TRUST I
2,200,000 Trust Preferred Securities
Guaranteed by
CNF TRANSPORTATION INC.
UNDERWRITING AGREEMENT
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June 5, 1997
X.X. XXXXXX SECURITIES INC.
XXXXXXX, SACHS & CO.
XXXXXXX XXXXX & CO.
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
CNF Trust I (the "Trust"), a statutory business trust created under
the Business Trust Act (the "Delaware Act") of the State of Delaware (Chapter
38, Title 12, of the Delaware Code, 12 Del. C. (S)3801 et seq.), proposes to
issue and sell 2,200,000 shares of its $2.50 preferred trust securities (the
"Firm Securities") to the several underwriters named in Schedule I hereto (the
"Underwriters"). The Trust also proposes to issue and sell to the several
Underwriters not more than 300,000 additional shares of its $2.50 preferred
trust securities (the "Additional Securities") if requested by the Underwriters
as provided in Section 2 hereof. The Firm Securities and the Additional
Securities are herein collectively called the "Securities." The Securities will
be guaranteed by CNF Transportation Inc., a Delaware corporation (the
"Company"), to the extent set forth in the Guarantee (as defined herein).
It is understood that substantially contemporaneously with the
offering and sale of the Firm Securities to the Underwriters contemplated
hereby, (i) the Trust, its trustees (the "Trustees") and the Company shall take
all necessary action to adopt an Amended and Restated Declaration of Trust in
substantially the form of the Amended and Restated
Declaration of Trust heretofore provided to you by the Company as an exhibit to
a Form 8-K to be filed by the Company prior to the Closing Date (as hereinafter
defined) (as so amended and restated, the "Declaration") pursuant to which the
Trust shall (x) issue and sell the Securities to the Underwriters pursuant
hereto and (y) issue 68,042 shares of its $2.50 common securities (and up to an
additional 9,278 shares of such securities in connection with the issuance and
sale of the Additional Securities) (the "Common Securities" and, together with
the Securities, the "Trust Securities"), to the Company, in each case with such
rights and obligations as shall be set forth in the Declaration, (ii) the
Company and The First National Bank of Chicago, as Trustee, shall enter into an
Indenture in substantially the form of the Form of the Subordinated Debt
Indenture attached as Exhibit 4(e) to the Registration Statement referred to
below and a First Supplemental Indenture thereto in substantially the form
heretofore provided to you by the Company as an exhibit to a Form 8-K to be
filed by the Company prior to the Closing Date (together the "Indenture")
providing for the issuance of up to $128,866,000 in aggregate principal amount
of the Company's 5% Convertible Subordinated Debentures due June 1, 2012 (the
"Debentures"), (iii) the Company shall deposit such Debentures in the Trust in
conjunction with the consummation of the sale of the Securities to the
Underwriters contemplated hereby and (iv) the Company and The First National
Bank of Chicago, as Guarantee Trustee, shall enter into a Preferred Securities
Guarantee Agreement in substantially the form of the Form of Preferred
Securities Guarantee Agreement attached as Exhibit 4(m) of the Registration
Statement referred to below (the "Guarantee") for the benefit of holders from
time to time of the Securities. The Common Securities will be sold to the
Company pursuant to a Common Securities Purchase Agreement (the "Common
Securities Purchase Agreement") between the Company and the Trust, and the
Debentures will be sold to the Trust pursuant to a Debenture Purchase Agreement
(the "Debenture Purchase Agreement") between the Company and the Trust.
1. Registration Statement and Prospectus. The Trust and the Company
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have prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively called the "Securities Act"), a registration statement on Form S-
3, including a prospectus, relating to, among other things, certain preferred
securities of the Trust, certain subordinated debt of the Company and guarantees
by the Company of preferred securities of the Trust (collectively, the "Shelf
Securities"). The Trust and the Company also have filed with, or propose to file
with, the Commission pursuant to Rule 424 under the Securities Act a prospectus
supplement specifically relating to the Securities. The registration statement
as amended to the date of this Agreement is hereinafter referred to as the "Base
Registration Statement" and any registration statement filed pursuant to Rule
462(b) under the Securities Act relating to the Securities is herein referred to
as the "Additional Registration Statement," and, together with the Base
Registration Statement, the "Registration Statement." The related prospectus
covering the
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Shelf Securities in the form first used to confirm sales of the Securities is
hereinafter referred to as the "Basic Prospectus." The Basic Prospectus as
supplemented by the prospectus supplement (the "Prospectus Supplement")
specifically relating to the Securities in the form first used to confirm sales
of the Securities is hereinafter referred to as the "Prospectus." Any reference
in this Agreement to the Registration Statement, the Basic Prospectus, any
preliminary form of Prospectus (a "preliminary prospectus") previously filed
with the Commission pursuant to Rule 424 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 Securities Act which were filed under the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "Exchange Act") on or before the
date of this Agreement or the date of the Basic Prospectus, any preliminary
prospectus or the Prospectus, as the case may be; and any reference to "amend,"
"amendment" or "supplement" with respect to the Registration Statement, the
Basic Prospectus, any preliminary prospectus or the Prospectus shall be deemed
to refer to and include any documents filed under the Exchange Act after the
date of this Agreement, or the date of the Basic Prospectus, any preliminary
prospectus or the Prospectus, as the case may be, which are deemed to be
incorporated by reference therein.
2. Agreements to Sell and Purchase. On the basis of the
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representations and warranties contained in this Agreement, and subject to its
terms and conditions, the Trust agrees to issue and sell and each Underwriter
agrees, severally and not jointly, to purchase from the Trust at a price per
share of $50 (the "Purchase Price"), the number of Firm Securities set forth
opposite the name of such Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Trust agrees to issue
and sell the Additional Securities and the Underwriters shall have the right to
purchase, severally and not jointly, up to an aggregate of 300,000 Additional
Securities from the Trust at the Purchase Price. Additional Securities may be
purchased solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Securities. The Underwriters may exercise their
right to purchase Additional Securities in whole or in part from time to time by
giving written notice thereof to the Company within 30 days after the date of
this Agreement. You shall give any such notice on behalf of the Underwriters and
such notice shall specify the aggregate number of Additional Securities to be
purchased pursuant to such exercise and the date for payment and delivery
thereof. The date specified in any such notice shall be a business day (i) no
earlier than the Closing Date (as hereinafter defined), (ii) no later than five
business days after such notice has been given and (iii) no earlier than two
business days after such notice has been given. If any Additional Securities are
to be purchased, each Underwriter, severally and not jointly, agrees to purchase
from the Trust the number of Additional Securities (subject to such adjustments
to eliminate fractional shares as you may
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determine) which bears the same proportion to the total number of Additional
Securities to be purchased from the Trust as the number of Firm Securities set
forth opposite the name of such Underwriter in Schedule I bears to the total
number of Firm Securities.
In view of the fact that the proceeds of the sale of the Securities
will be used to purchase Debentures, the Company agrees to pay as compensation
("Underwriter's Compensation") for the Underwriters' arranging the investment
therein of such proceeds an amount in immediately available funds of $1.1875 per
Security purchased hereunder.
3. Terms of Public Offering. The Company is advised by you that the
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Underwriters propose (i) to make a public offering of their respective portions
of the Securities as soon after the parties hereto have executed this Agreement,
as in your judgment is advisable and (ii) initially to offer the Securities upon
the terms set forth in the Prospectus.
4. Delivery and Payment. Delivery to the Underwriters of and
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payment for the Firm Securities and payment of the related Underwriters'
Compensation shall be made at 10:00 A.M., New York City time, on June 11, 1997,
or at such other time or such other date as the Underwriters and the Company may
agree upon in writing. The time and date of such payment are referred to herein
as the "Closing Date." As used herein, the term "Business Day" means any day
other than a day on which banks are permitted or required to be closed in New
York City.
Delivery to the Underwriters of and payment for any Additional
Securities to be purchased by the Underwriters and payment of the related
Underwriters' Compensation shall be made at such place as you shall designate at
10:00 A.M., New York City time, on the date specified in the applicable exercise
notice given by you pursuant to Section 2 (an "Option Closing Date"). Any such
Option Closing Date and the location of delivery of and the form of payment for
such Additional Securities may be varied by agreement between you and the
Company.
Certificates for the Securities shall be registered in such names and
issued in such denominations as you shall request in writing not later than two
full business days prior to the Closing Date or an Option Closing Date, as the
case may be. Such certificates shall be made available to you for inspection
not later than 9:30 A.M., New York City time, on the business day next preceding
the Closing Date or the applicable Option Closing Date, as the case may be.
Certificates in definitive form evidencing the Securities shall be delivered to
you or as directed by you on the Closing Date or the applicable Option Closing
Date, as the case may be, with any transfer taxes thereon duly paid by the
Company, for the respective accounts of the several Underwriters, against
payment to the Trust of the Purchase Price therefor by wire transfer in
immediately available funds to the account specified by the
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Company to the Underwriters (no later than noon the Business Day prior to the
Closing Date or the applicable Option Closing Date, as the case may be).
5. Agreements of the Trust and the Company. The Trust and the
---------------------------------------
Company agree with each of you:
(a) To file the Prospectus, which shall be in a form reasonably
satisfactory to you, with the Commission within the time periods specified
by Rule 424; and to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering or
sale of the Securities; and to furnish copies of the Prospectus to the
Underwriters in New York City prior to 5:00 p.m., New York City time, on
the Business Day next succeeding the date of this Agreement in such
quantities as the Underwriters may reasonably request;
(b) To advise you promptly and, if requested by you, to confirm
such advice in writing, (i) when any post-effective amendment to the
Registration Statement has been filed or becomes effective after the date
of this Agreement, (ii) when any supplement to the Prospectus or any
amended Prospectus has been filed, (iii) of any request by the Commission
for amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information, (iv) 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
Securities for offering or sale in any jurisdiction, or the initiation of
any proceeding for such purposes, and (v) of the happening of any event
during the period referred to in paragraph (e) below which makes any
statement of a material fact made in the Registration Statement or the
Prospectus untrue or which requires the making of any additions to or
changes in the Registration Statement or the Prospectus in order to make
the statements therein not misleading. The Trust and the Company will use
their reasonable best efforts to prevent the issuance of any stop order by
the Commission, and if at any time the Commission shall issue any stop
order suspending the effectiveness of the Registration Statement, the Trust
and the Company will make every reasonable effort to obtain the withdrawal
or lifting of such order at the earliest possible time.
