EXHIBIT 1.1
THE READER'S DIGEST ASSOCIATION, INC.
CLASS A NONVOTING COMMON STOCK
(par value $0.01 per share)
UNDERWRITING AGREEMENT
__________, 1999
Xxxxxxx, Xxxxx & Co.,
Lazard Freres & Co. LLC,
As representatives of the several
Underwriters named in
Schedule I hereto,
c/o Goldman, Xxxxx & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Certain stockholders named in Schedule II hereto (the "Selling
Stockholders") of The Reader's Digest Association, Inc., a Delaware
corporation (the "Company"), propose, subject to the terms and conditions
stated herein, to sell to the Underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of 10,000,000 shares (the "Firm Shares") and,
at the election of the Underwriters, up to 1,500,000 additional shares (the
"Optional Shares") of Class A Nonvoting Common Stock, par value $0.01 per
share ("Stock"), of the Company (the Firm Shares and the Optional Shares
which the Underwriters elect to purchase pursuant to Section 2 hereof are
herein collectively called the "Shares").
1. (a) The Company represents and warrants to, and agrees with, each
of the Underwriters and the Selling Stockholders that:
(i) A registration statement on Form S-3 (File No.
333-_____) (the "Initial Registration Statement") in respect of the
Shares has been filed with the Securities and Exchange Commission (the
"Commission"); the Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore
delivered to you, and, excluding exhibits thereto but including all
documents incorporated by reference in the prospectus contained
therein, to you for delivery to each of the other Underwriters, have
been declared effective by, or have been filed with, as the case may
be, the Commission in such form; other than a registration statement,
if any, increasing the size of the offering (a "Rule 462(b)
Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act"), which became effective
upon filing, no other document with respect to either the Initial
Registration Statement or any document incorporated by reference
therein has heretofore been filed with the Commission; and no stop
order suspending the effectiveness of the Initial Registration
Statement, any post-effective amendment thereto or the Rule 462(b)
Registration Statement, if any, has been issued and no notice has been
received from the Commission by the Company that any proceeding for
that purpose has been initiated or threatened by the Commission (any
preliminary prospectus included in the Initial Registration Statement
or filed with the Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Securities Act of 1933, as
amended (the "Act"), is hereinafter called a "Preliminary Prospectus";
the various parts of the Initial Registration Statement or the Rule
462(b) Registration Statement, if any, including all exhibits thereto
and including (A) the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b) under the
Act in accordance with Section 5(a) hereof and deemed by virtue of
Rule 430A under the Act to be part of the Initial Registration
Statement at the time it was declared effective and (B) the documents
incorporated by reference in the prospectus contained in the Initial
Registration Statement at the time such part of the Initial
Registration Statement became effective as amended at the time such
part of the Initial Registration Statement became effective or such
part of the Rule 462(b) Registration Statement if any, became or
hereafter becomes effective, are hereinafter collectively called the
"Registration Statement"; such final prospectus, in the form first
filed pursuant to Rule 424(b) under the Act, is hereinafter called the
"Prospectus"; any reference herein to any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act, as of the date of such Preliminary Prospectus or
Prospectus, as the case may be; any reference to any amendment or
supplement to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include any documents filed after the date of
such Preliminary Prospectus or Prospectus, as the case may be, under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; and any reference to any amendment to
the Registration Statement shall be deemed to refer to and include any
annual report of the Company filed pursuant to Section 13(a) or 15(d)
of the Exchange Act after the effective date of the Initial
Registration Statement that is incorporated by reference in the
Registration Statement);
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in
all material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, 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, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing
to the Company by an Underwriter through Xxxxxxx, Sachs & Co. or by a
Selling Stockholder expressly for use therein;
(iii) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder, and none of
such documents contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and any
further documents so filed and incorporated by reference in the
Prospectus or any further amendment or supplement thereto, when such
documents become effective or are filed with the Commission, as the
case may be, will conform in all material respects to the requirements
of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing
to the Company by an Underwriter through Xxxxxxx, Xxxxx & Co. or by a
Selling Stockholder expressly for use therein;
(iv) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration
Statement or the Prospectus, when they become effective or are filed
with the Commission, will conform, in all material respects to the
requirements of the Act and the rules and regulations of the
Commission thereunder 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 applicable filing date as to the Prospectus and
any amendment or supplement thereto, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through Xxxxxxx, Sachs & Co. or by a Selling Stockholder
expressly for use therein;
(v) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any loss or
interference, material to the Company and its subsidiaries taken as a
whole, 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 incorporated by reference in the Prospectus; and,
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any
change in the capital stock of the Company (other than in connection
with the issuance of Stock in the ordinary course of business pursuant
to the Company's 1989 Key Employee Long Term Incentive Plan, the 1994
Key Employee Long Term Incentive Plan, the Employee Ownership Plan and
401(K) Partnership and the Employee Stock Purchase Plan described in
the Prospectus) or any of its subsidiaries, any change in the
short-term debt or long-term debt of the Company or any of its
subsidiaries, which change is material to the Company and its
subsidiaries, taken as a whole, or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus;
(vi) The Company has good and marketable title in fee simple
to its headquarters and principal operating facilities in Westchester
County, New York free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property
by the Company and its subsidiaries; and the Company or a subsidiary
of the Company has good and marketable title in fee simple, or, in
jurisdictions outside of the United States, the substantive equivalent
thereto, to all other real property and good and marketable title to
all personal property owned by the Company or a subsidiary of the
Company, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Prospectus or such as do
not in the aggregate materially affect the business or financial
condition of the Company and its subsidiaries, taken as a whole; and
any real property and buildings held under lease by the Company or a
subsidiary of the Company are held by the Company or a subsidiary of
the Company under valid, subsisting and enforceable leases with such
exceptions as do not, in the aggregate, materially adversely affect
the business or financial condition of the Company and its
subsidiaries, taken as a whole;
(vii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority to own its properties and
conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and
is in good standing under the laws of each other jurisdiction in which
it owns or leases properties or conducts any business so as to require
such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified or in good
standing in any such jurisdiction; and each subsidiary of the Company
has been duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation, or,
in jurisdictions outside of the United States, the substantive
equivalent thereto, with power and authority (corporate and other) to
own its properties and conduct its business as described in the
Prospectus, except that no representation is made with respect to any
currently inactive subsidiary of the Company;
(viii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and conform to the description of the
Stock contained in the Prospectus; and all of the issued shares of
capital stock of each subsidiary of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable, or
the substantive equivalent thereto, and (except for directors'
qualifying shares) are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims;
(ix) The compliance by the Company with all of the
provisions of this Agreement and the consummation of the transactions
herein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the consummation by the
Company of the transactions contemplated by this Agreement, except the
registration under the Act of the Shares and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters;
(x) Neither the Company nor any of its subsidiaries is in
violation of its certificate of incorporation or by-laws or in default
in the performance or observance of any obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which
it is a party or by which it or its properties may be bound other than
any violation or default which would not have a material adverse
effect on the Company and its subsidiaries taken as a whole;
(xi) The statements set forth in the Prospectus under the
caption "Description of Capital Stock", insofar as they purport to
constitute a summary of the terms of the Stock, present fairly the
information disclosed therein in all material respects;
(xii) Other than as set forth in the Prospectus, there are
no legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which the Company
has reasonable cause to believe would individually or in the aggregate
have a material adverse effect on the current or future consolidated
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries; and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(xiii) The Company is not an "investment company" or an
entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act" and, together with the Act, the "Acts");
(xiv) The Stock is listed on the New York Stock Exchange;
(xv) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida
Statutes;
(xvi) KPMG LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of
the Commission thereunder;
(xvii) The Company has reviewed its operations and that of
its subsidiaries and any third parties with which the Company or any
of its subsidiaries has a material relationship to evaluate the extent
to which the business or operations of the Company or any of its
subsidiaries will be affected by the Year 2000 Problem. As a result of
such review, the Company has no reason to believe, and does not
believe, that the Year 2000 Problem will have a material adverse
effect on the general affairs, management, the current or future
consolidated financial position, business prospects, stockholders'
equity or results of operations of the Company and its subsidiaries
taken as a whole or result in any material loss or interference with
the Company's business or operations. The "Year 2000 Problem" as used
herein means any significant risk that computer hardware or software
used in the receipt, transmission, processing, manipulation, storage,
retrieval, retransmission or other utilization of data or in the
operation of mechanical or electrical systems of any kind will not, in
the case of dates or time periods occurring after December 31, 1999,
function at least as effectively as in the case of dates or time
periods occurring prior to January 1, 2000.