(c) To furnish to you one signed copy and three conformed copies
of the Registration Statement as first filed with the Commission and of
each amendment to it, including all exhibits thereto and documents
incorporated by reference
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therein, and to furnish to you and each Underwriter designated by you such
number of conformed copies of the Registration Statement as so filed and of
each amendment to it, without exhibits thereto but including the documents
incorporated by reference therein, as you may reasonably request.
(d) During the period specified in paragraph (e) below, not to
file any amendment or supplement to the Registration Statement, whether
before or after the time when it becomes effective, or to make any
amendment or supplement to the Prospectus of which you shall not previously
have been advised and given the opportunity to review, or to which you
shall reasonably object; and to prepare and file with the Commission,
promptly upon your reasonable request, any amendment to the Registration
Statement or supplement to the Prospectus which may be necessary or
advisable in connection with the distribution of the Securities by you,
and, if applicable, to use its reasonable best efforts to cause the same
to become promptly effective.
(e) Promptly after the Registration Statement becomes effective,
and from time to time thereafter for such period as in the opinion of
counsel for the Underwriters a prospectus is required by law to be
delivered in connection with sales by an Underwriter or a dealer, to
furnish to each Underwriter and dealer as many copies of the Prospectus
(and of any amendment or supplement to the Prospectus) as such Underwriter
or dealer may reasonably request.
(f) If during the period specified in paragraph (e) any event
shall occur as a result of which, in the opinion of counsel for the
Underwriters, it becomes necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if it
is necessary to amend or supplement the Prospectus to comply with any law,
forthwith to prepare and file with the Commission an appropriate amendment
or supplement to the Prospectus so that the statements in the Prospectus,
as so amended or supplemented, will not in the light of the circumstances
when it is so delivered, be misleading, or so that the Prospectus will
comply with law, and to furnish to each Underwriter and to such dealers as
you shall specify, such number of copies thereof as such Underwriter or
dealers may reasonably request.
(g) Prior to any public offering of the Securities, to cooperate
with you and counsel for the Underwriters in connection with the
registration or qualification of the Securities for offer and sale by the
several Underwriters and by dealers under the state securities or Blue Sky
laws of such jurisdictions as you may request, to continue such
qualification in effect so long as required for distribution of the
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Securities and to file such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification.
(h) To mail and make generally available to its securityholders
and to the Underwriters as soon as reasonably practicable an earnings
statement covering a period of at least twelve months beginning with the
first fiscal quarter of the Company occurring after the effective date of
the Registration Statement, which shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 of the Commission promulgated
thereunder, and to advise you in writing when such statement has been so
made available.
(i) For a period of 90 days after the date of the Prospectus
Supplement not to (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell,
grant any option to purchase or otherwise transfer or dispose of any
Securities, any equity securities of the Company, the Trust or any similar
trust or any securities convertible into or exchangeable or exercisable
for any equity securities of the Company, the Trust or any similar trust or
(ii) enter into any swap or other agreement the transfers, in whole or in
part, any of the economic consequences of ownership of any equity
securities of the Company, the Trust or any similar trust, whether any such
transaction described in clause (i) or (ii) above is to be settled by
delivery of equity securities of the Company, the Trust or any similar
trust, other securities, cash or otherwise, without prior written consent
of X.X. Xxxxxx Securities Inc., except for (a) sales, issuances or other
dispositions made pursuant to existing officer, director or employee
benefit plans (collectively, "Plans") and other incentive plans or upon the
exercise of options issued, under existing or prior Plans, (b) conversion
of the Series B Preferred Stock (as defined in the Registration
Statement), the Securities, the Common Securities, and the Debentures, (c)
shares of capital stock or other rights to acquire capital stock issued as
consideration for acquired businesses, provided any such shares or rights
referred to in this clause (c) are subject to resale restrictions
equivalent to those in Exhibit A hereto and (d) sales pursuant to this
Agreement.
(j) To use the net proceeds received by the Company from the sale
of the Securities pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds."
(k) To use its reasonable best efforts to list, subject to
official notice of issuance, the Securities on the New York Stock Exchange
(the "Exchange").
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(l) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, to pay all
costs, expenses, fees and taxes incident to the performance of its
obligations hereunder (excluding, without limitation, fees and
disbursements of counsel for the Underwriters other than pursuant to
clauses (iv) and (v) below), including without limiting the generality of
the foregoing, all costs and expenses incident to (i) the preparation,
issuance, and delivery of the certificates for the Securities, including
any expenses of the Trustees, (ii) the preparation, printing, filing and
distribution under the Securities Act of the Registration Statement
(including financial statements and exhibits), each preliminary prospectus
and all amendments and supplements to any of them prior to or during the
period specified in paragraph (e), (iii) the printing and delivery of the
Prospectus and any Preliminary Prospectus and all amendments or supplements
to it during the period specified in paragraph (e), (iv) the printing and
delivery of this Agreement, the Indenture, Preliminary and Supplemental
Blue Sky Memoranda and all other agreements, memoranda, correspondence and
other documents printed and delivered in connection with the offering of
the Securities (including in each case any disbursements of counsel for
the Underwriters relating to such printing and delivery of the Blue Sky
Memorandum), (v) the registration or qualification of the Securities for
offer and sale under the securities or Blue Sky laws of the several states
(including in each case the reasonable fees and disbursements of counsel
for the Underwriters relating to such registration or qualification and
memoranda relating thereto), (vi) in connection with the listing of the
Securities on the Exchange, (vii) filings and clearance with the National
Association of Securities Dealers, Inc. in connection with the offering,
(viii) furnishing such copies of the Registration Statement, the Prospectus
and all amendments and supplements thereto as may be requested for use in
connection with the offering or sale of the Securities by the Underwriters
or by dealers to whom Securities may be sold, and (ix) the rating of the
Securities including, without limitation, fees payable to rating agencies
in connection therewith.
(m) To use its reasonable best efforts to do and perform all
things required or necessary to be done and performed under this Agreement
by the Trust and the Company prior to the Closing Date and to satisfy all
conditions precedent to the delivery of the Securities.
6. Representations and Warranties of the Trust and the Company. The
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Trust and the Company, jointly and severally, represent and warrant to each
Underwriter that:
(a) No order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission, and each preliminary
prospectus filed
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as part of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities 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; provided that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through X.X. Xxxxxx Securities Inc. expressly for use therein;
(b) The Registration Statement has been declared effective by the
Commission under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of the
Company, threatened by the Commission; and the Registration Statement and
Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) comply, or will comply, as the case
may be, in all material respects with the Securities Act and the Trust
Indenture Act of 1939, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Trust Indenture Act"), and do not
and will not, as of the applicable effective date as to the Registration
Statement and any amendment thereto and as of the date of the Prospectus
and any amendment or supplement thereto, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and the
Prospectus, as amended or supplemented, if applicable, at the Closing Date
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; except that the
foregoing representations and warranties shall not apply to (i) that part
of the Registration Statement which constitutes the Statement of
Eligibility and Qualification (Form T-1) under the Trust Indenture Act of
any trustee (each a "Form T-1"), and (ii) statements or omissions in the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through X.X. Xxxxxx Securities Inc. expressly for use therein;
(c) The documents incorporated by reference in the Prospectus,
when they were filed with the Commission conformed in all material respects
to the requirements of the Exchange Act, and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not
9
misleading; and any further documents so filed and incorporated by
reference in the Prospectus, when such documents are filed with the
Commission, will conform in all material respects to the requirements of
the Exchange Act, and will not contain an untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(d) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware with corporate
power and corporate authority under such laws to own, lease and operate its
properties and conduct its business as described in the Prospectus; and the
Company is duly qualified to transact business as a foreign corporation and
is in good standing in each other jurisdiction in which it owns or leases
property of a nature, or transacts business of a type, that would make such
qualification necessary, except to the extent that the failure to so
qualify or be in good standing would not have a material adverse effect on
the Company and its subsidiaries, considered as one enterprise.
(e) Each of Con-Way Transportation Services, Inc., Xxxxx
Worldwide Airlines, Inc. ("EWA") and Menlo Logistics, Inc. (each
individually, a "Significant Subsidiary" and collectively, the
"Significant Subsidiaries") is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with corporate power and corporate authority under such laws
to own, lease and operate its properties and conduct its business; and each
Significant Subsidiary is duly qualified to transact business as a foreign
corporation and is in good standing in each other jurisdiction in which it
owns or leases property of a nature, or transacts business of a type, that
would make such qualification necessary, except to the extent that the
failure to so qualify or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, considered as one
enterprise. All of the outstanding shares of capital stock of each
Significant Subsidiary have been duly authorized and validly issued and are
fully paid and non-assessable and are owned by the Company (except for
directors' qualifying shares), free and clear of any pledge, lien, security
interest, charge, claim, equity, encumbrance or adverse interest of any
kind (except for restrictions on transfer arising under federal or state
securities or blue sky laws).
(f) As of the Closing Date, the Trust Securities will have been
duly authorized by the Declaration and (x) when the Securities are duly
executed, authenticated and issued in accordance with the terms of the
Declaration and delivered to and paid for by the Underwriters in accordance
with the terms of this Agreement and (y) the Common Securities, when duly
executed and issued in accordance with the terms
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of the Declaration and delivered to and paid for by the Company as provided
in the Common Securities Purchase Agreement, such Trust Securities will be
duly and validly issued and (subject to the terms of and except as provided
in the Declaration) will be fully paid and nonassessable undivided
beneficial interests in the assets of the Trust, not subject to any
preemptive or similar rights, and will be convertible into shares of Common
Stock as provided in the Declaration and the Indenture. Holders of
Securities will be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under
the General Corporation Law of the State of Delaware (the "DGCL"). As of
the Closing Date, all of the issued and outstanding Common Securities will
be directly owned by the Company free and clear of any pledge, lien,
security interest, charge, claim, equity, encumbrance or adverse interest
of any kind, except for restrictions on transfer arising under the
Declaration or federal or state securities or blue sky laws.
(g) As of the Closing Date, the Declaration will have been duly
authorized, executed and delivered by the Company and will be a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, fraudulent transfer or
other similar laws relating or affecting creditors' rights generally or by
general equitable principals and except as rights to indemnification and
contribution may be limited by applicable law or public policy.
(h) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Act, is and will be
treated as a "grantor trust" for Federal income tax purposes under existing
law, has the business trust power and business trust authority to enter
into and perform its obligations under this Agreement and the Trust
Securities and the Declaration and to conduct its business as described in
the Registration Statement and Prospectus, has not conducted and will
conduct no business other than as permitted by the Declaration and is not
required to be authorized to do business in any other jurisdiction.
(i) The Indenture has been duly qualified under the Trust
Indenture Act and, at the Closing Date, will have been duly authorized,
executed and delivered by the Company and will be a valid and binding
agreement of the Company, enforceable in accordance with its terms subject
to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, fraudulent transfer or other similar laws relating
or affecting creditors' rights generally or by general equitable principals
and except as rights to indemnification and contribution may be limited by
applicable law or public policy; the Debentures have been duly authorized
and when duly executed, attested and authenticated in accordance with the
provisions of the
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Indenture and delivered to the Trust against payment therefor as provided
in the Debenture Purchase Agreement, will be entitled to the benefits of
the Indenture.
(j) The Guarantee has been duly qualified under the Trust
Indenture Act and, as of the Closing Date, assuming due authorization,
execution and delivery by the Company thereunder, of the Guarantee, the
Guarantee will be a valid and binding agreement of the Company, enforceable
in accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, fraudulent transfer or
other similar laws relating or affecting creditors' rights generally or by
general equitable principals and except as rights to indemnification and
contribution may be limited by applicable law or public policy.
(k) This Agreement has been duly authorized, executed and
delivered by the Company.
(l) The Securities, the Guarantee, the Indenture and the
Debentures conform as to legal matters in all material respects to the
descriptions thereof contained in the Registration Statement and the
Prospectus. The Company had at the date indicated in the Prospectus a duly
authorized, issued and outstanding capitalization as set forth in the
Prospectus under the caption "Capitalization" and such authorized capital
stock conforms as to legal matters in all material respects to the
description thereof set forth in the Prospectus. All of the outstanding
shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable. There are no
outstanding options to purchase, or any rights or warrants to subscribe
for, or any securities or obligations convertible into, or any contracts or
commitments to issue or sell, any shares of Common Stock of the Company,
any shares of capital stock of any subsidiary, or any such warrants,
convertible securities or obligations, except as set forth in the
Prospectus and except for options granted under, or contracts or
commitments pursuant to, the Company's previous or currently existing stock
option and other similar officer, director or employee benefit plans.
(m) The Company is not in violation of its charter or by-laws,
the Trust is not in violation of the Declaration and none of the
Significant Subsidiaries is in violation of its charter or by-laws, except
for any such violations which, individually and in the aggregate, would
not have a material adverse effect on, with respect to the Company and the
Significant Subsidiaries, the Company and its subsidiaries taken as a
whole, or with respect to the Trust, the Trust, nor is the Trust, the
Company or any of the Significant Subsidiaries in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture,
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mortgage, loan agreement, note, lease or other agreement or instrument to
which it is a party or by which it is bound or to which any of its
properties is subject, except for such defaults that would not have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of, with respect to the
Company and the Significant Subsidiaries, the Company and its subsidiaries,
considered as one enterprise, or with respect to the Trust, the Trust.
The execution, delivery and performance by the Trust or the Company, as the
case may be, of this Agreement, the Indenture, the Debentures, the
Guarantee, the Declaration and the Securities and the compliance by the
Trust or the Company, as the case may be, with all of their respective
obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by
all necessary action (corporate or otherwise) on the part of the Trust and
the Company, as the case may be, and do not and will not result in any
violation of the Declaration of the Trust or charter or by-laws of the
Company or any Significant Subsidiary, and do not and will not violate or
conflict with, or result in a breach of any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Trust,
the Company or any Significant Subsidiary under any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument to
which the Trust, the Company or any Significant Subsidiary is a party or by
which it is bound or to which any of their respective properties are
subject or any existing applicable law, rule, regulation, judgment, order
or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Trust, the Company or any
Significant Subsidiary or any of their respective properties (except for
such violations, conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or business prospects
of, with respect to the Trust, the Trust, or with respect to the Company
and the Significant Subsidiaries, the Company and its subsidiaries,
considered as one enterprise).
(n) No authorization, approval, consent or license of any
government, governmental instrumentality or court, domestic or foreign
(other than under the Securities Act, the Exchange Act, the Trust Indenture
Act, and the securities or blue sky laws of the various states and of
foreign jurisdictions) is required for the valid authorization, issuance,
sale and delivery of the Securities, for the execution, delivery or
performance by the Trust or the Company, as the case may be, of this
Agreement, the Indenture, the Debentures, the Guarantee, the Declaration
and the Securities or for the consummation by the Company or the Trust, as
the case may be, of the transactions contemplated hereby or thereby, except
such of the foregoing as will be obtained prior to the Closing Date.
13
(o) Except as disclosed in the Prospectus, there is no action, suit or
proceeding before or by any government, governmental instrumentality or
court, domestic or foreign, now pending or, to the knowledge of the Company
or the Trust, threatened against or affecting the Trust, the Company or any
Significant Subsidiary or any of their respective officers or Regular
Trustees (as defined in the Declaration), as applicable, in their capacity
as such, in which there is a reasonable possibility of an adverse decision
that would (A) result in any material adverse change in the condition
(financial or otherwise), earnings, business affairs or business prospects
of, with respect to the Trust, the Trust or, with respect to the Company
and the Significant Subsidiaries, the Company and its subsidiaries,
considered as one enterprise, (B) materially and adversely affect the
properties or assets of, with respect to the Trust, the Trust or, with
respect to the Company and the Significant Subsidiaries, the Company and
its subsidiaries, considered as one enterprise or (C) adversely affect the
consummation of the transactions contemplated in this Agreement; the
aggregate of all pending legal or governmental proceedings that are not
described in the Prospectus to which the Trust, the Company or any
Significant Subsidiary is a party or which affect any of their respective
properties and in which there is a reasonable possibility of an adverse
decision, including ordinary routine litigation incidental to the business
of the Trust, the Company or any Significant Subsidiary, would not have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of, with respect to the
Trust, the Trust or, with respect to the Company and the Significant
Subsidiaries, the Company and its subsidiaries, considered as one
enterprise; and there are no contracts or other documents that are required
to be described in the Registration Statement or Prospectus or to be filed
as exhibits to the Registration Statement that are not described or filed
as required;
(p) Each employee benefit plan, within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended,
("ERISA") that is maintained, administered or contributed to by the Company
or any of its subsidiaries for employees or former employees of the Company
and its subsidiaries has been maintained in compliance with its terms and
the requirements of any applicable statutes, orders, rules and
regulations, including but not limited to ERISA and the Internal Revenue
Code of 1986, as amended, ("Code"), except where the failure to comply
would not have a material adverse effect on the Company and its
subsidiaries considered as one enterprise. No prohibited transaction,
within the meaning of Section 406 of ERISA or Section 4975 of the Code has
occurred with respect to any such plan excluding transactions effected
pursuant to a statutory or administrative exemption, except where such
prohibited transaction would not have a material adverse effect on the
Company and its subsidiaries taken as one enterprise. For each such plan
which is subject to the funding rules of Section 412 of the Code or Section
14
302 of ERISA no "accumulated funding deficiency" as defined in Section 412
of the Code has been incurred, whether or not waived, and the fair market
value of the assets of each such plan (excluding for these purposes accrued
but unpaid contributions) exceeded the present value of all benefits
accrued under such plan determined using reasonable actuarial assumptions.
There is no reasonable likelihood that the Company or any of its
subsidiaries could incur liability under Title IV of ERISA or suffer the
imposition of one or more liens under ERISA or the Code with respect to any
such plan or other employee benefit plan, except as otherwise disclosed in
or contemplated by the Prospectus and except for such liability or lien
which would not have a material adverse effect on the Company and its
subsidiaries considered as one enterprise.
(q) The Company has no knowledge of any actionable violation by
the Company or any of its subsidiaries of any federal, state or local law
relating to employment and employment practices, discrimination in the
hiring, promotion or pay of employees, or any applicable wage or hour laws,
which, individually or in the aggregate, would result in a material adverse
effect on the Company and its subsidiaries, considered as one enterprise.