(xviii) The Company owns all the patents, trademarks, service
marks, trade names and copyrights or licenses rights with respect to
the foregoing necessary for the present and planned future conduct of
its business, except where the failure to own or license the same
would not have a material adverse effect on the business or condition,
financial or otherwise, of the Company and its subsidiaries, taken as
a whole, without any known conflict with the rights of others, the
result of which conflict could materially and adversely affect the
business or condition, financial or otherwise, of the Company and its
subsidiaries, taken as a whole, and to the knowledge of the Company
there is no infringement of such patents, trademarks, service marks,
trade names and copyrights by others, the result of which infringement
could materially and adversely affect the business or condition,
financial or otherwise, of the Company and its subsidiaries, taken as
a whole; and
(xiv) The Company has obtained from each of the Selling
Stockholders and [list supporting organizations that are not selling
stockholders], a letter agreement to the Underwriters in which each
signatory agrees substantially to the effect of (b) (iv) below
(including with respect to the voting stock); each such letter
agreement has been delivered to the Underwriters and is in full force
and effect and the terms thereof have been complied with on and as of
the date hereof.
(b) Each Selling Stockholder severally represents and warrants
to, and agrees with, each of the Underwriters and the Company that:
(i) The compliance by such Selling Stockholder with all of
the provisions of this Agreement, the power of attorney in connection
with this transaction (the "Power of Attorney") and the Custody
Agreement in connection with this transaction (the "Custody
Agreement"), each to which such Selling Stockholder is a party, and
the consummation of the transactions herein and therein contemplated
will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which such Selling Stockholder is a party or by which
such Selling Stockholder is bound or to which any of the property or
assets of such Selling Stockholder is subject, nor will such action
result in any violation of the provisions of the Certificate of
Incorporation or By-laws of such Selling Stockholder, or any statute
or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over such Selling Stockholder or any of
the property of such Selling Stockholder; and no consent, approval,
authorization, order, registration or qualification of or with any
such court or governmental agency or body is required for the
execution and delivery of or compliance by such Selling Stockholder
with or the consummation by such Selling Stockholder of the
transactions contemplated by this Agreement, the Power of Attorney to
which such Selling Stockholder is a party or the Custody Agreement to
which such Selling Stockholder is a party, except the registration
under the Act of the Shares and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares;
(ii) This Agreement has been duly authorized, executed and
delivered by such Selling Stockholder. The Power of Attorney and the
Custody Agreement, each to which such Selling Stockholder is a party,
have been duly authorized, executed and delivered by such Selling
Stockholder and, assuming due authorization, execution and delivery by
the other parties thereto, constitute valid and legally binding
agreements of such Selling Stockholder, enforceable in accordance with
their respective terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(iii) Such Selling Stockholder has, and immediately prior to
each Time of Delivery (as defined in Section 4(a) hereof) such Selling
Stockholder will have, good and valid title to the Shares to be sold
by such Selling Stockholder hereunder, free and clear of all liens,
encumbrances, equities or claims; and upon delivery of such Shares and
payment therefor pursuant hereto, good and valid title to such Shares,
free and clear of all liens, encumbrances, equities or claims, will
pass to the several Underwriters;
(iv) During the period beginning from the date hereof and
continuing to and including the date 180 days after the First Time of
Delivery (as defined herein), such Selling Stockholder will not offer,
sell, contract to sell or otherwise dispose of any Shares or any
securities of the Company that are substantially similar to the
Shares, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to
receive, Shares or any such substantially similar securities without
prior written consent of you, as the representatives of the
Underwriters, except as provided hereunder, pursuant to the Purchase
Contracts in connection with the February 13, 1998 offering of Trust
Automatic Common Exchange Securities, or pursuant to bona fide grants
to persons who agree in writing with you to be bound by the provisions
of this clause; provided, however, that in the event the Company
enters into a definitive business combination agreement providing for
the acquisition of the Company by, or the merger of the Company with,
a third party in which substantially all of the outstanding Shares or
assets of the Company are acquired by such third party, this provision
shall not prohibit such Selling Stockholder from tendering its Shares
into any tender offer or exchange offer, or from voting its Shares in
favor of any transaction, contemplated by such agreement;
(v) Such Selling Stockholder has not taken and will not
take, directly or indirectly, any action which is designed to or which
has constituted or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Shares; and
(vi) To the extent that any statements or omissions made in
the Registration Statement, any Preliminary Prospectus, the Prospectus
or any amendment or supplement thereto are made in reliance upon and
in conformity with written information furnished to the Company by
such Selling Stockholder expressly for use therein, such Preliminary
Prospectus and the Registration Statement did, and the Prospectus and
any further amendments or supplements to the Registration Statement
and the Prospectus, when they become effective or are filed with the
Commission, as the case may be, will conform in all material respects
to the requirements of the Acts and the rules and regulations of the
Commission thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
In order to document the Underwriters' compliance with the reporting
and withholding provisions of the Tax Equity and Fiscal Responsibility Act
of 1982 with respect to the transactions herein contemplated, each of the
Selling Stockholders agrees to deliver to you prior to or at the First Time
of Delivery (as hereinafter defined) a properly completed and executed
United States Treasury Department Form W-9 (or other applicable form or
statement specified by Treasury Department regulations in lieu thereof).
Each of the Selling Stockholders represents and warrants that
certificates in negotiable form representing all of the Shares to be sold
by such Selling Stockholder hereunder have been placed in custody under a
Custodial Agreement, in the form heretofore furnished to you, duly executed
and delivered by such Selling Stockholder to [The Bank of New York,] as
custodian (the "Custodian"), and that such Selling Stockholder has duly
executed and delivered a Power of Attorney, in the form heretofore
furnished to you, appointing the persons indicated in Schedule II hereto,
and each of them, as such Selling Stockholder's attorneys-in-fact (the
"Attorneys-in-Fact") with authority to execute and deliver this Agreement
on behalf of such Selling Stockholder, to authorize the delivery of the
Shares to be sold by such Selling Stockholder hereunder and otherwise to
act on behalf of such Selling Stockholder in connection with the
transactions contemplated by this Agreement and the Custody Agreement.
Each of the Selling Stockholders specifically agrees that the
Shares represented by the certificates held in custody for such Selling
Stockholder under the Custody Agreement are subject to the interests of the
Underwriters hereunder, and that the arrangements made by such Selling
Stockholder for such custody, and the appointment by such Selling
Stockholder of the Attorneys-in-Fact by the Power of Attorney, are to that
extent irrevocable. Each of the Selling Stockholders specifically agrees
that the obligations of the Selling Stockholders hereunder shall not be
terminated by operation of law, whether by the dissolution of any Selling
Stockholder, or by the occurrence of any other event. If any Selling
Stockholder should be dissolved, or if any other such event should occur,
before the delivery of the Shares hereunder, certificates representing the
Shares shall be delivered by or on behalf of the Selling Stockholders in
accordance with the terms and conditions of this Agreement and of the
Custody Agreements, as appropriate, and actions taken by the
Attorneys-in-Fact pursuant to the Powers of Attorney shall be as valid as
if such dissolution or other event had not occurred, regardless of whether
or not the Custodian, the Attorneys-in-Fact, or any of them, shall have
received notice of such dissolution or other event.