There is (A) no material unfair labor practice complaint pending or, to
the knowledge of the Company, threatened against the Company before the
National Labor Relations Board or any state or local labor relations board,
nor are any material grievance or arbitration proceedings arising under any
collective bargaining agreement pending or, to the knowledge of the
Company, threatened against the Company, (B) no labor strike, dispute,
slowdown or stoppage ("Labor Dispute") in which the Company is involved,
nor, to the knowledge of the Company, is any Labor Dispute imminent, other
than routine disciplinary and grievance matters, and (C) except as
disclosed in or contemplated by the Prospectus, no question concerning
union representation within the meaning of the National Labor Relations Act
existing with respect to the employees of the Company and, to the knowledge
of the Company, no union organizing activities are taking place by
employees of the Company or any of its subsidiaries, which, with respect to
any matter specified in clauses (A), (B) or (C) above, whether considered
singly or in the aggregate, would have a material adverse effect on the
Company and its subsidiaries, considered as one enterprise.
(r) Xxxxxx Xxxxxxxx LLP, which reported upon the audited
financial statements and related notes included in the Prospectus, is an
independent public accountant with respect to the Company in accordance
with the provisions of the Securities Act and the rules and regulations of
the Commission thereunder.
15
(s) The financial statements, together with the related notes and
schedules thereto, 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 cash flow of the Company and its subsidiaries on the basis
stated in the Registration Statement and the Prospectus at the respective
dates and for the respective periods to which they apply; such statements
and related notes and schedules thereto have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and the other
financial and statistical information and data set forth in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), in all material respects, present fairly the information
purported to be shown thereby at the respective dates or for the respective
periods to which they apply and, to the extent that such information is set
forth in or has been derived from the financial statements and accounting
books and records of the Company, have been prepared on a basis consistent
with such financial statements and the books and records of the Company.
(t) Since the respective dates as of which information is given
in the Prospectus, except as otherwise stated therein or contemplated
thereby, there has not been (A) any material adverse change, or any
development involving a prospective material adverse change, in the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company and its subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of business, (B)
any transaction or agreement entered into by the Company, whether or not
arising in the ordinary course of business, that is material to the Company
and its subsidiaries, considered as one enterprise, (C) any dividend or
distribution of any kind declared, paid or made by the Company on its
capital stock, except for regular periodic dividends on its capital stock,
or (D) any change in the capital stock or long-term debt of the Company or
any of its subsidiaries, except for the issuance of Common Stock upon the
conversion of the Company's Series B Cumulative Convertible Preferred
Stock, the issuance of capital stock, options and other securities under
existing officer, director or employee benefit plans or upon the exercise
of options issued under existing or prior officer, director or employee
benefit plans and except for changes in long-term debt in the ordinary
course of business.
(u) The Company and the Significant Subsidiaries each owns,
possesses or has obtained all governmental licenses, permits, certificates,
consents, orders, approvals and other authorizations necessary to own or
lease, as the case may be, and to operate its properties and to carry on
its business as presently conducted, and the Company has not received any
notice of proceedings relating to revocation or
16
modification of any such licenses, permits, certificates, consents, orders,
approvals or authorizations, except in each case for such licenses,
permits, certificates, consents, orders, approvals and other authorizations
or revocations or modifications thereof which would not have a material
adverse effect on the Company and its subsidiaries considered as one
enterprise. Each of the Company and the Significant Subsidiaries is in
compliance with all laws and regulations relating to the conduct of its
business as conducted as of the date of the Prospectus. The Company is in
compliance with all the laws and regulations relating to the conduct of its
business except for any such non-compliance which, individually or in the
aggregate, would not have a material adverse effect on the Company and its
subsidiaries taken as a whole.
(v) Neither the Trust nor the Company is and, after giving effect
to the offering and the sale of the Securities, will be an "investment
company" or a company controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(w) Except as would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, or otherwise
require disclosure in the Registration Statement, and except as otherwise
set forth in or contemplated by the Prospectus, (i) none of the Company or
any of its subsidiaries is in violation of any federal, state or local laws
and regulations relating to pollution or protection of human health or the
environment, including, without limitation, laws and regulations relating
to emissions, discharges, releases or threatened releases of toxic or
hazardous substances, materials or wastes, or petroleum and petroleum
products ("Materials of Environmental Concern"), or otherwise relating to
the protection of human health and safety, or the use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern
(collectively, "Environmental Laws"), which violation includes, but is not
limited to, noncompliance with, or lack of, any permits or other
environmental authorizations, and (ii) (A) none of the Company or any of
its subsidiaries has received any communication (written or oral), whether
from a governmental authority or otherwise, alleging any such violation or
noncompliance, and there are no circumstances, either past, present or that
are reasonably foreseeable, that could reasonably be expected to lead to
any such violation in the future, (B) there is no pending or, to the
knowledge of the Company, threatened claim, action, investigation or notice
(written or oral) by any person or entity alleging potential liability for
investigatory, cleanup, or governmental response costs, or natural
resources or property damages, or personal injuries, attorney's fees or
penalties relating to (x) the presence, or release into the environment, of
any Materials of Environmental Concern at any location owned or operated by
the Company or any of its subsidiaries now or in the past, or (y)
circumstances forming the basis of any violation or potential
17
violation, of any Environmental Law (collectively, "Environmental Claims"),
and (C) there are no past or present actions, activities, circumstances,
conditions, events or incidents that could form the basis of any
Environmental Claim against the Company or any of its subsidiaries or
against any person or entity for whose acts or omissions the Company or any
of its subsidiaries is or may reasonably be expected to be liable, either
contractually or by operation of law. In the ordinary course of business,
the Company and/or certain of its subsidiaries, as appropriate, have
conducted environmental investigations of, and have reviewed reasonably
available information regarding, the business, properties and operations
of the Company and its subsidiaries, and of other properties within the
vicinity of their business, properties and operations, as appropriate for
the circumstances of each such property and operation; on the basis of such
reviews and investigations, the Company has reasonably concluded that,
except as disclosed or contemplated by the Prospectus, any costs and
liabilities associated with such matters would not have, singly or in the
aggregate, a material adverse effect on the Company and its subsidiaries,
considered as one enterprise, or otherwise require disclosure in the
Registration Statement.
(x) No person has the right to require the Trust or the Company
to register any securities for offering and sale under the Securities Act
by reason of the filing of the Registration Statement with the Commission
or the issue and sale of the Securities.
(y) The Common Stock issuable upon conversion of the Securities
has been duly authorized by the Company and validly reserved for issuance
by the Company upon such conversion by all necessary corporate action and
such Common Stock, when duly issued upon such conversion, will be validly
issued and fully paid and non-assessable; no holder thereof will be subject
to personal liability solely by reason of being such a holder; and the
issuance of such Common Stock upon such conversion will not be subject to
preemptive rights.
(z) The Company and each of the Significant Subsidiaries have
timely filed (or have had timely filed on their behalf) all material Tax
returns required by applicable law to be filed by them prior to the date
hereof (taking into account any properly granted extensions of time to file
any Tax returns), and all such Tax returns are true, complete, and correct
in all material respects. Except as otherwise stated in the Prospectus,
the Company and each of the Significant Subsidiaries have paid (or have had
paid on their behalf) all material Taxes (as defined below) due or claimed
to be due from the Company, other than those (i) currently payable without
penalty or interest or (ii) being contested in good faith and by
appropriate proceedings. Other than Tax items relating to proposed
assessments or Audits (as defined below) which
18
have been disclosed to counsel for the Underwriters, there are no other Tax
items that are currently under examination by any Tax Authority (as defined
below) or, to the best knowledge of the Company, could result in a proposed
deficiency if examined by a Tax Authority in respect of which there is a
reasonable possibility of a determination that would be adverse to the
Company and that would have a material adverse effect on the Company and
its subsidiaries considered as one enterprise. In addition, the Company
hereby confirms that it has disclosed to counsel for the Underwriters all
proposed assessments that have been made by the Internal Revenue Service
and all issues that have been raised by the Internal Revenue Service in
connection with the matters set forth in the Prospectus under the caption
"Risk Factors -- Certain Tax Matters Relating to Xxxxx".
For purposes of this paragraph 6(z):
"Taxes" shall mean all federal, state, local and foreign taxes,
and other assessments of a similar nature, whether imposed directly or
through withholding), including any interest, additions to tax or penalties
applicable thereto; and
"Audit" shall mean any audit, assessment of Taxes, other
-----
examination by any tax authority, proceeding or appeal of such proceeding
relating to Taxes.
"Tax Authority" means the Internal Revenue Service and any other
-------------
domestic or foreign governmental authority responsible for the
administration of any Taxes.
(aa) Neither the Trust, the Company nor any of the Significant
Subsidiaries has taken or will take, directly or indirectly, any action
designed to, or that might be reasonably expected to, cause or result in
stabilization or manipulation of the price of the Securities.
(ab) Any certificate signed by any Regular Trustee of the Trust
or officer of the Company and delivered to you or your counsel on or after
the date of this Agreement shall be deemed a representation and warranty by
the Company to you as to the matters covered thereby.
(ac) The United States Postal Service ("USPS") Agreement, dated
April 23, 1997, has been duly authorized, executed and delivered by EWA and
is a valid and binding agreement of EWA which is in full force and effect
and there are no material breaches of the Agreement by EWA or, to the
Company's knowledge, the USPS.
19
7. Indemnification. (a) Each of the Trust and the Company, jointly
---------------
and severally, agrees to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, from and against any and
all losses, claims, damages, liabilities (including, without limitation, but
subject to paragraph (b) below, the legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted) and
judgments (i) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
furnished in writing to the Company by or on behalf of any Underwriter through
X.X. Xxxxxx Securities Inc. expressly for use therein; provided, however, that
-------- -------
the foregoing indemnity agreement with respect to any preliminary prospectus
shall not inure to the benefit of any Underwriter from whom the person asserting
any such losses, claims, damages, liabilities or judgments purchased Securities,
or any person controlling such Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Securities to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such losses, claims, damages, liabilities or judgments.
(b) In case any action shall be brought against any Underwriter
or any person controlling such Underwriter, based upon any preliminary
prospectus, the Registration Statement or the Prospectus or any amendment
or supplement thereto and with respect to which indemnity may be sought
against the Trust and the Company, such Underwriter shall promptly notify
the Trust and the Company in writing and the Trust and the Company shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and
expenses. Any Underwriter or any such controlling person shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Underwriter or such controlling person unless (i) the
employment of such counsel has been specifically authorized in writing by
the Trust and the Company, (ii) the Trust and the Company have failed
within a reasonable time to retain counsel reasonably satisfactory to such
Underwriter or such controlling person or (iii) the named parties to any
such action (including any impleaded parties) include both such Underwriter
or such controlling person and the Trust and the Company and such
Underwriter or such
20
controlling person shall have been advised by such counsel that there may
be one or more legal defenses available to it which are different from or
additional to those available to the Trust and the Company (in which case
the Trust and the Company shall not have the right to assume the defense of
such action on behalf of such Underwriter or such controlling person, it
being understood, however, that the Trust and the Company shall not, in
connection with any one such action or separate but substantially similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to one
firm of local counsel) for all such Underwriters and controlling persons,
which firm shall be designated in writing by X.X. Xxxxxx Securities Inc.
and that all such fees and expenses shall be reimbursed as they are
incurred). The Trust and the Company shall not be liable for any settlement
of any such action effected without the written consent of the Trust and
the Company but if settled with the written consent of the Trust and the
Company, the Trust and the Company agree to indemnify and hold harmless any
Underwriter and any such controlling person from and against any loss or
liability by reason of such settlement. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second sentence of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 business days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall have
received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall
not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. Notwithstanding the immediately
preceding sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees
and expenses of counsel as contemplated by the second sentence of this
paragraph, such indemnifying party shall not be liable for any settlement
effected without its written consent if such indemnifying party (x)
reimburses such indemnified party in accordance with such request to the
extent that the indemnifying party in its judgment considers such request
to be reasonable and (y) provides written notice to the indemnified party
stating that reason it deems the unpaid balance unreasonable, in each case
prior to the date of such settlement. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement
of any pending or threatened proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.
21
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless (i) the Trust, the Trustees, each person who, on behalf
of the Company as sponsor of the Trust, signed the Registration Statement
and any person controlling the Trust within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act and (ii) the
Company, its directors, its officers who signed the Registration Statement
and any person controlling the Company within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, in each such case to
the same extent as the foregoing indemnity from the Trust and the Company
to each Underwriter but only with reference to information furnished in
writing by or on behalf of such Underwriter through X.X. Xxxxxx Securities
Inc. expressly for use in the Registration Statement, the Prospectus, any
preliminary prospectus or any amendment or supplement thereto. In case any
action shall be brought against the Trust, any Trustee, any person who, on
behalf of the Company as sponsor of the Trust, signed the Registration
Statement or any person controlling the Trust or against the Company, any
of its directors, any officer of the Company who signed the Registration
Statement or any person controlling the Company based on the Registration
Statement, the Prospectus or any preliminary prospectus or any amendment
or supplement thereto and in respect of which indemnity may be sought
against any Underwriter, the Underwriter shall have the rights and duties
given to the Trust and the Company (except that if the Trust and the
Company shall have assumed the defense thereof, such Underwriter shall not
be required to do so, but may employ separate counsel therein and
participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such Underwriter), and the Trust, the
Trustees, any person who, on behalf of the Company as sponsor of the Trust,
signed the Registration Statement and any person controlling the Trust, and
the Company, its directors, any officers of the Company who signed the
Registration Statement and any person controlling the Company shall have
the rights and duties given to the Underwriter, by Section 7(b) hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities and judgments (i) in
such proportion as is appropriate to reflect the relative benefits received
by the Trust and the Company on the one hand and the Underwriters on the
other hand from the offering of the Securities 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 Trust,
the Company and the Underwriters in connection with the state-
22
ments or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received by the Trust and the
Company on the one hand and the Underwriters on the other hand shall be
deemed to be in the same respective proportions as the total proceeds from
the offering received by the Trust and the Company (before deducting
expenses but after deducting the total Underwriters' Compensation), and the
total Underwriters Compensation received by the Underwriters, in each case
as set forth in the table on the cover page of the Prospectus, bear to the
total price to the public of the Securities. The relative fault of the
Trust and 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 Trust, the Company or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Trust, the Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation (even if the Underwriters were treated as
--- ----
one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities
or judgments referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. 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 at
which the Securities underwritten by it and distributed to the public was
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities 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(d) are several in
proportion to the respective number of Securities purchased by each of the
Underwriters hereunder and not joint.
The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
23
8. Conditions of Underwriters' Obligations. The several obligations
---------------------------------------
of the Underwriters to purchase the Securities under this Agreement on the
Closing Date or the Option Closing Date, as the case may be, are subject to the
performance by the Company and the Trust of their obligations hereunder and to
the following additional conditions:
(a) All the representations and warranties of the Trust and the
Company contained in this Agreement shall be true and correct on the
Closing Date or the Option Closing Date, as the case may be, with the same
force and effect as if made on and as of the Closing Date or the Option
Closing Date, as the case may be.
(b) The Registration Statement shall have become effective (or if
a post-effective amendment is required to be filed under the Securities
Act, such post-effective amendment shall have become effective) not later
than 5:00 P.M., New York City time, on the date hereof; and no stop order
suspending the effectiveness of the Registration Statement or any post-
effective amendment shall be in effect, and no proceedings for such purpose
shall be pending before or threatened by the Commission; the Prospectus
shall have been filed with the Commission pursuant to Rule 424(b) within
the applicable time period prescribed for such filing by the rules and
regulations under the Securities Act and in accordance with Section 5(a)
hereof; and all requests for additional information shall have been
complied with to the satisfaction of the Underwriters;
(c) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date or the Option Closing Date, as the case may
be, there shall not have been any downgrading, nor shall any notice have
been given of any intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the possible
change, in the rating accorded to any of the Company's or the Trust's
securities or to any securities of any other trust that is organized in
substantially the form of, and for substantially the same purpose as, the
Trust and whose common equity capital is wholly owned by the Company or any
subsidiary, by any "nationally recognized statistical rating organization,"
as such term is defined for purposes of Rule 436(g)(2) under the Securities
Act.
(d) (i) Since the date of the latest balance sheet included or
incorporated by reference in the Prospectus, there shall not have been any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the condition, financial or
otherwise, or in the earnings, affairs or business prospects, whether or
not arising in the ordinary course of business, of the Company and its
subsidiaries, taken as a whole, from that described in the Prospectus, (ii)
since the date of the latest balance sheet included or incorporated by
reference in the Pro-
24
spectus there shall not have been any material adverse change, or any
development involving a prospective material adverse change, in the capital
stock or in the long-term debt of the Company from that set forth in the
Prospectus, (iii) the Trust and the Company shall have no liability or
obligation, direct or contingent, which is material to, in the case of the
Trust, the Trust, or, in the case of the Company, the Company and its
subsidiaries, taken as a whole, other than those reflected in or
contemplated by the Prospectus, (iv) since the date of the latest balance
sheet included or incorporated by reference in the Prospectus, neither the
Trust nor Company has sustained any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Prospectus; and (v) on the Closing Date or the Option Closing Date, as the
case may be, you shall have received a certificate dated the Closing Date,
signed on behalf of the Company by the Chief Executive Officer, Chief
Financial Officer, Treasurer, or any Vice President of the Company as you
may specify confirming the matters set forth in paragraphs (a), (b), (c)
and (d) of this Section 8.
(e) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing
Date or the Option Closing Date, as the case may be, of Eberhard X.X.