2. Subject to the terms and conditions herein set forth, (a) each of
the Selling Stockholders agrees, severally and not jointly, to sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from each of the Selling Stockholders, at a purchase
price per share of $_____, the number of Firm Shares (to be adjusted by you
so as to eliminate fractional shares) determined by multiplying the
aggregate number of Shares to be sold by each of the Selling Stockholders
as set forth opposite their respective names in Schedule II hereto by a
fraction, the numerator of which is the aggregate number of Firm Shares to
be purchased by such Underwriter as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the
aggregate number of Firm Shares to be purchased by all of the Underwriters
from all of the Selling Stockholders hereunder and (b) in the event and to
the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, each of the Selling Stockholders agrees,
severally and not jointly, to sell to each of the Underwriters, and each of
the Underwriters agrees, severally and not jointly, to purchase from each
of the Selling Stockholders, at the purchase price per share set forth in
clause (a) of this Section 2, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you
so as to eliminate fractional shares) determined by multiplying such number
of Optional Shares by a fraction the numerator of which is the maximum
number of Optional Shares which such Underwriter is entitled to purchase as
set forth opposite the name of such Underwriter in Schedule I hereto and
the denominator of which is the maximum number of Optional Shares that all
of the Underwriters are entitled to purchase hereunder.
The Selling Stockholders, as and to the extent indicated in Schedule
II hereto, hereby grant, severally and not jointly, to the Underwriters the
right to purchase at their election up to 1,500,000 Optional Shares, at the
purchase price set forth in clause (a) of the first paragraph of this
Section 2, for the sole purpose of covering overallotments in the sale of
the Firm Shares. Any such election to purchase Optional Shares shall be
made in proportion to the maximum number of Optional Shares to be sold by
each Selling Stockholder as set forth in Schedule II hereto among the
Selling Stockholders in proportion to the maximum number of Optional Shares
to be sold by each Selling Stockholder as set forth in Schedule II hereto.
Any such election to purchase Optional Shares may be exercised only by
written notice from you to the Attorneys-in-Fact (with copies to Xxxxxxx
Xxxxxx, Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, Xxx Xxx Xxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 and [Xxxxxx Xxxxxxx][Xxxxxx Xxxxxxx], Xxxxxxxx &
Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 10022), given within a
period of 30 calendar days after the date of this Agreement, setting forth
the aggregate number of Optional Shares to be purchased and the date on
which such Optional Shares are to be delivered, as determined by you but in
no event earlier than the First Time of Delivery (as defined in Section
4(a) hereof) or, unless you and the Attorneys-in-Fact otherwise agree in
writing, earlier than two or later than ten business days after the date of
such notice.
3. Upon the authorization by you of the release of the Firm Shares,
the several Underwriters propose to offer the Firm Shares for sale upon the
terms and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in
such names as Xxxxxxx, Sachs & Co. may request upon at least forty-eight
hours' prior notice to the Selling Stockholders, shall be delivered by or
on behalf of the Selling Stockholders to Xxxxxxx, Xxxxx & Co., through the
facilities of the Depository Trust Company ("DTC") for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the
purchase price therefor by wire transfer or certified or official bank
check or checks in Federal (same day) funds to the account specified by
each of the Selling Stockholders, to Xxxxxxx, Sachs & Co. at least
forty-eight hours in advance. The Company will cause the certificates
representing the Shares to be made available for checking and packaging at
least twenty-four hours prior to the Time of Delivery (as defined below)
with respect thereto at the office of DTC or its designated custodian (the
"Designated Office"). The time and date of such delivery and payment shall
be, with respect to the Firm Shares, 9:30 a.m., New York City time, on
__________, 1999 or such other time and date as Xxxxxxx, Xxxxx & Co. and
the Selling Stockholders may agree upon in writing, and, with respect to
the Optional Shares, 9:30 a.m., New York City time, on the date specified
by Xxxxxxx, Sachs & Co. in the written notice given by Xxxxxxx, Xxxxx & Co.
of the Underwriters' election to purchase such Optional Shares, or such
other time and date as Xxxxxxx, Sachs & Co. and the Selling Shareholders
may agree upon in writing. Such time and date for delivery of the Firm
Shares is herein called the "First Time of Delivery", such time and date
for delivery of the Optional Shares, if not the First Time of Delivery, is
herein called the "Second Time of Delivery", and each such time and date
for delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or
on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(o) hereof, will be delivered at the
offices of Milbank, Tweed, Xxxxxx & XxXxxx LLP, 0 Xxxxx Xxxxxxxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (the "Closing Location"), and the Shares will be
delivered at the Designated Office, all at such Time of Delivery. A meeting
will be held at the Closing Location at 3:30 p.m., New York City time, on
the New York Business Day next preceding such Time of Delivery, at which
meeting the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto. For
the purposes of this Section 4, "New York Business Day" shall mean each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York City are generally authorized or obligated
by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and
to file such Prospectus pursuant to Rule 424(b) under the Act not
later than the Commission's close of business on the second business
day following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus prior to the last Time of
Delivery which shall be disapproved by you promptly after reasonable
notice thereof, such disapproval not to be unreasonably exercised; to
advise you, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish you with copies thereof; 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 Shares; to advise you, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or
of any order preventing or suspending the use of any Preliminary
Prospectus or prospectus, of the suspension of the qualification of
the Shares for offering or sale in any jurisdiction, of the initiation
or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional information;
and, in the event of the issuance of any stop order or any order
preventing or suspending the use of any Preliminary Prospectus or
prospectus or suspending any such qualification, to promptly use its
best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you
may reasonably request to qualify the Shares for offering and sale
under the securities laws of such jurisdictions as you may request and
to comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Shares, provided that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process
in any jurisdiction;
(c) Prior to 10:00 a.m. New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time
to time to furnish the Underwriters with copies of the Prospectus in
such quantities as you may reasonably request, and, if the delivery of
a prospectus is required at any time prior to the expiration of nine
months after the time of issue of the Prospectus in connection with
the offering or sale of the Shares and if at such time any events
shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary during
such same period to amend or supplement the Prospectus or to file
under the Exchange Act any document incorporated by reference in the
Prospectus in order to comply with the Act or the Exchange Act, to
notify you and upon your request to file such document and to prepare
and furnish without charge to each Underwriter and to any dealer in
securities as many copies as you may from time to time reasonably
request of an amended Prospectus or a supplement to the Prospectus
which will correct such statement or omission or effect such
compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Shares at any time
nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and
deliver to such Underwriter as many copies as you may request of an
amended or supplemented Prospectus complying with Section 10(a)(3) of
the Act;
(d) To make generally available to its security-holders as
soon as practicable, but in any event not later than eighteen months
after the effective date of the Registration Statement (as defined in
Rule 158(c) under the Act), an earnings statement of the Company and
its subsidiaries (which need not be audited) complying with Section
11(a) of the Act and the rules and regulations of the Commission
thereunder (including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date 180 days after the First Time of
Delivery, not to offer, sell, contract to sell or otherwise dispose of
any Stock or any securities of the Company (other than pursuant to
employee plans described in the Prospectus) which are substantially
similar to the Shares, including but not limited to any securities
that are convertible into or exchangeable for, or that represent the
right to receive, Stock or such substantially similar securities
without your prior written consent;
(f) To furnish to its stockholders as soon as practicable
after the end of each fiscal year an annual report (including a
balance sheet and statements of income, stockholders' equity and cash
flows of the Company and its consolidated subsidiaries certified by
independent public accountants) and, as soon as practicable after the
end of each of the first three quarters of each fiscal year (beginning
with the fiscal quarter ending after the effective date of the
Registration Statement), to make available to its stockholders
consolidated summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail;
(g) During a period of five years from the effective date of
the Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to stockholders,
and deliver to you as soon as they are available, copies of any
reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of
securities of the Company is listed. Such financial statements will be
on a consolidated basis to the extent the accounts of the Company and
its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission;
(h) To use its best efforts to maintain the listing of the
Stock on the New York Stock Exchange; and
(i) If the Company elects to rely upon Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement, and the Company shall at the
time of filing either pay to the Commission the filing fee for the
Rule 462(b) Registration Statement or give irrevocable instructions
for the payment of such fee pursuant to Rule 111(b) under the Act.
6. The Company and each of the Selling Stockholders covenant and agree
with the one another and with the several Underwriters that (a) the Company
will pay or cause to be paid (i) the cost of preparing stock certificates
for the Shares; (ii) the cost and charges of any transfer agent or
registrar for the Shares; and (iii) all other costs and expenses incident
to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section; (b) the Selling Stockholders
will pay or cause to be paid a pro rata share (based on the number of
Shares to be sold by each such Selling Stockholder) of the following: (i)
the fees, disbursements and expenses of the Company's outside accountants
and of the Company's outside counsel in connection with the registration of
the Shares under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus, the Prospectus and amendments and supplements
thereto and the mailing and delivering of copies thereof to the
Underwriters and dealers; (ii) the cost of printing or producing any
Agreement among Underwriters, this Agreement and Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of
the Shares; (iii) all expenses in connection with the qualification of the
Shares for offering and sale under state securities laws as provided in
Section 5(b) hereof, including the fees and disbursements of counsel for
the Underwriters in connection with such qualification and in connection
with the Blue Sky survey; (iv) the filing fees incident to, and the fees
and disbursements of counsel for the Underwriters in connection with,
securing any required review by the NASD of the terms of the sale of the
Shares; (v) all fees and expenses in connection with the preparation and
filing of a registration statement under the Exchange Act relating to the
Shares and all costs and expenses incident to the listing of the Shares on
the New York Stock Exchange or other national or regional exchange, if any;
(vi) all fees, expenses and costs in connection with the marketing of the
Shares; and (vii) all other costs and expenses incident to the performance
of all obligations hereunder which are not otherwise specifically provided
for in this Section; and (c) each Selling Stockholder will pay or cause to
be paid all costs and expenses incident to the performance of such Selling
Stockholder's obligations hereunder which are not otherwise specifically
provided for in this Section, including (i) any fees and expenses of
counsel for such Selling Stockholder; (ii) such Selling Stockholder's pro
rata share of the fees and expenses of the Attorneys-in-Fact and the
Custodian; and (iii) all expenses and taxes incident to the sale and
delivery of the Shares to be sold by such Selling Stockholder. In
connection with clause (c)(iii) of the preceding sentence, Xxxxxxx, Xxxxx &
Co. agrees to pay New York State stock transfer tax, and the Selling
Stockholders agree to reimburse Xxxxxxx, Sachs & Co. for associated
carrying costs if such tax payment is not rebated on the day of payment and
for any portion of such tax payment not rebated. It is understood, however,
that the Company shall bear, and the Selling Stockholders shall not be
required to pay or to reimburse the Company for, the cost of any other
matters not directly relating to the sale and purchase of the Shares
pursuant to this Agreement, and that, except as provided in this Section,
Section 8 and Section 11 hereof, the Underwriters will pay all of their own
costs and expenses, including the fees of their counsel, transfer taxes on
resale of any of the Shares by them, and any advertising expenses connected
with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to
be delivered at each Time of Delivery, shall be subject, in their
discretion, to the condition that all representations and warranties of the
Company and the Selling Stockholders herein are, at and as of such Time of
Delivery, true and correct, the condition that the Company and the Selling
Stockholders shall have performed all of its and their obligations
hereunder theretofore to be performed, and the following additional
conditions:
(a) 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 Act and in accordance
with Section 5(a) hereof; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the part of the
Commission shall have been complied with to your reasonable satisfaction;
(b) Milbank, Tweed, Xxxxxx & XxXxxx LLP, counsel for the
Underwriters, shall have furnished to you such opinion or opinions, dated
such Time of Delivery, with respect paragraphs (i), (ii), (vi) and (ix) of
subsection (c) below, as well as a statement to the effect of the text
following paragraph (ix) of subsection (c) below, and such other related
matters as you 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;
(c) Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, special counsel for
the Company, shall have furnished to you their written opinion, dated such
Time of Delivery, in form and substance satisfactory to you, to the effect
that:
(i) The Company has been incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with corporate power and authority necessary to own its
properties and conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the Shares have been duly and
validly authorized and issued and are fully paid and non-assessable;
(iii) Each of QSP, Inc., and R.D. Manufacturing Corporation
(each a "Designated Subsidiary" and collectively, the "Designated
Subsidiaries") has been incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware
with corporate power and authority necessary to own its properties and
conduct its business as described in the Prospectus; and all of the
issued shares of capital stock of each such Designated Subsidiary have
been duly and validly authorized and issued, are fully paid and
non-assessable, and (except for directors' qualifying shares) are
owned of record directly or indirectly by the Company;
(iv) This Agreement has been duly authorized, executed and
delivered by the Company;
(v) The compliance by the Company with all of the provisions
of this Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under,
(i) any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, (ii) the provisions of
the Certificate of Incorporation or By-laws of the Company, (iii) the
Delaware General Corporation Law or any present law, or present
regulation of any government agency or authority, of the State of New
York or the United States of America known by us to be applicable to
the Company or any of its subsidiaries or their respective properties
or (iv) any court decree or order binding upon the Company or any of
its subsidiaries or their respective properties (it being understood
that (A) with respect to the opinions in clauses (i) and (iv) of this
paragraph, (w) such opinions are limited to the indentures, mortgages,
deeds of trust, loan agreements, other agreements, instruments or
court decrees or orders (the "Identified Documents") which have been
identified to such counsel in a certificate provided by an officer of
the Company as material to the Company and its subsidiaries, taken as
a whole, (x) such counsel is not required to express any opinion with
respect to any violation not readily ascertainable from the face
thereof or arising under or based upon any cross-default provision
insofar as it relates to a default under any indentures, mortgages,
deeds of trust, loan agreements, other agreements, instruments or
court decrees or orders not listed on such certificate, (y) in
rendering its opinion with respect to any covenant of a financial or
numerical nature or requiring computation such counsel may rely as to
matters of fact on an officers' certificate of the Company and (z)
such counsel is not required to make any independent investigation as
to whether the Identified Documents which are governed by the laws of
any jurisdiction other than the State of New York, will be enforced as
written under the laws of such jurisdiction and (B) the opinion in
clause (iii) of this paragraph is limited (x) to our review of only
those laws and regulations that, in our experience, are normally
applicable to transactions of the type contemplated by this Agreement,
and (y) in that such counsel is not required to express any opinion
with respect to the application of, or compliance with, Federal or
state securities or Blue Sky laws or any rules or regulations
thereunder);
(vi) No consent, approval, authorization, order,
registration or qualification of or with any United States or New York
court or governmental agency or body, or with respect to matters
arising under the Delaware General Corporation Law, Delaware court or
governmental agency or body is required by or of the Company for the
sale of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement, except the registration
under the Act of the Shares, and such consents, approvals,
authorizations, orders, registrations or qualifications as may be
required under state or foreign securities or Blue Sky laws, rules and
regulations in connection with the purchase and distribution of the
Shares by the Underwriters (it being understood that this opinion is
limited to those consents, approvals, authorizations, orders,
registrations or qualifications that, in our experience, are normally
applicable to transactions of the type contemplated by this
Agreement);
(vii) The Company is not an "investment company", as such
term is defined in the Investment Company Act;
(viii) The documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto made by the
Company prior to such Time of Delivery (other than the financial
statements and related schedules, and other financial data derived
from the financial statements or accounting records of the Company
therein, as to which such counsel need express no opinion), when they
were filed with the Commission appear on their face to be responsive
as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission
thereunder;
(ix) The Registration Statement and the Prospectus and or
any amendments or supplements thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related
schedules, and other financial data derived from the financial
statements or accounting records of the Company, therein, as to which
such counsel need express no opinion), appear on their face to be
responsive as to form in all material respects with the requirements
of the Act and the rules and regulations thereunder.