Xxxxxxxxx, General Counsel for the Company, to the effect that:
(i) the Company and each of the Significant Subsidiaries
has been duly incorporated, is validly existing as a corporation in
good standing under the laws of its jurisdiction (other than foreign
jurisdictions) of incorporation and has the corporate power and
corporate authority to conduct its business and to own, lease and
operate its properties as described in the Prospectus;
(ii) the Company and each of the Significant Subsidiaries
is duly qualified and is in good standing as a foreign corporation
authorized to do business in each jurisdiction (other than foreign
jurisdiction) in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the
failure to be so qualified or in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as
a whole;
(iii) except as set forth in the Prospectus, all of the
outstanding shares of capital stock of the Significant Subsidiaries
have been duly authorized and are owned by the Company (except for
directors qualifying
25
shares), free and clear of any pledge, lien, security interest,
charge, claim, equity or encumbrance of any kind (except for
restrictions on transfer arising under federal or state securities or
blue sky laws);
(iv) the outstanding shares of capital stock of the Company
have been duly authorized and are validly issued, fully paid and non-
assessable;
(v) the Company is not in violation of its charter or by-
laws, the Trust is not in violation of the Declaration, and none of
the Significant Subsidiaries is in violation of its charter or by-
laws, except for any such violations which would not have a material
adverse effect on, in the case of the Trust, the Trust, or, in the
case of the Company and the Significant Subsidiaries, the Company and
its subsidiaries taken as a whole;
(vi) the execution, delivery and performance of this
Agreement, the Indenture, Debentures, Guarantee and Declaration by
the Company, the compliance by the Trust and the Company with their
respective obligations hereunder and thereunder, the issuance of the
Securities and the consummation of the transactions contemplated
hereby and thereby do not, to the knowledge of such counsel, require
any consent, approval, authorization, license or other order of any
United States federal court sitting in the State of California, any
California state court or any United States federal or California
state regulatory body, administrative agency or other governmental
body under Applicable Laws (as defined below) (except such as may be
required under the Securities Act, the Exchange Act, the Trust
Indenture Act or other securities or Blue Sky laws) and do not
conflict with or constitute a breach of any of the terms or provisions
of, or a violation or a default under, the Declaration, the charter or
by-laws of the Company or any of the Significant Subsidiaries or, to
the knowledge of such counsel, any bond, debenture, note, indenture,
mortgage, deed of trust, loan arrangement or any other agreement or
other instrument to which the Trust, the Company or any of the
Significant Subsidiaries is a party or by which the Trust, the Company
or any of the Significant Subsidiaries or their respective properties
are bound that is material to, in the case of the Trust, the Trust,
or, in the case of the Company and the Significant Subsidiaries, the
Company and its subsidiaries, taken as a whole, or, to the knowledge
of such counsel, violate or conflict with any United States federal or
California state laws or administrative regulations or any rulings or
decrees of any United States federal court sitting in the State of
California or any California state court which are applicable to the
Trust, the Company or any of the Significant
26
Subsidiaries or their respective properties, except in any such case
for such conflicts, breaches, violations or defaults which would not
have a material adverse effect on, in the case of the Trust, the
Trust, or, in the case of the Company and the Significant
Subsidiaries, the Company and its subsidiaries taken as a whole. Such
counsel may state that, for purposes of such opinion, the term
"Applicable Laws" means those state laws of the State of California,
federal laws of the United States of America and portions of the DGCL
which, in such counsel's experience, are normally applicable to
transactions of the type contemplated by this Agreement (provided that
the term "Applicable Laws" shall not include United States federal or
state securities or blue sky laws or the rules and regulations
thereunder, the Trust Indenture Act or the rules and regulations of
the Commission thereunder, the Investment Company Act of 1940, as
amended, or the rules and regulations thereunder (collectively, the
"1940 Act"), any antifraud laws or any law, rule or regulation that
may have become applicable as a result of any Underwriter's
involvement with the transactions contemplated by this Agreement or
because of any facts specifically pertaining to any Underwriter), but
without such counsel having made any special investigation concerning
the applicability of any other law, rule or regulation;
(vii) other than as set forth or contemplated in the
Prospectus, to such counsel's knowledge, there are no legal or
governmental investigations, actions, suits or proceedings (other
than any legislative proceedings) pending or threatened against the
Trust, the Company or any of the Significant Subsidiaries or any of
their respective properties or to which the Company or any of the
Significant Subsidiaries is or may be a party or to which any property
of the Trust, the Company or any of the Significant Subsidiaries is or
may be the subject in which there is a reasonable possibility of a
determination adverse to the Trust, the Company or any of the
Significant Subsidiaries that would have individually or in the
aggregate, a material adverse effect on, in the case of the Trust, the
Trust, or, in the case of the Company and the Significant
Subsidiaries, the Company and its subsidiaries taken as a whole;
(viii) to the knowledge of such counsel, each of the
Company and the Significant Subsidiaries owns, possesses or has
obtained all licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and has made all declarations
and filings with, all United States federal and California state
governmental authorities necessary to own or lease, as the case may
be, and to operate its properties and to carry on its business as
conducted as of the date hereof, except where the failure to own,
possess or
27
obtain any such license, permit, certificate, consent, order, approval
or authorization would not have a material adverse effect on the
Company and its subsidiaries taken as a whole, and to the knowledge of
such counsel, neither the Company nor any of the Significant
Subsidiaries has received any actual notice of any proceeding relating
to revocation or modification of any such license, permit,
certificate, consent, order, approval or other authorization, except
as described in the Registration Statement or the Prospectus and
except where the revocation or modification thereof would not have a
material adverse effect on the Company and its subsidiaries taken as a
whole; and
(ix) the documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto made by the
Company prior to the Closing Date or the Option Closing Date, as the
case may be, (other than the financial statements and schedules and
other financial and statistical data included or incorporated by
reference therein or omitted therefrom, and other than the exhibits
thereto, as to which such counsel need express no opinion) when they
were filed with the Commission, complied as to form in all material
respects with the requirements of the Exchange Act.
Eberhard X.X. Xxxxxxxxx shall further state that he has participated
in conferences with officers and other representatives of the Company, and
representatives of the independent public accountants for the Company and your
representatives, at which conferences the contents of the Registration
Statement, the Prospectus and related matters were discussed and although such
counsel has not independently verified and is not passing upon and assumes no
responsibility for the accuracy, completeness or fairness of the statements
included or incorporated by reference in the Registration Statement, the
Prospectus or the documents incorporated or deemed to be incorporated by
reference therein and has made no independent verification thereof, no facts
have come to such counsel's attention which led him to believe that the
Registration Statement (other than financial statements and schedules and other
financial or statistical data included therein or omitted therefrom and other
than any Form T-1, as to which no statement need be made) at its effective date,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements contained
therein not misleading, or the Prospectus (other than financial statements and
schedules and other financial or statistical data included therein or omitted
therefrom, as to which no statement need be made), as of the date of the
Prospectus Supplement or the Closing Date, contains any untrue statement of a
material fact or omitted to state any material fact necessary to make the
statements contained therein, in the light of the circumstances under which they
were made, not misleading. Such counsel may further state that such opinion is
limited to matters arising under the federal laws of the United States of
America, the laws of the State of California
28
and the DGCL, and such counsel expresses no opinion as to the laws of any other
jurisdiction or, in the case of Delaware, any other Delaware laws, or as to the
municipal laws or the laws of any other local agencies or governmental
authorities within the State of California or any matters arising thereunder or
relating thereto. Such counsel may further state that any opinions as to good
standing or due qualification of the Company or any of its subsidiaries are
based solely upon good standing and other similar certificates of public
officials. Such counsel may further state that, insofar as such opinion
concerns any bond, debenture, note, indenture, mortgage, deed of trust, loan
arrangement or other agreement or instrument referred to in clause (vi) above or
this Agreement, the Indenture, the Debentures, the Guarantee, the Declaration
(collectively, "Relevant Agreements"), such counsel has assumed that such
Relevant Agreements are governed by and construed in accordance with the
internal laws of the State of California and, insofar as such opinion concerns
the Trust, such counsel has assumed that the laws of the State of Delaware
applicable to Delaware statutory business trusts are the same as the laws of the
State of California applicable to California corporations.
In rendering his opinions above, Xx. Xxxxxxxxx may rely as to factual
matters on such certificates of the Company's officers, the Regular Trustees or
of governmental officials as he may deem relevant or necessary for such opinions
and as to matters governed by other than federal or California law or by the
DGCL on opinions of local counsel.
(f) You shall have received on the Closing Date an opinion
(satis factory to you and counsel for the Underwriters), dated the Closing
Date or the Option Closing Date, as the case may be, of Xxxxx & Xxxx LLP,
counsel for the Company, to the effect that:
(i) the Trust is not and, immediately after giving effect
to the sale of the Securities to the Underwriters on the date of such
opinion, will not be required to be registered under the Investment
Company Act of 1940, as amended.
(ii) the Debentures have been duly authorized by all
necessary corporate action on the part of the Company and (assuming
the due authorization, execution and delivery of the Indenture by the
trustee thereunder), when executed and attested by duly authorized
officers of the Company under its corporate seal, authenticated,
issued and delivered, all in accordance with the provisions of the
Indenture, and delivered to and paid for by the Trust as set forth in
the Debenture Purchase Agreement, will be entitled to the benefits of
the Indenture and will be valid and binding obligations of the Company
enforceable against the Company in accordance with their terms
29
except as may be limited by bankruptcy, insolvency reorganization,
moratorium, arrangement, fraudulent conveyance, fraudulent transfer
or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles;
(iii) this Agreement has been duly authorized by all
necessary corporate action on the part of the Company and has been
duly executed and delivered by the Company;
(iv) the Indenture and the Guarantee have been duly
qualified under the Trust Indenture Act, the Indenture, Declaration
and Guarantee have been duly authorized by all necessary corporate
action on the part of the Company and have been duly executed and
delivered by the Company, and (assuming the due authorization,
execution and delivery of the Indenture and the Guarantee by the
trustees thereunder) the Indenture and the Guarantee are valid and
binding agreements of the Company, enforceable against the Company in
accordance with their respective terms except as may be limited by
bankruptcy, insolvency reorganization, moratorium, arrangement,
fraudulent conveyance, fraudulent transfer or other similar laws
relating to or affecting creditors' rights generally or by general
equitable principles, and except that no opinion need be expressed
regarding Section 606 of the Indenture or Section 8.2 of the Guarantee
and except as rights to indemnity and contribution may be limited by
applicable law or public policy;
(v) the Registration Statement has become effective under
the Securities Act (assuming compliance with clause (2) of Rule 462(b)
in the case of any Additional Registration Statement) and, to the best
of such counsel's knowledge, no stop order suspending its
effectiveness has been issued and no proceedings for that purpose are
pending before or contemplated by the Commission;
(vi) the statements under the captions "Description of
Capital Stock" (other than statements under such caption (i) regarding
the number of outstanding shares of any class or series of capital
stock, (ii) the number of shares of Common Stock issuable upon
conversion of the Series B Preferred Stock (as defined in the
Prospectus) or the number of votes per share of Series B Preferred
Stock, or (iii) in the first sentence of the second paragraph and the
last sentence of the third paragraph under the subcaption "--
Preferred Stock -- Series B Preferred Stock"), "Description of Debt
Securities," (other than statements under such caption regarding the
Senior Debt Securities and the
30
Senior Indenture (as such terms are defined in the Prospectus)),
"Description of the TECONS (other than the statements under the
subcaption "-- Book-Entry Only Issuance -- The Depository Trust
Company"), "Description of the Guarantee," "Description of the
Convertible Debentures" (other than the statements under the sub-
captions "-- Book-Entry and Settlement" and "-- The Depository"),
"Description of Trust Preferred Securities," and "Description of
Preferred Securities Guarantee," in the Prospectus, insofar as such
statements constitute a summary of certain provisions of the
Indenture, the Debentures, the Declaration, the Securities, the
Guarantee or the Company's charter and by-laws (assuming for such
purpose that the Declaration and the Securities and all rights and
obligations thereunder were governed by and construed in accordance
with the internal laws of the State of New York) accurately summarize
such provisions in all material respects;
(vii) Although the discussion set forth in the Prospectus
under the caption "Certain Federal Tax Consequences" does not purport
to discuss all possible United States federal income tax consequences
of the purchase, ownership and disposition of the Securities, such
discussion constitutes, in all material respects, a fair and accurate
summary of the United States federal income tax consequences of the
purchase, ownership and disposition of the Securities under current
law;
(viii) The Trust will be classified for United States
federal income tax purposes as a grantor trust and not as an
association taxable as a corporation;
(ix) To such counsel's knowledge, no consent, approval,
authorization or other order of any federal regulatory body,
administrative agency or other governmental body of the United States
of America or any state regulatory body, administrative agency or
other governmental body of the States of California or New York is
legally required under Applicable Laws for the issuance and sale of
the Securities to the Underwriters as contemplated by this Agreement
or the public offering of the Securities contemplated by the
Prospectus. Such counsel may state that, for purposes of such
opinion, the term "Applicable Laws" means those state laws of the
State of California and the State of New York, federal laws of the
United States of America and portions of the DGCL which, in the
experience of such counsel, are normally applicable to transactions of
the type contemplated by the Underwriting Agreement (provided that the
term "Applicable Laws" shall not include federal or state securities
or blue sky laws, the Trust Indenture Act or the rules and
31
regulations of the Commission thereunder, the 1940 Act, any antifraud
laws, any law or regulation relating to transportation, aviation or
similar matters, or any law, rule or regulation that may have become
applicable as a result of any Underwriter's involvement with the
transactions contemplated by this Agreement or because of any facts
specifically pertaining to any Underwriter), but without such counsel
having made any special investigation concerning the applicability of
any other law, rule or regulation;
(x) the Common Stock initially issuable upon conversion of
the Debentures has been duly authorized by the Company and validly
reserved for issuance by the Company upon such conversion by all
necessary corporate action on the part of the Company and such Common
Stock, when duly issued upon such conversion in accordance with terms
of the Indenture and at conversion prices at or in excess of the par
value of the Common Stock at the time, will be validly issued and
fully paid and non-assessable; no holder of Common Stock is subject to
personal liability under the DGCL solely by reason of being such a
holder; and the issuance of such Common Stock upon such conversion is
not subject to preemptive rights arising under the certificate of
incorporation or by-laws of the Company or the DGCL.