In addition, in the course of the preparation by the Company of the
Registration Statement and any amendment thereto and the Prospectus and any
amendment or supplement thereto, such counsel has participated in
conferences with certain of the officers and other representatives of the
Company, representatives of the independent certified public accountants
for the Company and representatives of the Underwriters, at which the
contents of the Registration Statement and the Prospectus were discussed.
Between the date of effectiveness of the Registration Statement and any
such amendment thereto and the time of delivery of this letter, such
counsel attended additional conferences with certain of the officers and
representatives of the Company, at which the contents of the Registration
Statement and any such amendment thereto and the Prospectus and any such
amendment or supplement thereto were discussed to a limited extent. Given
the limitations inherent in the independent verification of factual matters
and the character of determinations involved in the registration process,
such counsel may state that they are not passing upon or assuming any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and any such amendment thereto or
the Prospectus and any such amendment or supplement thereto except as
specified in paragraph (vii) above. Subject to the foregoing and on the
basis of the information gained in the performance of the services referred
to above, including information obtained from officers and other
representatives of, and the independent public accountants for, the
Company, no facts have come to their attention to cause them to believe
that as of its effective date, the Registration Statement or any amendment
thereto made by the Company prior to such Time of Delivery contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or that, as of its date, the Prospectus or any amendment or
supplement thereto made by the Company prior to such Time of Delivery
contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. Also, subject to the
foregoing, no facts have come to such counsel's attention in the course of
the procedures described in the second paragraph of this section that have
caused such counsel to believe that, as of such Time of Delivery, the
Prospectus as amended or supplemented contains an untrue statement of a
material fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances in which they were made,
not misleading. Such counsel may state that they express no view or belief,
however, with respect to the financial statements and related schedules
included in, and other financial data derived from the financial statements
or accounting records of the Company excluded or omitted from, the
Registration Statement or Prospectus.
In rendering such opinion, such counsel may rely, in respect to
matters of fact, and to the extent not specifically set forth above, upon
certificates of officers of the Company and its subsidiaries and
certificates of public officials. In rendering such opinion, such counsel
may state that they express no opinion as to the laws of any jurisdiction
other than the laws of the State of New York, the Federal law of the United
States and, to the extent relevant for the opinions expressed, the General
Corporation Law of the State of Delaware;
(d) Xxxxxxxx X.X. XxXxxx, Vice President and Associate General
Counsel of the Company, shall have furnished to you his written opinion,
dated such Time of Delivery, in form and substance satisfactory to you, to
the effect that:
(i) The Company has been incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with corporate power and authority and all governmental
licenses, permits, approvals, franchises, consents and authorizations
necessary to own its properties and conduct its business as described
in the Prospectus other than any such license, permit, approval,
franchise, consent or authorization the failure to possess which would
not have a material adverse effect on the business or financial
condition of the Company and its subsidiaries, taken as a whole;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the Shares have been duly and
validly authorized and issued and are fully paid and non-assessable;
and the Shares conform to the description of the Stock contained in
the Prospectus;
(iii) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of failure to be so qualified or in good standing in any such
jurisdiction;
(iv) Each of QSP, Inc., R.D. Manufacturing Corporation, The
Reader's Digest Association Proprietary Limited, The Reader's Digest
Association (Canada) Ltd., Selection du Reader's Digest S.A., Verlag
Das Beste G.m.b.H., The Reader's Digest Association Limited and Books
Are Fun, Ltd. (each an "Indicated Subsidiary" and collectively, the
"Indicated Subsidiaries") has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation or, in jurisdictions outside of the
United States, the substantive equivalent thereto, with corporate
power and authority and all governmental licenses, permits, approvals,
franchises, consents and authorizations necessary to own its
properties and conduct its business as described in the Prospectus,
other than any such license, permit, approval, franchise, consent or
authorization the failure to possess which would not have a material
adverse effect on the business or financial condition of the Company
and its subsidiaries, taken as a whole; and all of the issued shares
of capital stock of each such Indicated Subsidiary have been duly and
validly authorized and issued, are fully paid and non-assessable, and
(except for directors' qualifying shares) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims;
(v) Other than as set forth or incorporated by reference in
the Prospectus, there are no legal or governmental proceedings pending
to which the Company or any of its subsidiaries is a party or of which
any property of the Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the current or future consolidated financial
position, stockholders' equity or results of operations of the Company
and its subsidiaries; and, to the knowledge of such counsel, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(vi) The compliance by the Company with all of the
provisions of this Agreement and the consummation of the transactions
herein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, except for any such
conflict, breach, violation or default which individually or in the
aggregate would not have a material adverse effect on the Company and
its subsidiaries taken as a whole or which would not have an adverse
effect on the transactions contemplated hereby, nor will such action
result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or any statute or any order,
rule or regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties;
(vii) Neither the Company nor any of the Designated
Subsidiaries is in violation of its certificate of incorporation or
by-laws;
(viii) The documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto made by the
Company prior to such Time of Delivery (other than the financial
statements and related schedules, and other financial data derived
from the financial statements or accounting records of the Company
therein, 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 and the rules and
regulations of the Commission thereunder; and he has no reason to
believe that any of such documents, when such documents were so filed
contained an 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 when such
documents were so filed, not misleading;
(ix) To the knowledge of such counsel, the Company owns all
the patents, trademarks, service marks, trade names and copyrights, or
licenses rights with respect to the foregoing necessary for the
present and planned future conduct of its business as described in the
Prospectus, except where the failure to own or license the same would
not have a material adverse effect on the business or condition,
financial or otherwise, of the Company and its subsidiaries, taken as
a whole, without any conflict known to such counsel with the rights of
others, the result of which conflict could materially and adversely
affect the business or condition, financial or otherwise, of the
Company and its subsidiaries, taken as a whole, and, to the knowledge
of such counsel, there is no infringement on such patents, trademarks,
service marks, trade names and copyrights by others, the result of
which infringement could materially and adversely affect the business
or condition, financial or otherwise, of the Company and its
subsidiaries, taken as a whole; and
(x) The Registration Statement and the Prospectus and or any
amendments or supplements thereto made by the Company prior to such
Time of Delivery (other than the financial statements and related
schedules, and other financial data derived from the financial
statements or accounting records of the Company, therein, as to which
such counsel need express no opinion), appear on their face to be
responsive as to form in all material respects with the requirements
of the Act and the rules and regulations thereunder.
In addition, in the course of the preparation by the Company of the
Registration Statement and any amendment thereto and the Prospectus and any
amendment or supplement thereto, such counsel has participated in
conferences with certain of the officers and other representatives of the
Company, representatives of the independent certified public accountants
for the Company and representatives of the Underwriters, at which the
contents of the Registration Statement and the Prospectus were discussed.
Between the date of effectiveness of the Registration Statement and any
such amendment thereto and the time of delivery of this letter, such
counsel attended additional conferences with certain of the officers and
representatives of the Company, at which the contents of the Registration
Statement and any such amendment thereto and the Prospectus and any such
amendment or supplement thereto were discussed to a limited extent. Given
the limitations inherent in the independent verification of factual matters
and the character of determinations involved in the registration process,
such counsel may state that they are not passing upon or assuming any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and any such amendment thereto or
the Prospectus and any such amendment or supplement thereto. Subject to the
foregoing and on the basis of the information gained in the performance of
the services referred to above, including information obtained from
officers and other representatives of, and the independent public
accountants for, the Company, no facts have come to his attention to cause
him to believe that as of its effective date, the Registration Statement or
any amendment thereto made by the Company prior to such Time of Delivery
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or that, as of its date, the Prospectus
or any amendment or supplement thereto made by the Company prior to such
Time of Delivery contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading.