Xxxxx & Xxxx LLP shall further state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the independent public accountants for the Company
and your representatives, at which conferences the contents of the Registration
Statement, Prospectus and related matters were discussed, and although such
counsel has not independently verified and is not passing upon and assumes no
responsibility for the accuracy, completeness or fairness of the statements
included or incorporated by reference in the Registration Statement, the
Prospectus or the documents incorporated or deemed to be incorporated by
reference therein and has made no independent verification thereof (A) such
counsel is of the opinion that the Registration Statement, as amended if
applicable, except for financial statements and schedules and other financial or
statistical data included or incorporated by reference therein or omitted
therefrom, the documents incorporated by reference therein, the exhibits thereto
and other than any Form T-1, as to which no opinion need be expressed, at the
time the most recent post-effective amendment thereto was declared effective,
complied as to form in all material respects with the applicable requirements of
the Securities Act and (B) no facts have come to such counsel's attention which
led them to believe that the Registration Statement (other than financial
statements and schedules and other financial or statistical data included or
incorporated by reference therein or omitted therefrom and other than any Form
T-1, as to which no statement need be made) at the effective date of the most
recent post-effective amendment thereto, contained any untrue statement of a
material fact or omitted to state a material fact
32
required to be stated therein or necessary to make the statements therein not
misleading, or the Prospectus (other than financial statements and schedules and
other financial or statistical data included or incorporated by reference
therein or omitted therefrom, as to which no statement need be made), as of the
date of the Prospectus Supplement or the Closing Date, included 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. Such counsel may further state that any
opinions as to good standing or due qualification of the Company or any of its
subsidiaries are based solely upon good standing and other similar certificates
of public officials. Such counsel may further state that such opinion is limited
to matters arising under the federal laws of the United States of America, the
laws of the States of California and New York and the DGCL, and such counsel
expresses no opinion as to the laws of any other jurisdiction or, in the case of
Delaware, any other Delaware laws, or as to the municipal laws or the laws of
any other local agencies or governmental authorities within the States of
California and New York or any matters arising thereunder or relating thereto.
In rendering their opinions above, Xxxxx & Wood LLP may rely as to
factual matters on such certificates of the Company's officers, the Regular
Trustees, or of governmental officials as they may deem relevant or necessary
for such opinions and as to matters governed by other than federal or California
or New York law or by the DGCL on opinions of local counsel.
(g) The Underwriters shall have received on and as of the Closing
Date or Option Closing Date, as the case may be, an opinion of Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP, counsel to the Underwriters, with respect
to the due authorization and valid issuance of the Securities, the
Registration Statement, the Prospectus and other related matters as the
Underwriters may reasonably request, and such counsel shall have received
such papers and information as they may reasonably request to enable them
to pass upon such matters.
In addition, Skadden, Arps, Slate, Xxxxxxx and Xxxx LLP, will make a
statement to the effect that such counsel has participated in conferences with
officers and other representatives of the Company and representatives of the
independent public accountants for the Company, at which conferences the
contents of the Registration Statement, Prospectus and related matters were
discussed, and, although such counsel has not independently verified and is not
passing upon and assume no responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement, except as
specified, no facts have come to such counsel's attention which lead such
counsel to believe that the Registration Statement (other than any financial
statements or other financial or statistical information therein and that part
of the Registration Statement that constitutes the
33
Form T-1 as to which no opinion is expressed) at the effective date of the most
recent post-effective amendment thereto contained any untrue statement or a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements contained therein not misleading, or
that the Prospectus as of its date or the Closing Date (other than any financial
statements or other financial or statistical information therein as to which no
opinion is expressed), contained any untrue statement of a material fact or
omitted to state any material fact necessary to make the statements contained
therein, in the light of the circumstances under which they were made, not
misleading.
(h) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing
Date, or Option Closing Date, as the case may be, of Xxxxxxxx, Xxxxxx &
Finger, P.A., special counsel for the Trust, to the effect that:
(i) the Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware Act
and under the Declaration and the Delaware Act has the business trust
power and authority to conduct its business as described in the
Registration Statement and Prospectus;
(ii) assuming due authorization, execution and delivery of
the Declaration by the Company and the Trustees, the Declaration is a
legal, valid and binding agreement of the Company and the Trustees,
enforceable against the Company and the Trustees in accordance with
its terms, except as (a) the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, receivership, reorganization,
liquidation, fraudulent conveyance or other similar laws relating to
or affecting the rights and remedies of creditors generally, (b)
principles of equity, including applicable laws relating to fiduciary
duties (regardless of whether considered and applied in a proceeding
in equity or at law) and (c) the effect of the applicable public
policy on the enforceability of provisions relating to indemnification
and contribution;
(iii) under the Declaration and the Delaware Act, (x) the
Trust has the requisite trust power and authority to execute and
deliver, and to perform its obligations under, this Agreement and to
issue and perform its obligations under the Trust Securities and (y)
the execution and delivery of this Agreement by the Trust, and the
performance by the Trust of its obligations hereunder, have been duly
authorized by all business trust action on the part of the Trust;
34
(iv) the Trust Securities have been duly authorized by the
Declaration and (x) when the Securities are issued in accordance with
the terms of this Agreement and delivered to and paid for by the
Underwriters and (y) the Common Securities are issued against payment
therefor as provided in the Declaration, such Trust Securities will be
duly and validly issued and the Securities will be fully paid and
nonassessable undivided beneficial interests in the assets of the
Trust; the holders of Securities, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended
to stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware;
(v) under the Declaration and the Delaware Act, the
issuance of the Trust Securities is not subject to preemptive rights;
(vi) no authorization, approval, consent or order of any
Delaware court or governmental authority or agency is required to be
obtained by the Trust solely in connection with the issuance of the
Securities;
(vii) assuming that the Trust is a grantor trust for
Federal income tax purposes the holders of the Securities (other than
holders of the Securities who reside or are domiciled in the State of
Delaware) will have no liability for income taxes imposed by the State
of Delaware solely as a result of participation in the Trust, and the
Trust will not be liable for any income tax imposed by the State of
Delaware; and
(viii) We have reviewed the statements in the Prospectus
under the captions "The Trust" and "CNF Trust I" and, insofar as they
contain statements of Delaware law, such statements are fairly
presented.
In rendering such opinion, such counsel may note that holders of Trust
Securities may be obligated, pursuant to the Declaration, to (i) provide
indemnity and security in connection with and pay taxes or other governmental
charges arising from transfers of certificates for Trust Securities and the
issuance of replacement certificates for Trust Securities, (ii) provide security
and indemnity in connection with requests of or directions to the Property
Trustee to exercise its rights and remedies under the Declaration and (iii)
undertake as a party litigant to pay costs in any suit for the enforcement of
any right or remedy under the Declaration or against the Property Trustee, to
the extent provided in the Declaration. In rendering such opinion such counsel
may also note that the Company, in its capacity as Sponsor and not in its
capacity as a holder, has undertaken certain payment obligations as set forth in
the Declaration.
35
(i) You shall have received a letter on and as of the date of
this Agreement, in form and substance satisfactory to you, from Xxxxxx
Xxxxxxxx LLP independent public accountants, with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus, and you shall have received a letter on and
as of the Closing Date or Option Closing Date, as the case may be, in form
and substance satisfactory to you, from Xxxxxx Xxxxxxxx LLP, confirming the
letter delivered on the date of this Agreement.
(j) The Securities to be delivered on the Closing Date or the
Option Closing Date, as the case may be, shall have been approved for
listing on the Exchange, subject to official notice of issuance.
(k) The "lock-up" letters, each substantially in the form of
Exhibit A hereto, from certain directors and executive officers of the
---------
Company as set forth in Exhibit B hereto relating to sales and certain
---------
other dispositions of shares of Common Stock or certain other securities,
shall have been delivered to you on or before the date hereof, and shall be
in full force and effect on the Closing Date.
(l) The Company and the Trust shall not have failed at or prior
to the Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the Company or
the Trust at or prior to the Closing Date.
The several obligations of the Underwriters to purchase any Additional
Securities hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Trust and the Company, the due authorization and issuance
of such Additional Securities and other matters related to the issuance of such
Additional Securities.
9. Effective Date of Agreement and Termination. This Agreement
-------------------------------------------
shall become effective upon the later of (i) execution of this Agreement and
(ii) when notification of the effectiveness of the Registration Statement has
been released by the Commission.
This Agreement may be terminated at any time prior to the Closing Date
by you by written notice to the Company if any of the following has occurred:
(i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or
development involving a prospective material adverse change in the condition,
financial or otherwise, or the earnings, affairs, or business prospects of the
Company and its subsidiaries, considered as one enterprise, whether or not
arising in the ordinary course of business, which would, in your judgment, make
it impracti-
36
cable to market the Securities on the terms and in the manner contemplated in
the Prospectus, (ii) any outbreak or escalation of hostilities or other
national or international calamity or crisis or material change in economic
conditions, if the effect of such outbreak, escalation, calamity, crisis or
change on the financial markets of the United States or elsewhere would, in your
judgment, make it impracticable to market the Securities on the terms and in the
manner contemplated in the Prospectus, (iii) the suspension or material
limitation of trading in securities on the Exchange, the American Stock Exchange
or the NASDAQ National Market System or limitation on prices for securities on
any such exchange or National Market System, (iv) trading of any securities of
the Company shall have been suspended on any exchange, (v) the declaration of a
banking moratorium by either federal, California or New York State authorities
or (vi) the taking of any action by any federal, state or local government or
agency in respect of its monetary or fiscal affairs which in your judgment has a
material adverse effect on the financial markets in the United States and would,
in your judgment, make it impracticable to market the Securities on the terms
and in the manner contemplated by the Prospectus.
If on the Closing Date or on an Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase the
Securities which it or they have agreed to purchase hereunder on such date and
the aggregate Firm Securities or Additional Securities, as the case may be,
which such defaulting Underwriter or Underwriters, as the case may be, agreed
but failed or refused to purchase is not more than one-tenth of the total number
of Securities to be purchased by all Underwriters on such date, each non-
defaulting Underwriter shall be obligated severally, in the proportion which the
number of Securities set forth opposite its name in Schedule I bears to the
aggregate number of Firm Securities which all the non-defaulting Underwriters
have agreed to purchase, or in such other proportion as you may specify, to
purchase the Securities which such defaulting Underwriter or Underwriters, as
the case may be, agreed but failed or refused to purchase on such date; provided
--------
that in no event shall the number of Firm Securities or Additional Securities,
as the case may be, which any Underwriter has agreed to purchase pursuant to
Section 2 hereof be increased pursuant to this Section 9 by an amount in excess
of one-ninth of such number of Firm Securities or Additional Securities, as the
case may be, without the written consent of such Underwriter. If on the Closing
Date or on an Option Closing Date, as the case may be, any Underwriter or
Underwriters shall fail or refuse to purchase Securities and the aggregate
number of Firm Securities or Additional Securities, as the case may be, with
respect to which such default occurs is more than one-tenth of the aggregate
number of Securities to be purchased on such date by all Underwriters and
arrangements satisfactory to you and the Company for purchase of such Securities
are not made within 48 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter and the 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
37
the Closing Date or on the Option Closing Date, as the case may be, but in no
event for longer than seven days, in order that the required changes, if any, in
the Registration Statement and the Prospectus or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
any such Underwriter under this Agreement.
10. Miscellaneous. Notices given pursuant to any provision of this
-------------
Agreement shall be addressed as follows: (a) if to the Trust, to CNF Trust I,
c/o CNF Transportation Inc., 0000 Xxxxxxxx Xxxxxx, Xxxx Xxxx, XX 00000,
Attention: General Counsel; (b) if to the Company, to CNF Transportation Inc.,
0000 Xxxxxxxx Xxxxxx, Xxxx Xxxx, XX 00000, Attention: General Counsel and (c)
if to any Underwriter or to you, to you c/o X.X. Xxxxxx Securities Inc., 00 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Syndicate Department, or in any
case to such other address as the person to be notified may have requested in
writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Trust and of the several
Underwriters set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Securities, regardless of (i) any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter or by or on behalf of
the Company, the officers or directors of the Company or any controlling person
of the Company or by or on behalf of the Trust, the Trustees or the officers or
any controlling person of the Trust, (ii) acceptance of the Securities and
payment for them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Underwriters because of
any failure or refusal on the part of the Trust or the Company to comply with
the terms or to fulfill any of the conditions of this Agreement, the Company
agrees to reimburse the several Underwriters for all out-of-pocket expenses
(including the reasonable fees and disbursements of counsel) reasonably incurred
by them.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of the Trust, the Company, the Underwriters, any
controlling persons referred to herein, the Trustees, the officers and directors
referred to in Section 7 hereof and their respective successors, assigns, heirs
and legal representatives, and shall be binding upon the Trust, the Company and
the Underwriters and their respective successors and assigns, all as and to the
extent provided in this Agreement, and no other person shall acquire or have any
right under or by virtue of this Agreement. The term "successors and assigns"
shall not include a purchaser of any of the Securities from any of the several
Underwriters merely because of such purchase.
38
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS
PROVISIONS THEREOF.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
39
Please confirm that the foregoing correctly sets forth the agreement
among the Trust, the Company and the Underwriters.
Very truly yours,
CNF TRUST I,
a Delaware statutory business trust
By: CNF TRANSPORTATION INC.,
as Sponsor
By___________________________
Title:
CNF TRANSPORTATION INC.
By___________________________
Title:
X.X. XXXXXX SECURITIES INC.
XXXXXXX, SACHS & CO.
XXXXXXX XXXXX & CO.
By: X.X. Xxxxxx Securities Inc.
By_______________________
Title:
40
SCHEDULE I
----------
Number of Firm Securi-
Underwriters ties to be Purchased
------------ ----------------------
X.X. Xxxxxx Securities Inc. 733,334
Xxxxxxx, Sachs & Co. 733,333
Xxxxxxx Xxxxx & Co 733,333
---------
Total 2,200,000
41
EXHIBIT A
______________ __, 1997
X.X. XXXXXX SECURITIES INC.
XXXXXXX, XXXXX & CO.
XXXXXXX XXXXX & CO.
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: CNF Trust I
-----------
Ladies and Gentlemen:
The undersigned understands that X.X. Xxxxxx Securities Inc., Xxxxxxx, Sachs &
Co. and Xxxxxxx Xxxxx & Co. (the "Underwriters") intend to enter into an
Underwriting Agreement (the "Underwriting Agreement") with the Company and CNF
Trust I, a statutory business trust formed under the laws of the State of
Delaware (the "Trust"), providing for the offering of term convertible preferred
securities (the "TECONS") of the Trust.
To induce the Underwriters to enter into the Underwriting Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the undersigned hereby agrees that, without the prior
written consent of X.X. Xxxxxx Securities Inc., the undersigned will not, during
the period commencing on the date of the Underwriting Agreement and ending 90
days after the date of the Underwriting Agreement, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any equity securities
of the Company, the Trust or any similar trust affiliated with the Company or
any securities convertible into or exchangeable or exercisable for any equity
securities of the Company, the Trust or any similar trust affiliated with the
Company, whether now owned or hereafter acquired by the undersigned or with
respect to which the undersigned has or hereafter acquires the power of
disposition, or (ii) enter into any swap or any other agreement or arrangement
that transfers to another, in a whole or in part, directly or indirectly, any of
the economic consequences of ownership of any equity securities of the Company,
the Trust or any similar trust affiliated with the Company, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of any equity securities of the Company, the Trust or any such similar trust
affiliated with the Company, other securities, in cash or otherwise.
Notwithstanding the
42
foregoing, (a) the undersigned may transfer, pledge or otherwise dispose of any
equity securities of the Company, the Trust or any similar trust affiliated with
the Company, or any securities convertible into or exchangeable or exercisable
for any equity securities of the Company, the Trust or any similar trust
affiliated with the Company, to any present or former spouse of the undersigned
or persons who are directly or indirectly related to the undersigned or to any
present or former spouse of the undersigned by blood, marriage or adoption
(collectively, "Related Persons"), to a trust or similar arrangement established
for or for the benefit of the undersigned or any Related Persons, or to any
educational or charitable institution or organization, provided that in each
instance the transferee agrees to be similarly bound; and (b) this agreement
shall not restrict the transfer or disposition of any securities by will,
pursuant to the terms of any so-called family or similar trust, or by testate or
intestate succession.
If the offering of TECONS has not been closed 10 days after the effective date
of the Underwriting Agreement, this agreement shall be of no further force or
effect.
This agreement shall be governed by and construed in accordance with the laws of
the State of New York.
Very truly yours,
Signature: _____________________
Print Name: ____________________
43
EXHIBIT B
---------
Persons Executing Lock-up Letters
---------------------------------
Xxxxxx X. Xxxxxxx
Xxxxxx Xxxxxx
Xxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxx
Xxxxxx Xxxxxxx XX
W. Xxxxx Xxxxxxx, Jr.
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxxx X. X. Xxxxxxxxx
Xxxx X. Xxxxxxxxx