Also, subject to the foregoing, no facts have come to such counsel's
attention in the course of the procedures described in the second paragraph
of this section that have caused such counsel to believe that, as of such
Time of Delivery, the Prospectus as amended or supplemented contains an
untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading. Such counsel may state that they
express no view or belief, however, with respect to the financial
statements and related schedules therein, and other financial data derived
from the financial statements or accounting records of the Company excluded
or omitted from the Registration Statement or Prospectus. Further, based
upon such participation and subject to such limitations and qualifications
described above, he does not know of any amendment to the Registration
Statement required to be filed or of any contracts or other documents of a
character required to be filed as an exhibit to the Registration Statement
or required to be incorporated by reference into the Prospectus or required
to be described in the Registration Statement or the Prospectus which are
not filed or incorporated by reference or described as required.
In rendering such opinion, such counsel may rely, (A) in respect to
matters of fact, and to the extent not specifically set forth above, upon
certificates of officers of the Company and its subsidiaries and
certificates of public officials, and (B) as to matters of law other than
New York and Federal law and the General Corporation Law of Delaware, on
the opinions of local counsel, provided that such counsel shall state that
they believe that both you and he is justified in relying upon such
opinions and certificates and provided further that true and complete
copies of such opinions and certificates shall be delivered to you. In lieu
of delivering such opinion as to matters governed by the laws of
jurisdictions outside of the United States, such counsel shall cause to be
delivered to you opinions of local counsel reasonably satisfactory to you,
provided that such local counsel shall state that they believe that both
you and he are justified in relying upon such opinions;
(e) Shearman & Sterling, special counsel for each of the
Selling Stockholders, shall have furnished to you their written opinion
with respect to each of the Selling Stockholders, dated such Time of
Delivery, in form and substance satisfactory to you, to the effect that:
(i) A Power of Attorney and a Custody Agreement have been
duly executed and delivered by such Selling Stockholder and constitute
valid and binding agreements of such Selling Stockholder enforceable
in accordance with their terms, subject to customary bankruptcy and
equitable principles qualifications;
(ii) This Agreement has been duly executed and delivered by
or on behalf of such Selling Stockholder;
(iii) The compliance by each Selling Stockholder with all of
the provisions of this Agreement, the Power of Attorney and the
Custody Agreement to which such Selling Stockholder is a party and the
consummation of the transactions herein and therein contemplated will
not conflict with or result in a breach or violation of, or constitute
a default under, (i) any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder is bound,
or to which any of the property or assets of such Selling Stockholder
is subject, (ii) the provisions of the Certificate of Incorporation or
By-laws of such Selling Stockholder, (iii) any present law, or present
regulation of any government agency or authority, of the State of New
York or the United States of America known by us to be applicable to
the Selling Stockholder or their respective properties or (iv) any
court decree or order binding upon the Selling Stockholder or their
respective properties (it being understood that (A) with respect to
the opinions in clauses (i) and (iv) of this paragraph, (w) such
opinions are limited to the indentures, mortgages, deeds of trust,
loan agreements, or other agreements, instruments or court decrees or
orders (the "Specified Documents") which have been identified to such
counsel in a certificate provided by an officer of the Selling
Stockholder as material to the Selling Stockholder, (x) such counsel
is not required to express any opinion with respect to any violation
not readily ascertainable from the face thereof or arising under or
based upon any cross-default provision insofar as it relates to a
default under any indentures, mortgages, deeds of trust, loan
agreements, or other agreements, instruments or court decrees or
orders not listed on such certificate, (y) in rendering its opinion
with respect to any covenant of a financial or numerical nature or
requiring computation such counsel may rely as to matters of fact on
an officers' certificate of such Selling Stockholder and (z) such
counsel is not required to make any independent investigation as to
whether the Specified Documents which are governed by the laws of any
jurisdiction other than the State of New York, will be enforced as
written under the laws of such jurisdiction and (B) the opinion in
clause (iii) of this paragraph is limited (x) to our review of only
those laws and regulations that, in our experience, are normally
applicable to transactions of the type contemplated by this Agreement,
and (y) in that such counsel is not required to express any opinion
with respect to the application of, or compliance with, Federal or
state securities or Blue Sky laws or any rules or regulations
thereunder);
(iv) No consent, approval, authorization or order of any
United States or New York court or governmental agency or body is
required by or of such Selling Stockholder for the consummation of the
transactions contemplated by this Agreement, except for the
registration of the Shares, under the Acts and such as may be required
under state or foreign securities or Blue Sky laws, rules or
regulations in connection with the purchase and distribution of the
Shares by the Underwriters (it being understood that this opinion is
limited to those consents, approvals, authorizations, orders,
registrations or qualifications that, in our experience, are normally
applicable to transactions of the type contemplated by this
Agreement);
(v) Assuming (A) due authorization, execution and delivery
of this Agreement by the Underwriters, (B) the certificates
representing such Shares do not contain any notation of liens or
restrictions, (C) the Underwriters acquire such Shares without notice
of any adverse claim (within the meaning of the New York UCC) and (D)
undated stock powers with respect to the certificates representing
such Shares effectively endorsed in blank are delivered to the
Underwriters, upon payment for and delivery to the Underwriters of the
Shares to be sold by each Selling Stockholder in accordance with this
Agreement, the Underwriters will acquire all of the rights of such
Selling Stockholder in such Shares and will also acquire their
interest in such Shares free of any adverse claim (within the meaning
of the New York UCC).
(vi) None of the Selling Stockholders is an "investment
company", as such term is defined in the Investment Company Act;
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction other than the laws of the State
of New York and the Federal laws of the United States.
(f) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the
effective date of any post-effective amendment to the Registration
Statement filed subsequent to the date of this Agreement and also at each
Time of Delivery, the accounting firm listed in Section 1(a)(xvi) hereof
shall have furnished to you a letter or letters, dated the respective dates
of delivery thereof, in form and substance satisfactory to you, to the
effect set forth in Annex I hereto;
(g) (i) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall not
have been any change, or any development involving a prospective change, in
or affecting the general affairs, management, financial position, results
of operations, prospects, investment objectives, investment policies or
liabilities of the Company, otherwise than as set forth or contemplated in
the Prospectus, (ii) neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial statements
included in the Prospectus or incorporated by reference therein any 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 (iii) since the respective dates as
of which information is given in the Prospectus there shall not have been
any change in the capital stock short-term debt or long-term debt of the
Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole, otherwise
than as set forth or contemplated in the Prospectus, the effect of which,
in any such case described in clause (i), (ii) or (iii), is in your
judgment so material and adverse as to make it impracticable or inadvisable
to proceed with the public offering or the delivery of the Shares being
issued at such Time of Delivery on the terms and in the manner contemplated
in the Prospectus;
(h) On or after the date hereof there shall not have occurred any
of the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; (ii) a suspension or
material limitation in trading in the securities of the Company on the New
York Stock Exchange; (iii) a general moratorium on commercial banking
activities declared by either Federal or New York State authorities; or
(iv) the outbreak or material escalation of hostilities involving the
United States or the declaration by the United States of a national
emergency or war, if the effect of any such event specified in this clause
(iv) in your judgment makes it impracticable or inadvisable to proceed with
the public offering or the delivery of the Shares being issued at such Time
of Delivery on the terms and in the manner contemplated in the Prospectus;
(i) The Shares to be sold by the Selling Stockholders at such
Time of Delivery shall have been duly listed, subject to notice of
issuance, on the New York Stock Exchange;
(j) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of copies of the
Prospectus on the New York Business Day next succeeding the date of this
Agreement; and
(k) The Company and the Selling Stockholders shall have furnished
or caused to be furnished to you at such Time of Delivery certificates of
officers of the Company and the Selling Stockholders, respectively,
satisfactory to you as to the accuracy of the representations and
warranties of the Company and the Selling Stockholders, respectively,
herein at and as of such Time of Delivery, as to the satisfaction and
performance by the Company and the Selling Stockholders of all of their
respective obligations hereunder and thereunder to be performed at or prior
to such Time of Delivery, as to the matters set forth in subsections (a)
and (g) of this Section (except in the case of the Selling Stockholders)
and as to such other matters relating to the transactions contemplated
herein and therein as you may reasonably request.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to
which such Underwriter may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending
any such action or claim as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or any such amendment or supplement thereto, in reliance
upon and in conformity with written information furnished to the Company by
any Underwriter through Xxxxxxx, Xxxxx & Co. expressly for use therein, and
provided, further, that the Company shall not be liable to any Underwriter
under the indemnity agreement in this subsection (a) with respect to any
Preliminary Prospectus to the extent that any such loss, claim, damage or
liability results from the fact such Underwriter sold Shares to a person to
whom there was not sent or given, at or prior to the written confirmation
of such sale, a copy of the Prospectus (or of the Prospectus as then
amended or supplemented) in any case where such delivery is required by the
Act if the Company has previously furnished copies thereof to such
Underwriter and the loss, claim, damage or liability of such Underwriter
results from an untrue statement or omission of a material fact contained
in the Preliminary Prospectus which was corrected in the Prospectus (or the
Prospectus as amended or supplemented).
(b) Each Selling Stockholder, severally, and not jointly, in
proportion to the number of Shares to be sold by each such Selling
Stockholder will indemnify and hold harmless each Underwriter against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading in each case to the extent,
but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Selling Stockholder expressly
for use therein, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Selling Stockholder shall not be
liable to any Underwriter under the indemnity agreement in this subsection
(b) with respect to any Preliminary Prospectus to the extent that any such
loss, claim, damage or liability of such Underwriter results from the fact
such Underwriter sold Shares to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the
Prospectus or of the Prospectus as then amended or supplemented in any case
where such delivery is required by the Act if the Company has previously
furnished copies thereof to such Underwriter and the loss, claim, damage or
liability of such Underwriter results from an untrue statement or omission
of a material fact contained in the Preliminary Prospectus which was
corrected in the Prospectus (or the Prospectus as amended or supplemented).
(c) Each Underwriter will indemnify and hold harmless the Company
and each Selling Stockholder against any losses, claims, damages or
liabilities to which the Company or such Selling Stockholder may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through Xxxxxxx, Sachs & Co. expressly for use
therein; and will reimburse the Company and each Selling Stockholder for
any legal or other expenses reasonably incurred by the Company or such
Selling Stockholder in connection with investigating or defending any such
action or claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to
be made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party, provided, however,
that if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have been
advised by its counsel that representation of such indemnified party and
the indemnifying party by the same counsel would be inappropriate (whether
or not such representation by the same counsel has been proposed) under
applicable standards of professional conduct due to actual or potential
differing interests between them, the indemnified party or parties shall
have the right to select one separate counsel to participate in the defense
of such action on behalf of all such indemnified parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party shall not be liable to
such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by
such indemnified party, in connection with the defense thereof other than
reasonable costs of investigation unless the indemnified party shall have
employed separate counsel in accordance with the proviso to the next
preceding sentence. No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise of,
or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party
is an actual or potential party to such action or claim) unless such
settlement, compromise or judgment (i) includes an unconditional release of
the indemnified party from all liability arising out of such action or
claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages
or liabilities (or actions in respect thereof) referred to therein, then
each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company and
the Selling Stockholders on the one hand and the Underwriters on the other
from the offering of the Shares. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under subsection
(d) above, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the
relative fault of the Company and the Selling Stockholders on the one hand
and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total net proceeds from
the offering (before deducting expenses) received by the Company and the
Selling Stockholders bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or the Selling Stockholders on the one hand or the Underwriters on
the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company, the Selling Stockholders and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this
subsection (e) 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 above in this subsection (e). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages
or liabilities (or actions in respect thereof) referred to above in
subsection (c) shall be deemed to include 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 subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations in this
subsection (e) to contribute are several in proportion to their respective
underwriting obligations and not joint, and the Selling Stockholders'
obligations in this subsection (e) to contribute are several and not joint.
(f) The obligations of the Company and the Selling Stockholders
under this Section 8 shall be in addition to any liability which the
Company and the respective Selling Stockholders may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any,
who controls any Underwriter within the meaning of the Act; and the
obligations of the Underwriters under this Section 8 shall be in addition
to any liability which the respective Underwriters may otherwise have and
shall extend, upon the same terms and conditions, to each officer and
director of the Company and of any Selling Stockholders and to each person,
if any, who controls the Company or any Selling Stockholder within the
meaning of the Act.
(g) Notwithstanding the foregoing provisions of this Section 8,
in no event shall any Selling Stockholder be liable under this Section 8
for an amount in excess of the net proceeds received by such Selling
Stockholder from the sale of the Shares.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder, you may in your
discretion arrange for you or another party or other parties to purchase
such Shares on the terms contained herein at a Time of Delivery. If within
thirty-six hours after such default by any Underwriter you do not arrange
for the purchase of such Shares, then the Company and the Selling
Stockholders shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to you
to purchase such Shares on such terms. In the event that, within the
respective prescribed periods, you notify the Company and the Selling
Stockholders that you have so arranged for the purchase of such Shares, or
the Company and the Selling Stockholders notify you that they have so
arranged for the purchase of such Shares, you or the Company and the
Selling Stockholders shall have the right to postpone such Time of Delivery
for a period of not more than seven days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company and
the Selling Stockholders agree to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby
be made necessary. The term "Underwriter" as used in this Agreement shall
include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to
such Shares.
(b) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by you and the
Company and the Selling Stockholders as provided in subsection (a) above,
the aggregate number of such Shares which remains unpurchased does not
exceed one-eleventh of the aggregate number of all the Shares to be
purchased at such Time of Delivery, then the Company and the Selling
Stockholders shall have the right to require each non-defaulting
Underwriter to purchase the number of Shares which such Underwriter agreed
to purchase hereunder at such Time of Delivery and, in addition, to require
each non-defaulting Underwriter to purchase its pro rata share (based on
the number of Shares which such Underwriter agreed to purchase hereunder)
of the Shares of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by you and the
Company and the Selling Stockholders as provided in subsection (a) above,
the aggregate number of such Shares which remains unpurchased exceeds
one-eleventh of the aggregate number of all the Shares to be purchased at
such Time of Delivery, or if the Company and the Selling Stockholders shall
not exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Shares of a defaulting Underwriter
or Underwriters, then this Agreement (or, with respect to the Second Time
of Delivery, the obligations of the Underwriters to purchase and of the
Selling Stockholders sell the Optional Shares) shall thereupon terminate,
without liability on the part of any non-defaulting Underwriter or the
Company and the Selling Stockholders, except for the expenses to be borne
by the Company, the Selling Stockholders and the Underwriters as provided
in Section 6 hereof and the indemnity and contribution agreements in
Section 8 hereof; but nothing herein shall relieve a defaulting Underwriter
from liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company the Selling Stockholders and
the several Underwriters, as set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement, shall remain in
full force and effect, regardless of any investigation (or any statement as
to the results thereof) made by or on behalf of any Underwriter or any
controlling person of any Underwriter, or the Company or any of the Selling
Stockholders or any officer or director or controlling person of the
Company or any controlling person of any Selling Stockholder and shall
survive delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, neither the Company nor the Selling Stockholders shall then be
under any liability to any Underwriter except as provided in Sections 6 and
8 hereof; but, if for any other reason, any Shares are not delivered by or
on behalf of the Selling Stockholders as provided herein, the each of
Selling Stockholders, pro rata (based on the number of Shares to be sold by
each such Selling Stockholder hereunder), will reimburse the Underwriters
through you for all out-of-pocket expenses approved in writing by you,
including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of
the Shares not so delivered, but the Company and the Selling Stockholders
shall then be under no further liability to any Underwriter in respect of
the Shares not so delivered except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any Underwriter
made or given by you jointly or by Xxxxxxx, Xxxxx & Co. on behalf of you as
the representatives; and in all dealings with any Selling Stockholder
hereunder, you and the Company shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of such Selling
Stockholder made or given by any or all of the Attorneys-in-Fact for such
Selling Stockholder.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to you as the representatives in care of
Xxxxxxx, Sachs & Co., 00 Xxx Xxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Registration Department; if to the Company shall be delivered or
sent by mail, telex or facsimile transmission to the address of the Company
set forth in the Registration Statement, Attention: Secretary; and if to
any Selling Stockholder shall be delivered or sent by mail, telex or
facsimile transmission to counsel for such Selling Stockholder at its
address set forth in Schedule II hereto; provided, however, that any notice
to an Underwriter pursuant to Section 8(d) hereof shall be delivered or
sent by mail, telex or facsimile transmission to such Underwriter at its
address set forth in its Underwriters' Questionnaire, or telex constituting
such Questionnaire, which address will be supplied to the Company or the
Selling Stockholders by you upon request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and the Selling Stockholders and,
to the extent provided in Sections 8 and 10 hereof, the officers and
directors of the Company, the Selling Stockholders and each person who
controls the Company, any Selling Stockholder or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Shares from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein,
the term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be
an original, but all such counterparts shall together constitute one and
the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us eight counterparts hereof, and upon the acceptance hereof
by you, on behalf of each of the Underwriters, this letter and such
acceptance hereof shall constitute a binding agreement between each of the
Underwriters, the Company and the Selling Stockholders. It is understood
that your acceptance of this letter on behalf of each of the Underwriters
is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company and the
Selling Stockholders for examination upon request, but without warranty on
your part as to the authority of the signers thereof.
Very truly yours,
THE READER'S DIGEST ASSOCIATION, INC.
By:
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and
Chief Financial Officer
SELLING STOCKHOLDERS
By:
------------------------------------
As Attorney-in-Fact acting on behalf
of each Selling Stockholder named in
Schedule II to this Agreement
Accepted as of the date hereof:
Xxxxxxx, Sachs & Co.
Lazard Freres & Co. LLC
By:
---------------------------
(Xxxxxxx, Xxxxx & Co.)
On behalf of each of the Underwriters
SCHEDULE I
UNDERWRITER TOTAL NUMBER OF NUMBER OF OPTIONAL
----------- FIRM SHARES SHARES TO BE
TO BE PURCHASED PURCHASED IF MAXIMUM
--------------- OPTION EXERCISED
--------------------
Xxxxxxx, Sachs & Co.
Lazard Freres & Co. LLC ========== =========
Total 10,000,000 1,500,000
SCHEDULE II
Total Number Number of
of Firm Optional
Shares to be Shares to
Delivered be
------------ Delivered
if Maximum
Option
Exercised
----------
The Selling Stockholders(a):
XxXxxx Xxxxxxx-Reader's Digest Fund, Inc.........
Xxxx Xxxxxxx-Reader's Digest Fund, Inc...........
[Xxxx Xxxxxxx and XxXxxx Xxxxxxx Fund for
Lincoln Center]...............................
[XxXxxx Xxxxxxx Fund for Macalester College
Community Funds, Inc].........................
[Xxxx Xxxxxxx and XxXxxx Xxxxxxx Fund for the
Xxxxxx Highlands].............................
[Xxxx Xxxxxxx and XxXxxx Xxxxxxx Fund for the
New York Zoological Society]..................
[XxXxxx Xxxxxxx Fund for Memorial Xxxxx-Xxxxxxxxx
Cancer Center]................................
[XxXxxx Xxxxxxx Fund for Colonial
Williamsburg].................................
[Xxxx Xxxxxxx Xxxxxxx Fund for The Metropolitan
Museum of Art]................................ -------------- -----------
Total.................................. 10,000,000 1,500,000
------------------
(a) Each Selling Stockholder is represented by Shearman & Sterling, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and has appointed Xxxxxx X.
Xxxxx and M. Xxxxxxxxx XxXxxx, and each of them, as the
Attorneys-in-Fact for such Selling Stockholder.
ANNEX I
Pursuant to Section 7(f) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined
by them and included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act or the Exchange
Act, as applicable, and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance
with standards established by the American Institute of Certified
Public Accountants of the consolidated interim financial statements,
selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such
letter, as indicated in their reports thereon, copies of which have
been furnished to the representatives of the Underwriters (the
"Representatives") and are attached hereto;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included in the Company's quarterly
report on Form 10-Q incorporated by reference into the Prospectus as
indicated in their reports thereon copies of which are attached
hereto; and on the basis of specified procedures including inquiries
of officials of the Company who have responsibility for financial and
accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i)
below comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the
related published rules and regulations, nothing came to their
attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the Exchange Act and the related published rules and
regulations;
(iv) The unaudited selected financial information with
respect to the consolidated results of operations and financial
position of the Company for the five most recent fiscal years included
in the Prospectus and included or incorporated by reference in Item 6
of the Company's Annual Report on Form 10-K for the most recent fiscal
year agrees with the corresponding amounts (after restatement where
applicable) in the audited consolidated financial statements for such
five fiscal years which were included or incorporated by reference in
the Company's Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus
under selected captions with the disclosure requirements of Regulation
S-K and on the basis of limited procedures specified in such letter
nothing came to their attention as a result of the foregoing
procedures that caused them to believe that this information does not
conform in all material respects with the disclosure requirements of
Items 301, 302, 402 and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and
other information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus, inquiries of officials of
the Company and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused
them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements
of cash flows included in the Prospectus and/or included or
incorporated by reference in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Prospectus do not
comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act as it applies to Form
10-Q and the related published rules and regulations, or (ii) any
material modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the
Prospectus or included in the Company's Quarterly Reports on Form
10-Q incorporated by reference in the Prospectus, for them to be
in conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any
such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included
or incorporated by reference in the Company's Annual Report on
Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived the unaudited
condensed financial statements referred to in Clause (A) and any
unaudited income statement data and balance sheet items included
in the Prospectus and referred to in Clause (B) were not
determined on a basis substantially consistent with the basis for
the audited financial statements included or incorporated by
reference in the Company's Annual Report on Form 10-K for the
most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the
Prospectus do not comply as to form in all material respects with
the applicable accounting requirements of the Act and the
published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, upon
earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on
the date of the latest balance sheet included or incorporated by
reference in the Prospectus) or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any
decreases in consolidated net current assets or stockholders'
equity or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each
case as compared with amounts shown in the latest balance sheet
included or incorporated by reference in the Prospectus, except
in each case for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or which are
described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the
Prospectus to the specified date referred to in Clause (E) there
were any decreases in consolidated net revenues or operating
profit or the total or per share amounts of consolidated net
income or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each
case as compared with the comparable period of the preceding year
and with any other period of corresponding length specified by
the Representatives, except in each case for increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(vii) In addition to the examination referred to in their
report(s) included or incorporated by reference in the Prospectus and the
limited procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (iii) and (vi) above, they have
carried out certain specified procedures, not constituting an examination
in accordance with generally accepted auditing standards, with respect to
certain amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the Prospectus (excluding
documents incorporated by reference) or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the Representatives
or in documents incorporated by reference in the Prospectus specified by
the Representatives, and have compared certain of such amounts, percentages
and financial information with the accounting records of the Company and
its subsidiaries and have found them to be in agreement.
